Dheeraj Jandial
Hamaravatan, khilte hue Shalimar Baghjaisa
Hamaravatan, Daljheel main khilte hue kamal jaisa
Nau jawanon ke garam khoon jaisa
Mera vatan,teravat an, hamara vatan Duniya ka sab se pyaara vatan
Quoting Dina NathKaul’s poetry in her Budget speech was not just a conjecture but a crafted presentation by them Union Finance Minister Ms. Nirmala Sitharaman to reassure and affirm the emotive connect the Union still has with people of erstwhile State of Jammu and Kashmir. This was followed by a brief reference to the special grant of Rs 30757 crore for newly created Union Territory of Jammu and Kashmir and Rs 5958 crore for the UT of Ladakh.
The categorical assertion in Lok Sabha about the special budgetary provisioning, for Jammu and Kashmirm and Ladakh once again endorsed the special status the erstwhile state enjoyed. The provisioning for Jammu and Kashmir and Ladakh resulted in enhanced allocation of Rs 1,67,250 crore to the Ministry of Home Affairs for fiscal 2020-21 compared to Rs 1,19,025 crore allocated in the previous year. The Ministry of Home Affairs deals with all legislative and Constitutional matters relating to the nine Union Territories.
Of the Rs 30757 crore allocated for Jammu and Kashmir, the government has provisioned Rs 279 crore as the contribution to the Unionm Territory Disaster Response Fund, while Rs 30478 crore has been allocated for meeting the resource gap, the Budget document said. Similarly, In Ladakh, the government has allocated Rs 83.38 crore for rural development, Rs 80.69 crore for public works, Rs 54.07 crore for power, Rs 52.00 crore for civil aviation and Rs 47.50 crore for tourism sector.
CONFUSION v/s CONTOURS
The Budget 2020 has failed to specify the broader counters of the allocation released in favour of the Union Territory of Jammu and Kashmir.This was evident as traders, businessmen and industrialists of Jammu and Kashmir remained unehthusiastic over the budget allocation of Rs 30757 crore.
The people said they did not yet know about the components of the proposedall ocation .Former Finance Minister of the erstwhile state of Jammu and Kashmir Mr Haseeb Drabu said there was nothing to be sad or happy about the Rs 30757 crore Budget allocation for the Union Territory of Jammu and Kashmir. “There is nothing new in Budget allocation for the Union Territory of Jammu and Kashmir. There is nothing would have got this money as Finance Commission award in what is called vertical distribution from the Centre to the State. But now that it is no longer a state but Union Territory, that part is accounted for in the Home Ministry’s Budget. So it has moved from the state to the Home Ministry, and that is why the Union Finance Minister had to announce it. Otherwise there is no change”, Drabu explained.
Of the Budgetary allocation of Rs 30757 crore allocated for Jammu and Kashmir, it is pointed out that the present allocation in Budget 2020-21 is far less than the previous year’s when J&K was a State and was entitled to devolution in form of grants and a share of Central taxes.
According to the 2018-2019 Budget of the erstwhile State of J&K, it received Rs 47314 crore revenue from the Centre. The cut of Rs 16000 crore is expected to be bridged from the levy of taxes and its collection, as around 70 per cent of the J&K’s revenue is borne by central transfers. This is suggestive of the fact that while tax collection is bound to surge, the levy of additional taxes could be there.
THE NEW REGIME- IS IT GOOD?
The new income tax is beneficial for people with low investments in policy schemes. It offers seven lower tax slabs. Anyone paying taxes without claiming exemptions under the existing system can benefit from payinga lower up front rate of tax.Therefore,for those investingless in tax-saving schemes must opt for the new regime. Another benefit of switching over to the new option alreg ime is not having to worryabout complex filings, hence fewer mistakes in filing. The Finance Minister, rightly asserted that the process under the new income tax structure will be much easier for taxpayers. It’s an optional scheme so people have the flexibility to switch over from one system to after evaluation for the previous year is complete. The exclusion of 70 exemptions also helps in containing income tax frauds. Cases abound where people haveinflated their return filing for claiming more tax refunds. Now, with a majorityof exemptions gone under the new system, the scope of misusing exemptions rules also reduces. Some of the exemptions available under the new tax regime are Leave encashment on retirement, Retirement compensation, Death-cum-Retirement benefit, Employer’s share of employee Provident Fund, Money received as scholarship for education, Amount received on VRS, etc.
