A news item published in tkbsen.in said that central government may implement 7th pay commission recommendation from April 2016.  Recently,The  Finance Minister in his pre budget speech has said  “The 7th Pay Commission impact may have to be absorbed in 2016-17.” This is for the reason the Sen Times feels,the 7th CPC report may be implemented from April 2016. The news item is posted below..

“……The Seventh Pay Commission drafted in to make a new pay structure for the 30 lakh Central government employees would not be able to submit its report in August this year, the Commission is likely to seek extension till October.

The reports of Seventh Pay Commission will be implicated from April next year as Finance Minister Arun Jaitley said in the Parliament on February 27, “The 7th Pay Commission impact may have to be absorbed in 2016-17.”

Finance Minister Arun Jaitley said above statement in his pre-budget speech. His statement indicates that the government may implement Seventh Pay Commission report from April 2016.

The UPA government formed the Seventh Pay Commission on 28 February 2014 under chairman justice Ashok Kumar Mathur with a timeline of 18 months to make its recommendations. According to present position, the commission will take at least 20-24 months.

However, the Sixth Pay Commission had submitted its report within 18 months.

As a result of the recommendations of the Sixth Pay Commission, pay and allowances of the central government employees more than doubled as per Fourteenth Finance Commission estimates.

As such, the central government employees are expected to get 100 percent salary hike under the recommendations of the Seventh Pay Commission.

Issues like inflation, the government’s financial position and salary structure of government employees in other countries would also be considered as parts of pay panel recommendations.

The Fourteenth Finance Commission asked the pay panel to link the pay with productivity, which will be the biggest hurdle for central government employees to be got over to get salary hike.

It is interesting to note that the earlier governments never accepted to link the pay with productivity.

Source: The Sen Times

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The rates for deduction of income-tax at source from “Salaries” during the financial year 2015-2016 and also for computation of “advance tax” payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the financial year 2015-2016 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during the financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration, etc.
The salient features of the rates specified in the said Part III are indicated in the following paragraph—

A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person. Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:-

(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act (not being a case to which any other Paragraph of Part III applies) are as under:—

Upto Rs.2,50,000 Nil.
Rs. 2,50,001 to Rs. 5,00,000 10 per cent.
Rs. 5,00,001 to Rs. 10,00,000 20 per cent.
Above Rs. 10,00,000 30 per cent.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—

Upto Rs.3,00,000 Nil.
Rs. 3,00,001 to Rs. 5,00,000 10 per cent.
Rs. 5,00,001 to Rs.10,00,000 20 per cent.
Above Rs. 10,00,000 30 per cent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at anytime during the previous year,—

Upto Rs. 5,00,000 Nil.
Rs. 5,00,001 to Rs. 10,00,000 20 per cent.
Above Rs. 10,00,000 30 per cent.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge at the rate of twelve percent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Source: http://indiabudget.nic.in/ub2015-16/memo/mem1.pdf

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Read at: http://www.livemint.com

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The Budget is also gravely silent on fund allocations for the Seventh Pay Commission award, due for implementation in 2016.  The budgetary documents are stressing upon likely burden from the report of the 7th Pay Commission.  However the funds are allocated for Commission’ss establishment.  The extract of budgetry documents which are related to 7th CPC are mentioned below:-

Speech of Finance Minister – Heading Fiscal Roadmap para 23:-

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CONFEDERATION OF CENTRAL GOVT. EMPLOYEES & WORKERS
1st Floor, North Avenue PO Building, New Delhi – 110001
Website: www.confederationhq.blogspot.com
Email: confederationhq@gmail.com

President
K. K. N. Kutty
09811048303

Secretary General
M. Krishnan
09447068125

Dated: 28th Feb. 2015.

PRESS STATEMENT – Budget 2015-16.

The Budget of Modi Government for the year 2015-16 presented today to the Parliament by the Finance Minister, Shri. Arun Jaitley belied all expectations of the poor people who placed their faith in the BJP in the last general elections. It is without doubt an anti-poor and pro-rich Budget. The Corporate Tax has been slashed to please the giant multinational Corporate houses, who really are the rulers in most of the Countries of the world, including ours. The Government has foregone about 8300 crores of direct tax revenue. The burden has been put on to the shoulders of the common working people in the form of indirect taxes to the extent of more than 23000 crores mostly coming from the increased service tax kitty.

