Tuesday, 17 January 2017

Budget 2017 - Expectations of the Salaried Class

Budget 2017 - Expectations of the Salaried Class

With the Union Budget 2017 just a couple of weeks away, there are expectations that the government will take some measures to help the common man, especially the salaried class, who has rallied behind the government's decision on demonetization despite suffering a lot post the note ban.

Experts are also of the view that the upcoming Budget 2017 should provide some tax gain for the common people to soothe at least the cash ban pain.

Otherwise also, "there are only a few tax concessions available to individual tax payers. Most of the current set of tax benefits like medical reimbursement, conveyance allowance etc., at the present level, do not offer any real economic benefit to the individual tax payers.

Instead they only add to the administrative burden for the employers as claims made by the employees have to be reviewed and processed by them," says Vikas Vasal, National Leader-Tax, Grant Thornton India LLP.

Thus, either these tax benefits should be substantially increased or they should be done away with and instead a special tax benefit like the erstwhile standard deduction be introduced. "This would simplify the tax law, reduce administrative burden and curtail unnecessary litigation associated with these tax concessions," suggests Vasal.

In view of the above, here's what to expect from the Budget 2017 for the salaried class:

1. Tax slab rates should be revised upwards

It is widely expected that there may be some upward revision in the income tax slabs to provide some relief to the common tax payers. What is making people more optimistic is the recent hint from Finance Minister Arun Jaitley himself that income tax slabs could further be increased, lowering the tax burden on taxpayers due to higher revenue being collected on account of cashless systems.

Some people are even expecting that the government should increase the current income tax exemption limit from Rs 2.5 lakh to Rs 4 lakh. However, the common expectation is that the exemption limit be raised from the current Rs 2.50 lakh per annum to Rs 3 lakh, while the subsequent slabs of 10 per cent, 20 per cent and 30 per cent should be applicable to annual income range of above Rs 3 lakh and up to Rs 10 lakh, above Rs 10 lakh and up to Rs 20 lakh and above Rs 20 lakh, respectively. If implemented, this will help alleviate the common man’s sufferings to some extent.

2. Reduction in tax rates

Salaried individuals are always at a loss when it comes to tax rates since they end up paying high amount of taxes when they fall into high salary brackets. Currently anyone who earns more than Rs. 10 lakh per annum pays 30% tax on the amount exceeding Rs. 10 lakh. Thus, he has to forgo a large portion of his income in taxes. Hence, apart from revision in tax slabs, change in tax rates would always be a welcome move.

"The IDS scheme of the government launched last year is expected to add a lot of tax revenues to the government coffers with almost Rs. 75,000 crore declared as black money. Considering a tax rate of 45%, almost Rs. 35,000 will be collected as taxes. These revenues are expected to help the government reduce the tax rates in the coming FY," informs Vaibhav Sankla, Director, H&R Block India.

3. Higher deduction for interest paid on housing loan

Housing and the real estate sector are facing a lot of hardship. The recent media reports indicate that sales have declined substantially and the sentiment is quite low. It is a fact that the real estate sector is one of the key growth engines for a developing economy like India.

It provides large-scale employment to unskilled and semi-skilled workers in the country, which is a need of the hour, to boost employment opportunities for a large scale population. This sector also impacts a few of the critical sectors like cement, steel, logistics etc., which in turn are important for the overall growth of the GDP.

Also, "keeping in view the government's agenda of providing housing for all, it is imperative that some tax concessions are provided in the Budget. One such option could be to increase the tax deduction for interest paid on housing loan from Rs 2 lakh to Rs 3 lakh. This will also provide an immediate boost to the banking services sector, which is flush with funds post demonetization and looking at avenues to lend money to the masses," says Vasal.

Some tax experts also believe that people having a single home need to be allowed to deduct the entire amount paid as interest on home loan. Vaibhav Sankla, for instance, says that currently the home loan interest deduction is capped at Rs. 2 lakh per annum for self-occupied house property and deduction of actual interest paid is allowed for a second home that is given on rent or is deemed rented.

However, "nowadays buying a second home is not very common owing to high property prices. In such cases, home owners possessing a single home need to be allowed to deduct the entire amount paid as interest on home loan. This would be a welcome relief for salaried individuals since they do not have much scope for tax saving and moreover this is an expense-based deduction," says Sankla.

4. Increase in deduction for insurance premium

The deduction under 80D is currently capped at Rs. 25,000 for self, spouse and dependent children. An additional deduction of Rs. 25,000 is available for parents and Rs. 30,000 if they are senior citizen parents. Hence the total deduction available under this section can go up to Rs. 55,000. A deduction for preventive medical expenses is also available up to Rs. 5,000 spent as a part of the overall deduction.

