Income Tax 21 Jan,2020
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Pre-Budget: Tax relief to Salaried Employees
Geetanshu BhallaChartered Accountant

Many newspapers have reported from its sources that Hon'ble Finance minister is going to give tax rebate to salaried taxpayers, however in author opinion, tax rebates if provided will not be very bulky keeping in mind the slowdown in the economy and the increasing fiscal deficit. Accordingly, in this article, Author recommend various tax reliefs to the Govt which not only create demand for the goods and service and accordingly, generate additional employment opportunities, etc but also does not create big burden on fiscal deficit and simultaneously provide big relief to salaried taxpayers.

1. Higher exemption on account of Leave Travel Concessions

The intent to introduce the exemption on account of Leave travel concessions was inter-alia to promote the domestic tourism. However, the manner in which the provision was drafted seems ineffective. Some Flaws are as under:

 a.  It is not available annually. It is available only twice in block of four years.

 b.  It is not covered the expenses of whole trip such as sightseeing, Hotel Accommodation, Food expenses, etc. Rather its exemption is restricted to travel cost only.

 c.  Even travel cost does not include for whole trips, its exemption is restricted to travel cost to be incurred by the shortest route from origin to destination.

 d.  In cases where place of journey and destination are not connected by any recognized public transport system, the provision only allows the amount equivalent to the air-conditioned first-class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail. This provision seems far to imagine even by any stretch of mind.

Govt should understand that the tourism is the only sector which create multi fold opportunities when it grows, also it creates opportunities for all kind of labour including semi- skilled, skilled labour. It can play an important role in reviving the Indian Economy.

Suggestions

Govt. should redraft the provision to promote the domestic tourism and should cover the following points:

 a.  Should be available annually rather than twice in a block.

 b.  Should be available for whole cost of trip including sightseeing, hotel accommodation, etc for which proper invoices are available with the taxpayers.

 c.  Should cover the whole travelling cost such as if trip includes 5 different destination or cities, the travelling cost incurred on whole trips should be allowed as exemption.

 d.  In cases where public transport is not available, those are the place such as high hilly areas where the potential of developing tourism is quite high, govt should allow whole travelling cost rather than rail cost by shortest route at present.

 e.  No LTA on account of foreign travel should be allowed as suggested by various tax experts .

Benefit to the Economy

 a.  Creating multi fold opportunities for employment in many sectors including aviation, tours and travels, hotels, etc.

 b.  Help in developing new areas for tourism in India.

 c.  Multi fold increase in tourism sectors as businessman may travel to explore domestic tourism after getting positive feedback from salaried taxpayers.

 d.  Increase in GST collection on various goods and services including transportation, hotel accommodations, food and beverage, tour and travelling services, and other goods.

 e.  Upgrading the social status of salaried taxpayers.

2. Deduction on account of investment which is essential for the economy

A. Adopting rain water harvesting technique

We have lost thousands of crores just because of drought and flood in our country every year and the main cause of drought and flood is that we are not adopting the rain water harvesting techniques till yet. Accordingly, promoting rain water harvesting should be the top most priority for the Govt not only for upgrading the social life of Indian but also for avoiding the economic loss caused by drought and flood.

Suggestion

Govt. should introduce the deduction for the individual taxpayers on account of investing in adopting rain water harvesting techniques in addition to deduction available under section 80C of Income tax Act, 1961.

Benefits to the Economy

 a.  Tax relief to salaried taxpayers

 b.  Saving of loss caused by drought and flood

 c.  Creating demand of all kind of labour including unskilled and semi-skilled.

 d.  Revival of various industries including sanitary ware industry, cement industry, etc.

 e.  GST collection on products used in sanitary ware items which allow govt to have either no or insignificant effect on fiscal deficit.

 f.  Upgrading the social status of Citizens by avoiding drought and flood issues.

B. Deduction on account of adopting Solar Energy

The target set by our Hon'ble Prime Minister Mr. Narendra Modi to generate 100GW solar energy seems infeasible in terms of current growth rate of generation of solar energy. Moreover, industrialization is the need of the hour to solve the issue of unemployment, etc. Availability of power at cheap rate without affecting the climate is the one of the key requirements for industrialization. Thus, promoting the solar energy should be on the priority list of Indian Govt.

Suggestions

Govt. should introduce the deduction for the individual taxpayers on account of investing in adopting solar energy techniques in addition to deduction available under section 80C of Income tax Act, 1961 and deduction discussed above.

Benefits to the Economy

 a.  Less dependency on Non-renewal source of energy

 b.  Earning of Carbon credits

 c.  Creating demand of all kind of labour including unskilled and semi-skilled.

 d.  Revival of various industries including electric industry, solar panel industry, etc.

 e.  GST collection on products used in solar panels and its accessories which allow govt to have either no or insignificant effect on fiscal deficit.

 f.  Upgrading the social status of Citizens by making available power at cheap rates.