[Submitted by CA.Mahesh Kapasi,
M. Com., LL.B., FCA, FCMA, FCS,
February 12, 2018
The Union Budget 2018 is a day dreaming budget. The proposed various schemes for the welfare of poor and needy is nothing new- in the past too such schemes were announced but how far they are converted into a realty is a big question mark. Time will only tell the truth. At this moment it is not a wise step to rely on it - because of poor administration - the benefit is mostly not reached to the expected/ announced levels to the persons it is aimed at, as there is no mechanism to control its implementation as accountability and responsibility is never assigned in stricter sense with penalty clauses etc for its failure on the part of persons behind it.
Any economy grows on investments and savings by citizens - especially the power of such schemes lies with tax payers and nothing is provided in this budget for such tax saving schemes.
The proposed Standard deduction of Rs.40000 is an eye wash as there is no benefit of tax saving since transport allowance and reimbursement of medial expenditure is withdrawn and the Cess is increased by 1 pc, thus whatever little tax is saved that shall be offset by inflationary trend, which this budget has failed to control inflation in toto. The levy /increase in custom duty on almost all necessary /daily life items would increase their cost.
The Parliamentarians have got maximum benefit in the Budget 2018 by safe guarding themselves against inflationary trend -which the government is unable to control from any angle/ measure. As it is provided in the Budget that there will be automatic revision of emoluments of Parliamentarians every five years indexed to inflation. This kind of benefit should be extending it to all citizens by linking income tax exemption limit; and raising all the other deductions and exemptions amounts mentioned in various sections of Income Tax Act and Rules etc.
Petrol cut of Rs. 2 in excise is taken over but Cess levied on it. It seems for government petrol is only and major source of revenue from taxes and government is in no mood to reduce or pass it to citizens.
The levy of ten per cent tax on Long Term Capital Gain on dividend income of more than Rs. One Lakh is not good for the share market.
It is suggested to abolish Cess -merge it with basic tax rates for simplification.
Tax slabs are not changed. It would be better is there had been no change at all from last year -that would have kept happier the middleclass and all salaried tax payers. However, the Budget must have provided for lower rates of taxes, as it results in more number of transactions in white and black money is reduced and economic activities increases and our Gross Domestic Production (GDP) and revenue too increases. The maximum rates for all kinds of taxes should not be more than say 10% only. Necessaries of life like food and health items like medicines should be totally tax free at all levels.
Most damaging proviso of the Budget is loss of claiming deductions under provisions of Chapter VIA under the heading "C, if the return is not filed within the due date, indirectly exemption limit with deductions available till now is reduced drastically in the cases of filing a belated return. It will also encourage of not filing the returns by those who could not file within due date under section 139(1) and thus there shall be revenue loss to the government and forcing of non-compliance of income tax law by innocent citizens-making them unnecessarily tax law breakers.
In fact, earlier provision of Belated income tax returns for last two years must be reintroduced without any penalty to encourage filing of I. T. Returns if by mistake or other causes beyond an assessee control - who failed to file income tax return before due date. Also, government’s objective of filing maximum returns shall be achieved only if these amendments are carried out in this budget.
Friendly attitude is missing: The coercive attitude and administration of tax department has resulted in an increase of good number of new tax payers. Friendlier attitude towards tax payers especially senior citizens is most important since a good number of senior citizens having below taxable limits of income- as they are retired now -stopped filing their tax returns but continue to get queries / letters etc as to their tax matters through electronic mode, which they are just not aware of this technique. A simple letter in reply on paper must be accepted at the counters of tax department from not only senior citizens but all tax payers. In fact, all taxpayers must get an option to file / reply on paper mode or e- mode as they are comfortable / chose it. Those who have no internet / e -mail ID or mobiles must be allowed to file tax returns in paper mode only.
Senior citizens are taken care a little - as their exemptions in interest income of Rs 50,000 from Banks Fixed deposits/ term deposits; Rs 50,000 per annum exemption for medical insurance under Sec 80D; for critical illnesses will get deduction of Rs 1 lakh and Rs 15 lakhs (increased from Rs.7.5 Lakhs) per senior citizen limit for investment in interest-bearing LIC scheme are being provided for. They would get somewhat benefit from standard deduction as they are not affecting by withdrawal of transport allowance and reimbursement medical expenses, but inflation will set off their full such benefit.
The total exemption from tax deduction at sources (TDS) is still the need of the hour for all the senior citizens including businessmen/professionals as they keep it to remain busy for their peace and family peace!
Medium, Small and Micro Enterprises (MSMEs) - Corporate Tax of 25% extended to companies with turnover up to Rs 250 Crores is welcome.
Political Donations: Because the anonymity of donors is guaranteed in Electoral Bonds there is no transparency. In democracy people have a right to know the funds and its sources of political parties, which is missing here. Moreover, the cap on corporate donations is lifted by the government. Now interested business persons can make funding to any political party they like without any public scrutiny; it may lead to more corruption as in turn they can get direct or indirect benefits. It can increase in black money with corporate world which in turn can be utilized to shield it by paying huge donations legally to political parties for not initiating any legal recourse against them-an easy way of obliging an industrialist by a corrupt practice -made legal to get any amount of political funds and remain in power as money can buy election results that is a truth of today’s scenario.
For simplification abolish MAT in toto.
GST desired changes are nowhere seen in this budget.
The One-page Saral form for tax payers having no business income to file income tax return up to an income of Rs. 5 Lakhs must be extended to all tax payers. ITR Form 4 -Sugam for Presumptive income from business and profession must allow maximum tax slab of 30 % only, the present slab of 50% is too high. Small businessmen / professional does not have that high margin -though they can declare lesser percentage of profit but that needs additional tax audit to be carried out which is costly and not convenient. Moreover, the purpose of Presumptive income is defeated with this high 50% of margin / profit.
Pre-filled ITRs: It would be more convenient if all the information with income tax department about an assessee collected from various sources including AIR etc. -linked with PAN- is also made available in Form 26AS and automatically uploaded in the income tax “Pre-filled” forms at the time of e-filing, yes with the option to edit it, if assessee wish so-finds it wrong. And it would be much better if full of previous year I T return filed is being made available in - with those changes which are not relevant in the current assessment year is also made available in ‘Pre-filled’ form with of course editing facility to update and correct it. This facility would help the assessee to fill correct figures too as comparison with last year’s figures with editing would help in re-checking and confirmation for changes required this year. Such a facility would reduce burden of I T department to issue even scrutiny notices as an assessees would be more vigilant and fill correct information in their I T Returns.