A deduction for the actual expenses made in this regard on medical insurance premiums will be a welcome move since insurance premiums are very high, especially when it comes to parents. The cap of Rs. 5,000 on preventive health check-up expenses should also be removed in budget 2017. It will help salaried individuals to save huge amounts in taxes.

5. Increase in deduction for education and childcare expenses

Childcare nowadays has become very expensive for parents, especially for those staying in metro cities. The maximum deduction for tuition fees permitted under Section 80C is Rs 1.5 lakh per financial year, with deductions eligible only for two children per assessee. Tuition fees generally constitute a very small portion of the entire education fees for the year. This deduction should be extended to other portions of the fees as well.

"Childcare in big cities also calls for daycare expenses, especially for working parents. The expenses many a time run into more than Rs 1-2 lakh per annum. These expenses should also form a part of deductions under Section 80C. This will provide another expense-based deduction to individuals and be a great move towards providing a deduction aimed at working parents," says Sankla.

6. Deduction for rent paid where no HRA is paid by the organization

Generally, organisations pay HRA to employees in order to ease the burden of rent and there is an exemption available under the tax laws on HRA. However, there are instances when organisations do not include HRA in the salary components.

When HRA is not paid by the organization, salaried individuals are being allowed a deduction of Rs. 5,000 per month under Section 80GG from FY2016-17. This deduction should be increased to at least Rs. 10,000 for metro cities. This is because rent for a decent accommodation in metro cities has risen to this level and there is a need to increase the deduction so that salaried individuals get the benefit of this deduction.

7. Standard Deduction

There are many deductions/ exemptions like medical reimbursement, conveyable allowance, meal allowances etc. Employees actually incur much more cost and obtain very little tax benefit. To highlight, a family of four members will incur on an average, say, Rs 50,000 plus on general medical ailments. And if the family has senior/ailing households, then this expenditure for general hospital/doctor visits and medicines may be much higher.

Therefore, there is need to take a re-look at all such benefits and increase them substantially in line with the current economic reality. Same is the case with other tax benefits like travel allowance etc. Keeping this in view, there is need for a special tax benefit like the erstwhile standard deduction to be introduced the budget 2017.

Source: FE

ATM Withdrawal increased to Rs.10000 per day per card - RBI Notification issued on 16.1.2017


ATM Withdrawal increased to Rs.10000 per day per card - RBI Notification issued on 16.1.2017

Enhancement of withdrawal limits from ATMs and Current Accounts
RBI/2016-17/213
DCM (Plg) No.2559/10.27.00/2016-17
January 16, 2017

The Chairman / Managing Director / Chief Executive Officer,
Public Sector Banks / Private Sector Banks / Foreign Banks /
Regional Rural Banks / Urban Co-operative Banks /
State Co-operative Banks/District Central Co-operative Banks

Dear Sir,

Enhancement of withdrawal limits from ATMs and Current Accounts


Please refer to our circulars DCM (Plg) No. 1274, 1317, 1437 and 2142/10.27.00/2016-17 dated November 14, 21 and 28 and December 30, 2016, respectively, on the above subject.

2. On a review of limits placed on withdrawals from ATMs and current accounts, it has been decided to enhance the same, with immediate effect as under:

(i) The limit on withdrawals from ATMs has been enhanced from the current limit of Rs. 4,500/- to Rs. 10,000/- per day per card (It will be operative within the existing overall weekly limit).

(ii) The limit on withdrawal from current accounts has been enhanced from the current limit of Rs. 50,000/- per week to Rs. 1,00,000/- per week and it extends to overdraft and cash credit accounts also.

3. There are no changes in the other conditions. The relaxations as provided in our circular dated November 28, 2016 will continue.

4. Please acknowledge receipt.

Yours faithfully,

sd/-
(P Vijaya Kumar)
Chief General Manager
Authority: www.rbi.org.in

Monday, 16 January 2017

PFRDA to organise National Pension System service fortnight from February 1

PFRDA to organise National Pension System service fortnight from February 1

"In order to ensure availability of information and ease problem, PFRDA and NSDL/CRA send various communications regularly to promote awareness regarding NPS.

The activities scheduled to be taken up during the fortnight (Feb 1-15), include updating subscriber details, printing of transaction statement for the subscribers, resolving grievances and addressing issues of pending exit/withdrawals under NPS.

PFRDA will organise a service fortnight from February 1 for building subscribers awareness and disseminate information regarding National Pension System (NPS) - the government's flagship pension programme. According to the Pension Fund and Regulatory Development Authority (PFRDA), subscribers and employees of the central and state governments are not fully aware about NPS which leads to a large number of queries and grievances.

"In order to ensure availability of information and ease problem, PFRDA and NSDL/CRA send various communications regularly to promote awareness regarding NPS.

