Raising of exemption limit for Income Tax and exemption of all allowances from Income Tax: NC JCM writes to Finance Minister
Raising
of exemption limit of Income Tax to Rs. 5 lakh for Individuals, Rs. 7
lakh for Senior Citizens above 60 years and Rs. 10 lakh for the very old
and exemption of all allowances from Income Tax – Com. Shiva Gopal
Mishra Secy/NC JCM writes to Finance Minister for including this demand
into Union Budget
Shiva Gopal Mishra
Secretary
National Council (Staff Side)
Joint Consultative Machinery
for Central Government Employee
13-C, Ferozshah Road, New Delhi - 110001
No.Nc-JCM/2014/IT
Dated: June 9, 2014
Shri Arun Jaitley,
Hon’ble Minister of Finance,
Ministry of Finance,
North Block, New Delhi
Resp. Sir,
Sub:
Raising of exemption limit for Income Tax and exemption of all allowances from Income TaxExemption
limit from Income Tax is very low and neither realistic nor justified.
It is not linked with Inflation nor is it appropriately revised every
year.
Fixing of exemption limit for Income Tax is done
arbitrarily. No systematic norms are followed while fixing the same.
There is no transparency about the norms or policy adopted for fixing
the Exemption limit for Income Tax.
Low ceiling of exemption is one of the root cause of build up of huge amounts of Black Money.
It
is also a major impediment in the growth and development of the
National economy as the spending by the common man gets restricted due
to the low ceiling of Income Tax. This, according to experts, adversely
affects the National Development as a whole.
Taxing of Dearness
Allowance, House Rent Allowance and Transport Allowance etc., erodes the
real income of the Salaried Class, as these Allowances are compensatory
in nature and as such should be exempted from Income Tax, as
recommended by the Fifth Central Pay Commission(vide Chapter 167 of
their Report).
Taxing of Pension of Senior Citizens, especially
Additional Pension of the very old Senior Citizens, is totally
unjustified, and as such should be exempted from Income Tax, as
recommended by the Fifth Central Pay Commission.
It is, therefore, requested that:-
(i)
Exemption limit for Income Tax be raised to Rs. 5 lakh for Individuals,
Rs. 7 lakh for Senior Citizens above 60 years and Rs. 10 lakh for the
very old - above 80 years of age.
(ii) All the allowances, i.e.
Dearness Allowance/Dearness Relief, HRA and Transport Allowance, may
please be exempted from the Income Tax to avoid erosion of real wages as
recommended by the Fifth Pay Commission vide Chapter 167 of their
Report and Para 95 of Summary of Recommendations (Please see excerpts of
Fifth CPC Report attached herewith as Annexure).
(iii) Fixed
Medical Allowance to Pensioners may please be exempted from Income Tax
as it is reimbursement of the expenses for day-to-day medical treatment.
Yours faithfully,
Sd/-
(Shiva Gopal Mishra)
Secretary(Staff Side)
NC/JCM
Encl: Excerpts of the recommendations of Fifth CPC
Copy to: All Constituent Organizations of the National Council, JCM(Staff Side) - for information.
ANNEXURE
EXCERPTS FROM THE REPORT OF FIFTH PAY COMMISSION REG. EXEMPTION OF ALL ALLOWANCES FROM INCOME TAX
The Fifth Pay Commission vide Chapter 167 & Para 95 of Summary of Recommendation had recommended as under:-
“Para
95 The Commission has felt that the salaries and pensions recommended
by it are not really adequate if they are to be fully taxed.
Accordingly, it has recommended that all Allowances and Pensions should
be paid Net of Taxes”.
The Fifth CPC in Para 167.7 had observed as under:-
‘‘If
such Allowances are taxed, then either the Basic Salary gets eroded in
its real value from Year to Year or the partial Reimbursement of
Expenditure incurred on certain items becomes less and less with the
passage of time. In both the cases, the objective of giving Allowances
is partially nullified”.The Fifth CPC further observed in Para 167.8 that -“We
have observed that Ministry of External Affairs pays ‘Net of Tax’
Salaries to its employees on Foreign Posting. Provision for paying Net
of Tax Salary already exists Under Sec.195A of the Income Tax Act. Under
the Section, employees do not have to pay Income Tax on the salaries
received by them and it is the liability of the employer to pay the same
to the Income Tax Department.”
“The solution to the problem of
the Central Government Employees in general lies in the application of
this legal provision” (Fifth CPC - Para 167.9).
Source: http://ncjcmstaffside.com/2014/raising-of-exemption-limit-of-income-tax-exemption-of-all-allowances-from-income-tax/