FEBRUARY 24, 2011

Budget 2011 - Wish List of Vox Populi

By Ratnamdhaveji

MEDICAL Deductions: Everyone knows that the expenses on account of medical treatment is going very high. Also the fact that India is fast becoming diabetic capital of the world. Ailments like diabetes, hyper tension etc are constantly increasing due to the fast urbanizing and changing life styles. These may not be deceases by themselves but need regular medication, which is ever increasing. I feel that the expenditure on managing diabetes and hyper tension shall be allowed as a deduction from taxable income. This will give some relief to the tax payers as well.

By R Raman

MAT as Advance Tax :

++ Additional depreciation on plant and machinery is allowed at 20% of the cost. Half this rate would be applicable for additions made in the second half of the year. For such assets added in the second half of the year, balance additional depreciation should be allowed in the next year.

++ It is fair that the credit for carried forward Minimum Alternate Tax is treated as advance tax for the purpose of computation of interest payable u/s 234B. While the Government has accepted this position and amended the Act to give effect to the same, it is better if the Government can notify that this amendment is clarificatory in nature. This would help the assessees in whose case this issue is pending at the appellate authorities.

++ When a refund becomes due to the assessee, irrespective of whether the amount is tax or interest, the Government should pay interest u/s 244A of the Act. As the money of the assessee is lying with the Government, it is fair that the Government pays interest on the same, irrespective of whether the amount payable to the assessee is towards tax or interest. Neither the quantum of refund nor the period of delay in giving the refund should be applied as a yard stick to determine the eligibility of the assessee to get the interest.

++ Several assessees face hardship with respect to deduction of tax at source u/s 195 while making remittance to non residents, especially payments in the nature of commission due to their marketing agents. While it was clarified earlier through circulars issued by the CBDT that payment of commission to non residents for marketing the products will not attract section 195, the withdrawal of the circulars is causing hardship to the assesses. The earlier position should be restored immediately. Besides, sitting fees payable to non resident directors for attending Board meetings being below the taxable limit, should be allowed to be remitted without deduction of tax at source if the corporates apply for exemption in Form 13 under Rule 28(1) furnishing full particulars of the likely amount to be paid.

++ While the Government is thrusting International Financial Reporting Standards (IFRS) on the business entities, the tax laws also should be amended to be in line with the same. While the business entities are required to account for gain / loss on foreign exchange transactions on the principle of Mark-to-Market (MTM) which will be reflected in their Profit and Loss Account, the same treatment should be given in the tax assessments also.

++ Sec 80HHC was introduced to allow benefits to corporates who earn valuable foreign exchange by export of their goods. To encourage such exports, government gives incentives like duty drawback, DEPB, etc. These incentives should not be taxed through the backdoor by making them ineligible to be included in the business profits. Almost all the business entities who export their goods reckon these export incentives when they fix the prices for their goods. Hence these export incentives should not be taxed. Besides, we have still a huge deficit in balance of trade and it is all the more necessary to let the exporters enjoy the full benefit without the tax authorities knocking off a portion.

++ The increase in the weighted deduction for Research u/s 35 (2AB) of the Act to 200% in the Finance Act is a welcome move. The Government should ensure that the assessing authorities are given instruction to ensure that the genuine expenditure incurred by business entities on research should be given the benefit of weighted deduction and not scuttled away by the authorities on some flimsy grounds.

++ With regard to application of Rule 8D for disallowing expenditure relating to exempted income, clarification is required from the CBDT regarding Interest expenditure, Gross Assets and Investments mentioned in Rule 8D to restrict the disallowance at least below the exempted income as otherwise there is no point in claiming exemption. Since expenditure disallowed is more than income exempted it is advisable not to claim any exemption in spite of the provision but due to Assessing Officer wrong interpretation in favour of revenue.

By Samir Kumar Sinha

Remove all Exemptions:

For individual

Remove all exemptions except exemption for housing loan with no limit for principal and interest amount;

Proposed Income Tax Slab (For all categories of person):

Income uptoRs.3,00,000/- NIL

Income more than Rs.3,00,000/- 10% of amount in excess of Rs.3,00,000/-

Similarly, Income Tax Slab for corporate may be considered. Also, there should be no exemption from income tax in the case of units covered under EOU or SEZ.

By Ajay Narhari Deole

Exempt senior Citizens:

++ Income from salary to be exempt upto Rs. 5 lacs and thereafter 10% upto 10 lacs and 20% upto 12 lacs and above 12 lacs as 30%

++ Proper methodology to arrive at genuine profit from income from business or profession since there is vast scope to claim expenses which are legitimate

++ Infrastructure bond 80CCF to be extended upto 1 lac instead of Rs. 20,000 present.

++ Pension in the hands of senior citizen to be totally exempt to be incorporated u/s10

By KK Wadhwa

Kind Children:

Monetary help given by children to parents/joint families should be given 100%income tax exemption. This will divert funds from wasteful activities to some useful social purpose thus will act as social as well as emotional security too.

By S Rayalu

No Amnesty please:

Please do not insult tax payers by bringing another amnesty scheme. It insults genuine tax payer! If any such scheme is launched then "No body should pay tax in time instead wait for such scheme.