It was interesting to read through various posts in the print and electronic media praising the govt for a “growth budget” for “aam aadmi”. Is it the actual scene?
The exemption limit being raised to 10K from 150k translates into a potential savings for 1000+ – Wowwww….cheerful isn’t it? But the smile will not last for long when the actual tax implications comes through in the form of abolishment of FBT. Most of the employees (including me) were/are enjoying the FBT being managed/paid by the respective employer, with some breathing space for lesser taxation at the employees’ hands. the situation is taking tangent to move to employee direction to pay the taxes. This is akin to revoke the regime prior to FBT implementation in 2005. The components other than specified exemption limits would be treated as perquisites at the employees hands and taxed accordingly. It is also noted that more items would be falling part of the perquisites where employee would be taxed leaving lesser disposable income at the end.
Much to surprise, the surcharge had been abolished which is never an aam aadmi’s a area of concern. the surcharge is meant for people having taxaable income of over 10 lacs and it would be shameful to think on people proclaiming this to be an aam aadmi budget.
effectively, the FBT is passed over to employee. The implications are
Employees – though the exemption limit is raised, the perqusities value (or adding most of the re-imbursement components as special allowance/other allwance) wil l be taxed. At the beginning of every month, payslip might be looking fatter but the net take home would tend to have a shrinkage. The bleeding to aam aadmi to continue…..
Govt (MoF) – will not loose any revenue on this account as the the tax is just routed from one party to another. The revenue continues and at the expense of aam aadmi…………..
Employers – the FBT loss is to get balanced by virtue of increased MAT payable by companies.
Who is benefitted in the whole schema of new tax proposition? perhaps, the high level income people who used to forego a decent sum on the surcharge, would still be remaining with them. Senior citizens are expected to welcome this and might be bringing some sunshine in their lives.
intriguingly, the underlying factors (rationale) for a such propositions are still unearthed (might be in dark forever, i guess). If the idea was to improve savings (by virtue of increased disposable income) the limits should be have been increased or exemtpion should have been raised. Is it that, govt. thought of helping the industry segment to stop bleeding and decided to part away with FBT so as to improve their financial positions? In the event, MAT should have been also kept under the scanner, with no alterations.
Wondering the rationales and underlying principles behind such propositions….i guess that needs more contemplation and deliberation
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