The existing income tax rule is characterized by an absence of distributive justice. The salaried employees incur expenditures so standard deduction should be restored. The basic exemption limit has to be increased proportionate to the increase in cost of living index or the dearness allowance has to be exempted from income tax. The Dearness Allowance is paid to the employees to compensate the erosion in the real value of their salaries resulting from price hike. The concept of dearness allowance is linked to cost of living index on the principle that whenever there is a price rise over the base period, the employees have to be protected against erosion in their earnings. Considering this as taxable income cannot be justified.The upper limit of 80C exemption needs to be increased to three lakhs and exemption on investment on infrastructure bonds should be 1 Lakh. 80L deduction also should be restored at least for senior and retired citizens or a blanket exemption has to be provided for interest on investments like bank FDs. The existing upper cap of Rs. 2.40 lakhs for exemption on income by way of leave encashment at the time of retirement also to be enhanced.
Tuesday, February 15, 2011
K.V.Aravindakshan, Manager (Internal Audit), The Keala Minerals and Metals Ltd
The existing income tax rule is characterized by an absence of distributive justice. The salaried employees incur expenditures so standard deduction should be restored. The basic exemption limit has to be increased proportionate to the increase in cost of living index or the dearness allowance has to be exempted from income tax. The Dearness Allowance is paid to the employees to compensate the erosion in the real value of their salaries resulting from price hike. The concept of dearness allowance is linked to cost of living index on the principle that whenever there is a price rise over the base period, the employees have to be protected against erosion in their earnings. Considering this as taxable income cannot be justified.The upper limit of 80C exemption needs to be increased to three lakhs and exemption on investment on infrastructure bonds should be 1 Lakh. 80L deduction also should be restored at least for senior and retired citizens or a blanket exemption has to be provided for interest on investments like bank FDs. The existing upper cap of Rs. 2.40 lakhs for exemption on income by way of leave encashment at the time of retirement also to be enhanced.
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