JOIN USFinance Minister Arun Jaitley had promised reforms for the corporates, lowering of their tax rates and taking away some exemptions and this shall be the year, he will lay a roadmap for these changes.
Rationalise TDS rates
While holding back tax exemptions may be fiscal prudence, some issues have been plaguing our direct taxes and need some relook. One of the issues is the high TDS rates.
The Eshwar committee, which was set up to review our current tax code, has recommended that TDS rates be brought down to five per cent.
The second issue is many deductions and exemptions have been around since the 90s and have lost relevance. Children’s education allowance, hostel allowance and transport allowance have not kept up with the rising cost of living.
Medical reimbursements which are claimed through the employer have not been revised since long. It is time these allowances and exemptions are reviewed and updated. It is worthwhile to note that section 80C has not been revised for the past two years. The government will benefit from increasing this limit and adding some new savings product under this section with a medium term lock-in of 3-5 years. Raising this limit to Rs 2,00,000, will ease tax burden on the common man.
It is expected that the GST bill will be passed. This should be good news for businesses and hopefully, Arun Jaitley will bring Direct Tax Code (DTC) in focus. DTC was proposed to simplify the income tax act by the erstwhile government.
(The author is the Chief Editor at www.cleartax.in)