Standard deduction for salaried may return
- All attempts being made to free soldier in Pakistan captivity: Rajnath Singh
- SC cancels Mohammad Shahabuddin's bail, orders police to take him into custody
- Congress and I stand by PM Narendra Modi: Rahul Gandhi on surgical strikes
- Bihar liquor ban: Patna HC strikes down govt's prohibition law, terms it 'illegal'
- LIVE: PM Modi calls second Cabinet Committee on Security meet
Ahead of the annual budget, here's some cheer for salaried employees and pensioners. The finance ministry is considering bringing back standard deduction of up to Rs 20,000 in individual taxable incomes.
According to revenue department officials, the government may be willing to take a small hit in return for a spike in spending that it hopes will result from a bigger disposable income with the salaried classes.
Till the budget for 2005-06, a standard deduction of Rs 30,000 or 40 per cent of income, whichever was lower, was allowed to salaried employees with an annual income between Rs 75,000 and Rs 5 lakh. For those earning more, the standard deduction was fixed at Rs 20,000.
The standard deduction was meant to compensate salaried people for the fact that self-employed small businesspersons or entrepreneurs paid tax only on their net income after deducting business expenditure.
Industry has been demanding the re-introduction of standard deduction so that individual taxpayers are able to spend more and stimulate domestic demand. As Indira Gandhi's finance minister, Pranab Mukherjee had in fact, raised it from Rs 5,000 to Rs 6,000 in the budget for 1983-84.
"There are two ways of looking at reducing personal tax. One option before the government is to do away with surcharges. The other option would be to give relief to individual earnings up to a particular level. In other words, keeping in mind fiscal deficit constraints, the benefit could be extended to only lower income earners. This would help reduce administrative burden of the department and focus on the big fish," said Sudhir Kapadia, Partner, Taxation, Ernst & Young.
- India may want calibrated strategic escalation, but this genie will not be put back in easily
- Swachh Bharat completes 2 years, but eliminating open defecation is a distant goal
- Pak does not know what it has lost, India doesn’t recognise where it is winning
- Nathuram Godse was a product of the political climate created by the Hindu right wing
- Why there are protests against Gandhi’s statue in Ghana University
- The emergence of Akhilesh Yadav as a popular leader is an indicator of the same-old in the SP