"However, it has been observed that in absence of latest contact details in their NPS accounts, most of the subscribers are not receiving such communication," the regulator said.

Therefore, during the awareness fortnight at offices of central and state governments, besides sharing information, nodal offices and the subscribers will be apprised about the need of updating their personal data to enable the system to work effectively.

The activities scheduled to be taken up during the fortnight (Feb 1-15), include updating subscriber details, printing of transaction statement for the subscribers, resolving grievances and addressing issues of pending exit/withdrawals under NPS.

PFRDA said the central ministries and state governments will be required to encourage the subscribers attached to them for downloading mobile apps. The maximum number of downloads of the app will be awarded.

The regulator said that downloading of mobile app by the subscribers will considerably reduce the dependence on the nodal officers.

"This will result in saving time and efforts of the nodal officers," it said. As on November 30, 2016 there were about 1.4 crore subscribers under NPS with over Rs 1.61 lakh crore asset under management.

7th Pay Commission: Will BJP pay the price for not implementing 7CPC before Assembly polls?

7th Pay Commission: Will BJP pay the price for not implementing 7CPC before Assembly polls?

The state governments, especially those ruled by opposition parties, used the 7th Pay Commission recommendations as an effective tool to woo voters ahead of Assembly polls.

New Delhi, Jan 16: Prime Minister Narendra Modi led government approved the recommendations of the 7th Pay Commission in June last year. It’s been six months and the Modi government is yet implement the 7th Pay Commission recommendations. However the state governments, especially those ruled by opposition parties, used the 7th Pay Commission recommendations as an effective tool to woo voters ahead of Assembly polls. Uttar Pradesh Chief Minister Akhilesh Yadav and his Uttarakhand counterpart Harish Rawat outsmarted the Modi government on implementation of the 7th Pay Commission ahead of Assembly elections in their states. Will the BJP pay the price for not implementing the 7th Pay Commission before Assembly polls?

The Assembly Elections will be held in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur in the first quarter of the year. Of the five states, three - Uttar Pradesh, Uttarakhand and Goa - have announced they will implement the recommendations of the 7th Pay Commission. While Uttar Pradesh is governed by Samajwadi Party, Uttarakhand in under Congress rule. Bharatiya Janata Party (BJP) is in power in Goa.

When the demonetisation drive of Prime Minister Narendra Modi was making headlines in December last year, Chief Minister Harish Rawat led Uttarakhand government announced it will implement the 7th Pay Commission recommendations. Uttarakhand was the first to implement the 7th Pay Commission's recommendations. With the populist announcement, Harish Rawat hopes to fight anti-incumbency in the state.

Similarly, Uttar Pradesh CM Akhilesh Yadav announced implementation of the 7th Pay Commission on December 13 last year, months before the crucial Assembly polls. The implementation of the 7th Pay Commission is likely to benefit more than 21 lakh state government employees, teachers and pensioners. The move is being seen by many as an attempt to offer sops to the government employees ahead of the crucial state assembly polls in 2017.

Goa, where the ruling BJP is fighting with Congress and Aam Aadmi Party, also announced it will implement the 7th Pay Commission recommendations before the model code of conduct came into force on January 4.

With pay hike decision under the 7th Pay Commission, the parties holding power in poll-bound states are trying to influence about 28 lakh employees and pensioners, and their dependents during the upcoming polls. On the other hand, the Modi government lost this battle politically as the model code of has come into force. It means the Modi government cannot announce the implementation of the 7th Pay Commission before March 8, by when the assembly polls would be over and budget presented.

7th Pay Commission recommendations on CGHS - Govt orders will be effective from 1st February 2017 - Ministry of Health issues modification OM

7th Pay Commission recommendations on CGHS - Govt orders will be effective from 1st February 2017 - Ministry of Health issues modification OM

No. S.11011/11/2016- CGHS (P)/EHS
Government of India
Ministry of Health and Family Welfare
EHS Section
Nirman Bhawan, New Delhi
Dated the 13th January, 2017
OFFICE MEMORANDUM

Sub: Revision of rates of subscription under Central Government Health Scheme due to revision of pay and allowances of Central Government employees and revision of pension/ family pension on account of implementation of recommendations of the Seventh Central Pay Commission.

In partial modification to this Ministry's OM of even No. dated 9th January, 2017 on the subject mentioned above, the undersigned is directed to say that the revised rates will be effective from 1st February 2017 instead of 1st January, 2017.

2. Other contents of the above said OM will remain unchanged.
(Sunil Kumar Gupta)
Under Secretary to the Government of india

Download Office Memorandum No. S .11011/11/2016- CGHS (P)/EHS dated 13.01.2017 issued by Ministry of Health and Family Welfare

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