THE NEW TAX STRUCTURE: IS IT BAD?
The new tax regime introduces lower tax rates in lieu of exemptions.It is good for people with low investments. The people who already have invested a fair amount in tax-free saving schemes like PPF, NPS and claim deductions ont hem will undoubtedly suffer. Therefore,even those opting for the new system with lower tax rate,will ending paying more taxas there are no exemptions for them to claim.The new tax regime can potentially lower house hold savings as many people will refrain from investing in tax free schemes due to exclusion of 70 common exemptions. Despite an upfront reduction in the tax rate,it will affect longter msavings of an individual. Some experts suggest that the new income tax structure could also discourage investments in the real estate sector.It may be noted that investment in housing property is a major tax saver forI ndian house holds and making the full use of it can earn very heavy tax deductions. However, with no such exemptions under the new taxs tructure, the real estate sector could encounter fall in demand. The insurance sector will also sufferas it wil lhavetoputmore effort and money on advertisements to attract people to invest.The new income tax structure, therefore, may lead to reduced business for insurance companies.
NO BOOST FOR INDIVIDUAL SAVINGS
While expectations typically have no end to them,one of the common expectations which had been at the top of the wish list for few years now is increasing the exemption limit under section 80C.
Section 80C is at the core of tax saving for all categories of individuals. Whether the individual is a government employee, privately employedor for that matter working in an NGO, use the section 80C basket to save ontax.
The limit of deduction under section 80C,was last increased from Rs1 lakh to Rs 1.5 lakh in Budget 2014; which is almost six years ago. Accordingly, expanding the horizon and limits ofthe 80C deduction was need of the hour.
It was expected that the overall exemption limit under section 80C would be enhanced to at least Rs 2.50 lakh from the current Rs 1.5 lakh. Similarly, while increasing the limits under 80C, concurrently the limit of investment under PPF, NPS (Tier-II) would be increased.
The expectation was based on the two-fold premise. Firstly, theenhanced savings for seeking deduction in tax would afford the government liquidity, and secondly, this move would have satiated the yearning of the employee for seeking change in tax structure limits.
Pertinent to mention here is that Section 80C was reintroduced in Budget 2005 as are placement to section 88 with the in here ntintention of moving from an EEE( exemptat contribution, exempton accrual,and exempton withdrawal) regime to EET(exempt at contribution, exemptat accrual, and taxed on withdrawal) one which is generally the preferred system in developed economies.
OWNING HOUSE- RELIEF EXTENDED
To boost the flagging real estate sector, in Budget 2019,the government had introduced an additional deduction of Rs 1.5 lakh on home loan interest pay ment if you purchase a new house between April 1,2019 and March 31, 2020. The Budget has extended this by a year. What this means is that you can claim this deduction if you buy a new house between April 1, 2020 and March 31, 2021, and meet the eligibility conditions. This is in addition to the Rs 2 lakh deduction available under section 24b. To be eligible for this additional deduction, the value of the house should also not be more than Rs 45 lakh.You should also nothold any other house on the day the loan is sanctioned.
RETIREMENT CONTRIBUTION BY EMPLOYER CAPPED AT Rs. 7.5 Lakh
Earlier, salaried employees who were in the highest income tax bracket had the flexibility to restructure their salary in such a way that the employer could make higher contribution towards Employees’ Provident Fund (EPF), NPS or superannuation fund. But this year’s Budget has limited the exemptionon such contributions to Rs 7.5 Lakh in a financial year. “Tax saving by optimizing the salary structure using NPS and superannuation may no longer be valid given the proposal on combined limit to employer contributions to provident fund, superannuation fund and NPS. The employers may have to revisit their compensation policies in view of the proposed amendment”, opine experts.
While, the Budget is always expected to be harbinger towards prosperous economy, the fact remain it’s a calibration wherein while advancing benefits from one-hand, the noose is tightened with the other end. The befitting lines of all time great Mirza Ghalib describes the aspirations of the common man…Hazaron kwaishay aise, ke har khawaish pe dam nikle, Bahutnikle mere armaan lekin phir bhi kam nikle.
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