My suggestions for the budget
1. Income tax limits should be based on a reference year and must be updated automatically every year based on the cost of living index (or the consumer price index). After all public servants get remuneration adjusted for inflation. So why not fix tax limits on that basis too instead of arguing every year about it?
2. Interest on bank/corporate/government deposits should be tax exempted based on the mean inflation of the previous year. If the interest rate is 6% and the inflation is 5.5%, only the excess of 0.5% should be added to the income and taxed applying the normal limits of income tax.
3. Investments are taxed for capital gains at a very steep rate. Except speculators others who make investments see their capital being constantly eroded. I suggest that interest income of up to 15% of the capital deployed should be exempt from long term capital gains tax in a year. Remember those who invest are taking risks and therefore deserve a reward too.
4. Since these days in most families both partners work to make ends meet, there should be a provision to file tax returns jointly as done in many other countries and the limits fixed accordingly. This will only apply for one husband-one wife situations. Those who want to have multiple wives cannot claim this facility.
5. Pensioners receive the benefit of standard deduction. The same should be applicable to every senior citizen including those who live on interest earnings alone.
6. Rather than increasing the tax rates, government must consider bringing more people into the tax base. Except for salaried people/people retired from service, others who earn comfortable income are never taxed. This applies to many small business owners, artisans and others. Many people like doctors demand cash fees which are outside taxation.
6. In my opinion the current government has no concern for senior citizens except those who are pensioners of government and the public sector (notably banks) who are well-organised and always keep agitating to increase their pension incomes. EPF (commuted) pensions are pathetic in comparison and nobody can survive on that.
7. In addition to increasing taxes, the government should reduce revenue expenditure. (I mean salaries, expenses on elected officials, Z category security for people who neither need or deserve it and so on). Otherwise it will be a case of killing the goose that lays golden eggs (by excessive taxation). The government can even consider gradually tapering off personal income tax and increase GST rates which at least applies uniformly to every citizen. more