Skip to main content

Budget might restore standard deduction

By
Standard deduction for personal income tax might return after over a decade in the Union Budget for 2017-18, if the finance ministry accepts recommendations of the tax simplification committee chaired by ex-judge R V Easwar.
Sources say the panel, in its second report given recently to the ministry, has suggested doing so. Standard deduction was given as a lump-sum benefit towards cost to income till 2003-04. In simple terms, it refers to a deduction allowed in income tax, irrespective of expenses incurred or investment made by assessees.
"Standard deduction is simple to administer," said Amit Maheshwari, partner, Ashok Maheshwary & Associates. For the deduction, there was no need for a taxpayer to keep proof of expenses such as bills. Then finance minister P Chidambaram did away with standard deduction for salaried personnel in 2004-05, on the reasoning that there was an equivalent increase in the basic exemption limit and other deductions. It was then abolished after the tax exemption ceiling on investment was raised to ~1 lakh. The standard deduction slab was Rs.30,000 for total income under Rs.5 lakh a year and Rs.20,000 for income over Rs.5 lakh.
The Easwar panel has reportedly not recommended any particular rate or amount for standard deduction. It wants smaller deductions given in income tax to be done away after standard deduction comes back. The panel has called for reviewing medical reimbursements. Restoration of standard deduction will not affect the threshold for income tax exemption, currently Rs.2.5 lakh a year.
In its first report, the panel suggested revision of the threshold and rates on tax deduction at source. These formed part of the previous Budget.
The 10-member panel has also suggested incorporation of masala bonds (issued abroad but denominated in rupees, not the local currency) in the Income Tax Act, to bring clarity on the capital gains tax on these. The report also went into nonresident taxation, assessment procedure, property income and salaries, among others.
“Review of the non-resident tax issue, of Section 9 with respect to section 195 of the Act, has been examined by the committee, which forms a major chunk of litigation,” said a source. These sections talk about the income deemed to accrue or arise in India from payments to a non-resident, be it salaries, technical fees, capital gains and royalties, and the procedures. The issues pertain to whether income will be classified as business profit or fees for technical services or some other head, all of which have different rates.
Business Standard New Delhi,12th January 2017

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more