After the budget
speech of Finance Minister, Media is trying to highlight the magic tax saving
figure of Rs. 4,44,200 available to the tax payers. It seems like a paid
advertisement, as the government offered nothing to the common man through its
budget. Instead of giving any relief, service tax rate is increased, which will
result in increase in prices of many consumables and services like mobile phone,
Internet etc. Further to give bonus to the Aam Aadmi, increase in Petrol and
Diesel prices are also declared.
Those who highlight
the magic tax saving figure of Rs. 4,44,200 might not have tried to
analyse whether this tax saving option is practically useful to the normal tax
payers or not.
What is this magic
tax saving figure of Rs. 4,44,200/-?
This figure is the
sum of the following tax saving options.
1. Rs. 1,50,000/- for Investment under section 80-C
2. Rs. 50,000/- as contribution for NPS under 80CCD
3. Rs. 2,00,000/- allowed as deduction against interest paid for self-occupied
house property. (Union Budget Joke of the year)
4. Rs. 25,000/- as medical insurance under Section 80D
5. Rs. 19,200/- per year against transport allowance
Now we have reached the magic figure and saved tax against Rs. 4,44,200/-
Let us analyse whether these options are useful to ordinary Indians or Aliens
1. Rs. 1,50,000/-
investment under Section 80-C
My experience in the taxation field shows that, for most of the tax payers,
it is very difficult to save Rs. 1,00,000/- under 80-C. More than 50% of the
employees do not have even minimum balance in their bank accounts. So how can
they save Rs. 1,50,000/- under 80-C. Since this figure is as per the last budget
there is nothing to explain more.
2. Rs. 50,000/- as contribution to NPS under 80CCD
This deduction is available against contribution to notified pension schemes.
Maximum amount allowed under this Section is 10% of salary +Dearness allowance
for salaried employees
In case of non salaried employees 10% of gross total income
This option is also beyond imagination for ordinary employees, unless they do
not have a fat salary package. This option may be useful for employees of few
MNC and Indian Companies, but not useful for major portion of tax payers.
3. Rs. 2,00,000/-
allowed as deduction for interest paid on self occupied house property.
This is the big joke
in Indian budget 2015. How many employees has the capacity to pay interest upto
Rs. 200,000/- for a self occupied property?. If the interest amount is upto Rs.
2 lacs, the loan amount will be in Crores and the monthly installment amount
will be in lacs. This option is not useful for ordinary employees and only
beneficial for the rich.
4. Rs. 25,000/-
against medical Insurance Section 80D
In my practical
experience most of the tax payers are paying Medical insurance premium below
15,000/- as this is non recoverable yearly expense. This option is useful only
for high income earning people and not affordable to an ordinary employee.
Instead of offering all these sops the government should think about providing
social security to the citizens. After all our finance ministers are most
intelligent in the world in imposing new taxes.
5. Rs. 19,200/- per against Transport Allowance
for deduction against transport allowance is Rs. 9600/- per year. Now this
amount is increased to Rs. 19,200/- per year. This is the only option useful
for ordinary tax payers for tax saving as per the Union Budget 2015. But the
tax payer will be compelled to spend this amount automatically to meet increased
transportation expenses, as the government is keen to increase petrol and diesel
prices according to the increase in crude oil prices, but not bothered to
decrease prices when crude oil prices come down.
In nutshell there is nothing to celebrate about this magic figure of Rs.
4,44,200/-. Media should do their work politely, instead of advertising for the
What is Baba ji
Perk? Why Media is silent?
Baba ji perk is the
exemption against income from yoga training defined under section 2(5) of Income
Tax Act. Definitely this is an additional perk to Baba ji after getting Z+ level
security at tax payers cost.
Another joke is the
government plan for construction of only 50000 toilets. When they have thousands
of Crores of money for construction of statues, why this figure is only 50000
Wealth tax abolition is also a good decision, because many of the politicians
are with multiple Crores of wealth and they deserve it.
Dear ordinary tax
payers, chill, we deserve it, because we believe in preachers.
With due respect