`Aam Aadmi`s budget wish list: Assocham Survey
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Raise the exemption limit, reduce tax rates, raise medical reimbursements, more in-hand savings, more employment and investment opportunities are some of the wishes an `Aam Aadmi` expects from the Finance Minster in the forthcoming budget for the financial year 2012-13, reveals the Assocham survey.
The Associated Chamber of Commerce and Industry of India (Assocham) interacted with about 500 employees from different sectors in cities of Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh and Dehradun.
Over 89% of the respondent said that the slab of tax free income has not moved up in line with real inflation. The current basic exemption limit of Rs 1.80 lakhs should be increased to Rs 3 lakh as it will spike up the purchasing power of individuals and stimulate demand.
About half of the respondents were in the age bracket of 25-29 years, followed by 30-39 years (25%), 40-49 years (15%), 50-59 years (10%).
The survey was able to target employees from 18 broad sectors, with maximum share contributed by employees from IT/ITes sector (17%). After IT/ITeS sector, contribution of the survey respondents from financial services is 11%. Employees working in engineering and telecom sector contributed 9% and 8% respectively in the questionnaire.
Nearly 6% of the employees belonged from market research/KPO and media background each. Management, FMCG and Infrastructure sector employees share is 5% each, in the total survey. Respondents from power and real estate sector contributed 4% each. Employees from education and food & beverage provided a share of 3% each. Advertising, manufacturing and textiles employees offered a share of 2% each in the survey results.
Reduce the maximum marginal tax rate; the maximum marginal income tax rate for individuals is 30%, which is on the higher side compared with other countries, said nearly 82% of the respondent.
However, the government could consider a reduction in peak rate from the current 30% to 25%. Further, the peak rate should be attracted at a higher income slab of Rs. 10 lakh (as compared to the current limit of Rs 8 lakh).
About 72% of the respondents said the standard deduction for salaried employees should be revived. Standard deduction is not a personal allowance but was earlier given as a lump sum for meeting employment-related expenses such as on conveyance, books, and so on. Salaried employees should not be deprived of standard deduction from their salaries when professionals/businessmen are eligible for deduction of expenses incurred for earning their income.
With increasing healthcare costs, the existing tax free limit of Rs. 15,000 should be increased to Rs. 50,000, the same also needs to be considered in the Budget, said majority of the respondents.
The transportation allowance granted by the employer to his employee for commuting between the place of work and residence is tax-free to the extent of Rs. 800 per month. This limit was fixed more than a decade ago, and definitely needs to be revised upwards to at least Rs. 3,000 per month, given the rising commuting costs across the country.
Additional benefits related to housing, an individual is permitted deduction for interest on loan for a self-occupied property only up to Rs. 1.50 lakh. This limit has not been revised for a long time while property prices have increased manifold.
The government should consider increasing this limit to Rs three lakh. This would have a twofold impact of not only reducing the taxable income of an individual but also boosting demand for the housing sector, added majority of the respondents.
Over 72% of the respondents said the government should also increase the aggregate deductible limit of Rs 1 lakh to Rs 3 lakh as the same would encourage long term saving by tax payers and enhance availability of low cost funds for the government to meet its long term development needs.
Investments in infrastructure bonds are currently allowed as a deduction up to Rs. 20,000. These bonds have proved to be quite popular and the limit should be increased to Rs. 50,000, considering that government needs massive funds for the development of infrastructure sector and also the lock period be reduced to three years, added the respondents.