Except raising the transport allowance exemption from Rs. 800 to Rs. 1600 p.m which only benefits the higher segment of tax payers among the salaried class, no concession or tax reduction has been given to the wage earners.

By not raising the non-taxable maximum which was needed in view of the high level of inflation, Modi Government has not only squeezed the middle class but also amassed more tax revenue from those class of wage earners, who get dearness compensation. In the process Government continue to ignore several judgements to exempt DA from taxation as DA is considered as a receipt, compensatory in nature. The salaried class of tax payers was constantly demanding the re- introduction of deduction under section 16(1) of the I.T. Act which was in vogue years back. While retaining such concessession and deduction to all other segment of tax payers, the Government continue to penalise wage earners who are really the honest tax payers.

Allocation for every social welfare schemes which targets the deprived section of the society has been reduced in percentage terms, the largest reduction being in the ICDS programme. The tax concessions to the rich and corporate houses are of the order of 5.89 lakh crores. This apart, the wealth tax has been fully abolished.

The Budget 2015-16 has unambiguously declared the intention of the Modi Government to pursue the neo- liberal economic policies vigorously.

K.K.N.Kutty
President.

Posted by Confederation Of Central Government Employees

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A survey carried out by industry body Assocham has found that a majority of salaried employees want Finance Minister Arun Jaitley to increase the income tax exemption in the forthcoming Budget.

A hike in income tax exemption from Rs. 2.5 lakh to Rs. 3 lakh will lead to savings of up to Rs. 5,000 for those who fall in the Rs. 2.5 lakh to Rs. 5 lakh tax bracket. Those in the Rs. 5 lakh to Rs. 10 lakh tax bracket will save up to Rs. 10,000, while those in the highest tax bracket can save up to Rs. 15,000.

Any increase in exemption in income tax would leave more money in the hands of people and will increase their purchasing power, Assocham said.

If Mr Jaitley hikes income tax exemption limit, it will be for the second time in two years that salaried employees will get a relief on taxes.

The other big expectation is about exemption on housing loans. 78 per cent of those surveyed want interest exemption on home loans to go up to Rs. 5 lakh from Rs. 2 lakh.

Property prices in the country have gone up sharply over the years and many individuals have to pay large amounts as interest for home loans. Exemption on interest on home loan was hiked by Rs. 50,000 to Rs. 2 lakh in the previous Budget.

A large number of respondents in the survey also voted for hiking exemption limit under section 80C of the Income Tax Act; the section makes investments worth Rs. 1.5 lakh on saving instruments such as fixed deposits, national saving certificates and public provident funds exempt from taxes.

“Hike in exemption limits will boost the savings rate in the Indian economy to 35 per cent of GDP from below 30 per cent currently,” said Assocham secretary general D S Rawat.

88 per cent of respondents want the government to reduce the record-high duty on gold import. Import duty on gold was hiked to 10 per cent in 2013 when the economy was struggling with a high current account deficit and volatile rupee.

Nearly 82 per cent of the salaried class expects a separate deduction of Rs. 50,000 for the payment towards annuity or pension plans. Deduction of the amount paid towards annuity plans u/s 80CCC and NPS u/s 80CCD come under the threshold limit of section 80C currently.

Around 55 per cent of the survey respondents were between 25 and 29 year-old; 26 per cent fell between 30 and 39 years; 16 per cent were between 40 and 49 years. The survey was carried out among employees from 18 broad sectors, with maximum share contributed by employees from IT/ITes sector (17 per cent). It was conducted across Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh, Dehradun, etc. About 500 salaried employees from the different sectors were covered by the survey from each city on an average.

Read at NDTV

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Budget 2015 may be yet another one, but financial comfort and rising hopes on growing Indian Economy, may provide room for the finance minister Mr. Arun Jaitley to announce more exemptions or reliefs in the income tax front in this Budget. More than additional exemptions these measures can be called as updating of Income Tax Exemption limit for various allowances which were fixed very long ago which unrealistic to present date.

Budget 2015 Wish List of Salaried Employees on Income Tax :

Basic Income Tax Exemption Limit :

Increase of Basic Income Tax Exemption Limit to Rs. 3 lakhs to meet out inflationary Trend.

