The exemption of Rs 10,000 interest from a savings bank account is a pragmatic move that takes into account ground realities. However, there are several other exemptions that should have been reviewed but found no mention in the budget.
For instance, there is an education allowance of Rs 100 per month per child. As any urban parent will tell you, this is not even 10% of what he actually spends on his child's education. While the government has gradually increased the education allowance for its employees over the years (it is Rs 15,000 a year per child), the tax exemption limit has not been revised since the 1980s.
We suggest this should be raised to Rs 10,000 a year to make it more meaningful. Then there is the tax-freetransport allowance of Rs 800 a month. Auto fares in most urban centres hover around Rs 6-8 per kilometre. If a person travels 8 km to work and back in a day, he will spend more than Rs 100 a day. The tax-free limit will be exhausted in just eight working days. We suggest this limit be raised to at least Rs 3,000 a month.
If a person is living on rent, but does not get a house rent allowance as part of his income, he can still claim deduction under Section 80GG. The least of the following can be claimed as deduction-rent paid, less 10% of the total income; 25% of total income; or Rs 2,000 a month.
However, the last condition means that nobody can claim a deduction of more than Rs 2,000 a month. This is a ridiculously low amount because rents have gone up considerably in the past decade. This should be raised to at least Rs 10,000 a month. To avoid tax leakages, the government can make it mandatory for the taxpayer to mention the PAN of the landlord while claiming the deduction.
Similarly, the exemption for a minor child's income should be revised from the current Rs 1,500 a year to about Rs 5,000 a year for it to make a significant difference.
For instance, there is an education allowance of Rs 100 per month per child. As any urban parent will tell you, this is not even 10% of what he actually spends on his child's education. While the government has gradually increased the education allowance for its employees over the years (it is Rs 15,000 a year per child), the tax exemption limit has not been revised since the 1980s.
We suggest this should be raised to Rs 10,000 a year to make it more meaningful. Then there is the tax-freetransport allowance of Rs 800 a month. Auto fares in most urban centres hover around Rs 6-8 per kilometre. If a person travels 8 km to work and back in a day, he will spend more than Rs 100 a day. The tax-free limit will be exhausted in just eight working days. We suggest this limit be raised to at least Rs 3,000 a month.
If a person is living on rent, but does not get a house rent allowance as part of his income, he can still claim deduction under Section 80GG. The least of the following can be claimed as deduction-rent paid, less 10% of the total income; 25% of total income; or Rs 2,000 a month.
However, the last condition means that nobody can claim a deduction of more than Rs 2,000 a month. This is a ridiculously low amount because rents have gone up considerably in the past decade. This should be raised to at least Rs 10,000 a month. To avoid tax leakages, the government can make it mandatory for the taxpayer to mention the PAN of the landlord while claiming the deduction.
Similarly, the exemption for a minor child's income should be revised from the current Rs 1,500 a year to about Rs 5,000 a year for it to make a significant difference.
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