Union Budget 2022: The one-size-fits-all section 80C deduction for a range of savings and investments remains untouched
Representational image. Reuters
Budget 2022-23 speech of the finance minister was to say the least jaw-dropping for the honest taxpayers except perhaps the one that denies wiggle room for those caught with their pants down in an Income Tax raid — income unearthed on such raids cannot be neutralized either fully or partially by the brought forward losses. This is at best a weak consolation prize for the honest taxpayer — there is nothing for you but be happy that the dishonest fellow has been penalized!
People generally gloat over others’ discomfiture but not in tax matters.
As it is, one can file a revised return to correct honest mistakes in the original return filed by the due date. This can be done within one year from the end of the assessment year unless the assessment of the original return is already over. Now as per the Finance Bill 2022, even dishonest mistakes, as it were, can be corrected before two years from end of the assessment year by filing an ‘updated return’ on payment of additional tax. This is of a piece with amnesty schemes that swore by last-time-to-return-to-the-path-of-rectitude rhetoric.
The finance minister hopes to buy peace and harmony with the taxpayers through this seeming munificence but time alone will tell if the hope was misplaced. Amnesty schemes in the past have bombed spectacularly.
No incentives for honest taxpayers
Prime Minister Narendra Modi long ago promised incentives for honest taxpayers but they have proved to be just effusive appreciation made in the spur of the moment. Nothing more. And to add insult to their injury, the grotesquely shocking regime of allowing 100 per cent deduction to individuals of donations to recognized political parties continues without let or hindrance. This is the worst kind of conceivable leg up for dubious one-man political parties.
The one-size-fits-all section 80C deduction for a range of savings and investments remains untouched. The overall cap remains at an abysmal level of Rs 1.50 lakh which is eaten up by an employee’s contribution to provident fund in vast majority of cases thus throwing cold water on his savings/investment impulses.
Nothing for senior citizens by way of insurance, loan schemes
There is nothing in it for senior citizens for whom life insurance, EMI on home loans etc. are all meaningless. He craves a regime sympathetic to his geriatric needs — heightened medical bills especially on tablets and insulin to hold at bay if not ward off lifestyle diseases.
Green bonds-devil is in the details
Issuance of green bonds as announced by the finance minister in her budget speech is fine though the devil as always would be in details but she could have revived infrastructure bonds that would have been win-win. The government could have garnered funds for its heightened capex program and the taxpayers would have reduced their tax bills by serving a national cause. Heavens would not have fallen had an additional Rs 1 lac deduction been allowed on this score.
Reliance on GST continues
No steps have been taken to right the skew in favour of indirect taxes as evidenced by the continued reliance on GST and fuel taxes to finance government programs and welfare schemes. Indirect taxes are regressive in the sense they don’t discriminate between the rich and the poor.
They turn Robin Hood taxation on its head.
That is why there was a case for taxing the capital gains from bourses at par with salary and other income in addition to reviving wealth tax and estate duty on the super-rich.
Day trading which is increasingly enticing the middle class despite its attendant risks should have been discouraged with a 30 per cent tax at par with tax on windfalls like lottery and winnings from TV contests.
The finance minister strangely has either chosen not to rock the boat or has run out of ideas. The least she could have done was to increase the tax-free threshold from the pitiful Rs 2.50 lakh (fixed in 2015) to Rs 3 lakh while stepping it up for senior citizens from Rs 3 lakh to Rs 3.5 lakh.
The writer is a senior columnist
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