Transport Allowance:

Transport Allowance is exempted to an extent of Rs. 800 per month. However, the lowest amount of Transport Allowance of Rs. 400 (plus dearness allowance) received by the employees in the Group C and MTS cadres itself is taxable. So there is a very high need for increasing exemption limit for Transport Allowance payable Government Employees.

Children Education Allowance:

Children Education Allowance is the other allowance, which is exempted to an extent of Rs. 100 per month. Of course this exemption limit was decided more than a decade ago when tuition fees of Rs. 100 was reimbursed to Central Government Employees. On implementation of sixth Pay commission recommendations, Children Education Allowance has been raised to Rs. 1000 and incremented when DA crosses 50% each time. So, there is no point in keeping the slab on IT Exemption for CEA at this low level. It is widely expected that Childen Education Allowance is to be fully exempted from Income Tax.

Medical Reimbursement by Employer:

The present Exemption Limit of Rs.15,000 as far as medical reimbursement is concerned provided by an employer needs to revised to Rs. 50,000 considering the cost of medical treatment presently.

Health Insurance premium under Section 80 D:

Salaried Employees also expect an increase of exemption limit for Health Insurance Premium paid to Rs. 50, 000 from the current level of Rs. 35,000 (Rs. 15,000 for family and Rs. 20,000 to Parents)

Re-Introduction of Standard Deduction:

As of now, Salaried Employees are treated at part with Tax Payers who are self employed and doing business of their own, as far as Income Tax is concerned. But this was not the case 10 years ago (until 2004-05). Just like Self Employed and Business related tax payers enjoy deduction of expenses made from the income, a fixed amount was exempted from total income of Salaried Employees which was termed as Standard Deduction. One of the expectations of Salaried Employees now is re-introduction of Standard Deduction for their income tax assessment.

Exemption Limit of Rs. 1.5 lakh for Savings under Section 80 C:

Also, Salaried Employees feel that Exemption of Rs. 1.5 lakh available for Savings and Insurance Insruments as wells as retirement plans is too low considering the number of investments allowed to be exempted under this category. It is expected that this Exemption limit has to be increased to Rs. 2 lakh at least.

Exemption limit on Rent Paid when no HRA is received :

Further, Rent paid by an individual is exempted now to an extent of Rs. 2000 per month if no House Rent Allowance is received. This limit was fixed in the year 1998. Needless to say house rent cost has increased enormously since 1998. So, this exemption limit needs immediate revision to match the current rental cost.

Source: moneycontrol.com

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It is learnt that Finance Ministry is considering to put up a proposal for discontinuing Exemption of Rs. 1.5 lakh presently available under Section 80C for Savings and Insurnace such as premium paid, investment in NSS, Mutual funds, Pension funds etc. Alternatively, the basic income tax exemption limit of Rs. 2.5 lakh would be raised to Rs. 4 lakh. Reasons behind such a bold move by Finance Ministry as per sources are:

1. Income Tax Department could not verify whether the Investments declared to be have been made to avail exemption under Section 80 C were actually made

2. To make Income Tax Law simple by raising basic Income Tax Exemption Limit and avoid complexities involved in providing Income Tax Exemption to promote savings.

As per Finance Ministry proposals, the current system allows individuals to avail of the Section 80C benefit without having made the required investments.

Most of the tax returns by individuals are processed by what is called a ‘summary assessment’, under which an adjustment in the reported income is made only in cases of arithmetic error or of a wrong claim that is apparent from the return filed. Officials do not ask questions or insist on proof of investment while processing returns. Only in cases of ‘scrutiny assessment’ and ‘assessment of income that has earlier escaped assessment’, which are done in very few cases, more information or evidence is sought to ensure that the reported income is correct.

Even in the case of salaried individuals, where the employer may insist on proof of investments, the tax authorities do not. Besides, if a salaried individual wrongly claims in his return that Section 80C investments have been made, the TDS by the employer and paid to the department is refunded by the tax authorities without asking any questions. In the case of self-employed, there is no check either by the employer or the taxman.
So the ministry feels that any individual who is actually interested in saving would anyway do it and there is really no need to incentivise the same through the tax policy.

Savings entitled to tax benefit under Section 80C include payments towards life insurance, deferred annuity, provident funds, National Savings Certificates, unit-linked investment plans of LIC Mutual Fund, pension funds set up by mutual funds, equity-linked savings plans, deposits with National Housing Bank and tuition free paid for education of children.

Source: Financial Express

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