The Finance Minister will present the Budget for 2012-13 on March 16 instead of the usual last day of February every year.
Demands for various exemptions and incentives have been put forward by the various interested parties.Finance Minister also consulting various groups and seeking their opinions, particularly all those who want concessions, However, the principal stakeholder who pays the taxes honestly are never consulted or his opinions are sought. It is high time that we learn lessons from the European debt crisis and take steps to avoid our country falling in to a debt trap and sovereign default. Finance Minister must take bold steps to ensure that the budget deficit is balanced and we must have reforms to the extent of having budget without any deficit and must produce a BALANCED BUDGET. Our revenue and expenditure must match.Even the limit prescribed by the FRBM Act is also too high and hence we must have no deficit at all. To achieve this objective we must increase our tax revenue. In this regard I would suggest the following:
As per the figures furnished in the last budget, the revenue foregone by way of tax exemptions and concessions were to the tune of Rs.511000 crores which was equivalent of total government borrowings last year. In one stroke the finance minister can withdraw all tax concessions to all sections of the society so as to avoid borrowings completely. However, by this we will not be able to balance the budget since the earlier borrowing which comes for maturity and its interest burden is too heavy and hence certain amount of increase in tax rates is necessary from those who can afford to pay and tax less to those who cannot afford to pay
The DTC 2011 has lost all its Original shape and present proposals are almost identical to the income tax act 1961. Instead of simplifying it has further complicated the matters.
The Finance Minister must think out of the box solutions and be bold to do away with different kind of incomes like salary, house property, interest, dividend, capital gains and partner ship accounts All incomes should be grouped under one head and should be be taxed at same rate at different slabs instead of different heads of income which will include agriculture income also.
There is a clamour and demand from various sections to tax the super rich and in western countries they themselves came forward and demanded to be taxed more.The same cannot be expected from the super rich of our country.
My proposals are as follows:
Up to Rs.5 lacs-----------------------Nil (All exemptions under different sections stands withdrawn)
Above Rs 5 lakhs to Rs 10 lakhs--------10%
Above Rs.10 lakhs to Rs.20 lacs--------20%
Above Rs.20 lakhs to Rs.30 lakhs------30%
Above Rs.30 lakhs to Rs.100 lakhs-----40%
Above Rs.1 Crore----------------------50%
This will apply to all types of income both to the personal as well as corporate taxes to bring in simplifications.
There should be compulsory TDS on all incomes like rent,interest,dividend,capital gains above a uniform income of Rs.2 lakhs,
All perquisits must be valued at market rate and to be taxed accordingly.
The wealth tax must be increased to 1% above Rs.1 crore with basic exemption upto Rs.1 Crore.
In all the advanced countries the dividend is taxed at the hands of the receiver in order to bring equity among all.By dividend distribution tax, a person who is otherwise not liable to tax also made to pay tax thus a poor investor subsidising the rich investor like Reliance promoters Ambanis.Munjals,Singhs,Ruias,Birlas & Mittals
Government also must bring an act similar to the minimum wages act to fix maximum wage and must have linkages of salary like lowest paid employees should not be paid less than 1% of the highest paid top most executive and at different grades of the employee there must be a difference of at least 10 to 15 %..
Section 197 of the companies act stipulating a limit of 11% of the income must be withdrawn and it should be linked to the total employee salary of the company with linkages to the highest paid and to the lowest paid. No promoter family must draw more than 1% salary as a family since they are eligible for dividends they own in the company.