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Make life easier for honest taxpayers

Make life easier for honest taxpayers
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First Published: Sun, Feb 27 2011. 08 58 PM IST

Pre-budget talk: Manisha Natarajan (left) and Monika Halan hosting the Let’s Talk Money show. Photo Ankit Agrawal/Mint
Pre-budget talk: Manisha Natarajan (left) and Monika Halan hosting the Let’s Talk Money show. Photo Ankit Agrawal/Mint
Updated: Sun, Feb 27 2011. 08 58 PM IST
Mint, along with the Hindustan Times and NDTV, brings you a personal finance show called Let’s Talk Money. The weekly call-in show, anchored by Monika Halan, editor, Mint Money, and Manisha Natarajan, editor and senior anchor, special programmes, NDTV, aims to answer viewers’ questions about money-linked issues. This is an edited transcript of the show that was aired over the weekend on NDTV Profit and NDTV 24x7.
Pre-budget talk: Manisha Natarajan (left) and Monika Halan hosting the Let’s Talk Money show. Photo Ankit Agrawal/Mint
Natarajan: We bring you this pre-budget Let’s Talk Money special to get your voice across. I also have with me today Gagan Randev, chief executive officer, Religare Securities Ltd; Vivek Rege, managing director, VR Wealth Advisors Pvt. Ltd. Let’s go across and bring in our first caller:
J.S. Kumar, 45, Chennai
...I would love Pranab babu (finance minister Pranab Mukherjee) to take measures to decrease food inflation to single digit by March... increase growth (to) 8.5-9%, make income up to Rs2 lakh tax free; reduce short-term capital gains tax from current level... increase the total 80C/80D allocation from current Rs1.2 lakh to Rs1.6 lakh including infrastructure bonds, increase sales tax on tobacco and related (items) by 2-3%, give more impetus for infrastructure sectors and education as well as health, (and for) defence allocation not to be increased.
Natarajan: Okay, Rs1.6-2 lakh is a very valid demand, because it’s inflation linked. They shouldn’t be doing this in the budget, Monika, it should be automatic.
Halan: Yes, but budget is the only time when these announcements are made. There is a certain logic to that, possibly we will see that the threshold gets raised. We are moving towards DTC (direct taxes code) so there are some incremental steps towards that. I don’t think anyone will be surprised if here is a small tampering with the slabs, whatever has to happen is already there in the codebook of DTC—3% is fair enough.
We don’t know what we are doing with the taxes. There is a chunk of urban population which doesn’t mind paying taxes... If we can see governance and compliance, I don’t think there is any issue
Natarajan: I think Kumar also didn’t raise any question about the taxes which he pays. Yes deduction is fairly inflation linked, but, Vivek, let’s bring you in here. On tax from what would happen really, what can we rationally expect from direct taxes?
Rege: Yes Manisha, I think inflation has been a core issue on top of everyone’s mind and low income-group families are affected the most. I would expect threshold limit from Rs1.6 lakh to Rs2 lakh in case of men and in case of women Rs1.9 lakh to Rs2.3 lakh, and for senior citizens from Rs2.4 lakh to Rs2.8 lakh, because as a family unit if these threshold limits are increased, whatever money was put out of the pocket of the consumer will be put back and that will be of some respite to them and nullification of what happened because of inflation.
Randev: I think if you look at the runaway inflation, I would say Rs2 lakh is a reasonable number. But you know that’s not the only thing. There are many other areas which finance minister needs to look at... The limits were set years back. Today, (with) Rs1.5 lakh at an interest of 10%, can you buy a property in any of the metros with 25% of your contribution? It’s ridiculous, so there is a clear logic about that amount to be hiked to, I would say, Rs5 lakh, because that means that you can buy something meaningful in one of the towns that we live in, and it gives a rebate at the end of the day that you are buying your own property... Similarly, medical reimbursement, even a little medical treatment and medicines will cost you a lot in today’s scenario.
Udaysimha Shastry, 34, information technology professional
...Purely from a sincere taxpaying salaried professional’s perspective, I find that the process for managing my income tax is messy. Various different sections of various rebates and the associated documentation for the same (are required). I have found that these provisions also open up a lot of opportunities for corruption. I want the FM (finance minister) to simplify this process...
Halan: I think Udaysimha is referring to the way all the salaries are structured. There is a HRA (house rent allowance), there is medical, whether or not the tax system cleans it up. There are people who won’t mind the extra taxes paid and don’t mind doing the extra paper work, but for you it’s very simple. Just talk to your employer. I can’t give you bills... Just cut your 80C, beyond that tell them that just cut my tax... Isn’t that easier?
Kush Kochgaway, 36, multinational corporation employee, New Delhi
Salaried, middle class, honest citizens of our country have a very, very high burden of direct and indirect taxes. The rich business class gets away with it because of black money. Let’s take real estate, for example. Most real estate transactions happen in cash because stamp duty is extremely high. Most people are able to get away with it because of cash transaction, but salaried class like us pay a premium to do an all-white (money) deal and then also pay hefty service tax and stamp duty. So my request to Pranab babu is to make life easier for honest taxpaying citizens like us. Right now, we are paying for revenue loss to the treasury because of black money circulation.
Natarajan: I think Kush is making a very large point here. I am not sure whether it’s directly linked to taxes because we are not really a tax-paying nation.
Halan: I would take that point, Kush, and agree with you that honest people are feeling foolish. We feel stupid because dishonesty pays in this country... (But) You know we don’t really pay that much tax... (If you are) a person earning annual income of Rs10 lakh a year, the average tax that you pay is 9%. (For) Rs15 lakh, you are paying 18% tax. In total Central government receipts, personal income taxes are just 8% of that... Problem is what we have mentioned; it is such a sitter for a government to get to it
Natarjan: Look at the market, everybody is complaining about the market. There is no regulator, it’s staring in your face that there is so much black money in real estate and you are not dealing with it. Is it because there are politicians involved, or there are very rich people involved, or what is it?
Randev: You know this is something that I get very passionate about and you are absolutely right that time has come for a regulator on real estate side. We sit in Delhi, we see all these transactions happening. I myself went through a real estate deal last year and I can tell you that there are not more than 2% people who are ready to do a 100% check deal. So when you look at the circle rates, circle rates today are actually 25% of what the actual property transactions are happening there.
letstalkmoney@livemint.com
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First Published: Sun, Feb 27 2011. 08 58 PM IST
More Topics: Let | s Talk Money | Religare Securities | DTC | Taxes |