Letter to Finance Minister for New Tax Law.

To Date. 12-9-2009.
Shri Pranav Mukherji,
Hon. Minister of Finance, Government of India,
North Block, New Delhi-110 011.

Respected Sir,

Sub: Direct Tax Code, 2009 & Discussion Paper notified on 12-8-09.

It is heartening to note that You have started the much-needed work of discarding the complicated Income Tax Act, inherited from Britishraj, by introducing Unified Tax Law in simple language for reducing the scope of litigation. It is very much necessary that all Ministers follow your foot-steps and give simple Laws/Rules to the Nation for their Ministries. e.g. for expeditious dealing of Court Cases, One Personal Law for all irrespective of caste, creed or religion, Respect for our Culture & Elders etc.

Please, accept our congratulations for suggesting quite law rates of Income Tax for all sectors based on sound policies and practices followed by various countries of the World. Principles laid down in Paras 3.2; 3.4; 3.5 and 4.1 in Discussion Paper are really appreciable and indicate your humane approach.

We, the Senior Citizens of India would like to bring out the followings considerations to your personal notice for needful early action.

1. In our country, there are no Pensions or Free/Concessional Medical Facilities etc for retired/unemployed citizens, as in developed countries even after 61 years of Independence and tremendous economic progress. Income of Senior Citizens gets reduced day by day due to deteriorating interest rates and unbearable dearness for food items and medical facilities. They do not enjoy fully Public Goods and Services provided by Government for citizens (Para 4.1 of Discussion Paper) due to immobility and many other factors. Their ability to pay Tax (Para 3.2) gets reduced after retirement and from year to year due to less income, more expenditure on food & medicines. Their Net Worth (Para 3.4) gets reduced considerably as at the beginning of the year. There are many other factors, which also require to be considered and all Senior Citizens should be completely exempted from paying Income Tax. They have paid a lot of Tax for 30-40 years during their earning period and worked hard for achieving Independence as well as present Economic Growth. If complete exemption can not be allowed, exemption up to 5 lakhs instead of only 2.40 may be considered sympathetically.

2. As per Para 12.4 of Discussion Paper, you have given some incentives for savings and hoped that people will be encouraged to save. In view of your EET proposal and permitting the savings in only 4 Savings Intermediaries, how is it expected that any one would like to invest willingly? All contributions in all kinds of P.F. will also be taxed at the time of withdrawal. Keeping savings in P.F. till retirement is otherwise also compulsory, as they have no other alternative. Now keeping in Retirement Benefit Account to avoid tax will be a big burden on retiring person, who has to use his savings for marriage of daughters or for medical treatment etc. EET and restriction of 4 Saving Intermediaries shall kill the incentive to voluntary and additional savings and people would prefer to pay tax in the current year instead of at the time of their need in future years. People will try their best to show less income and hoard money instead saving for productive progress of the Country. Senior Citizens, whose income is getting from year to year due to reduction in rates of interest, prevailing and expected rise in cost of living and medical treatment, will be at a very great disadvantage by EET rule. Though, limit of savings is proposed to be increased to 3 lakhs, Senior Citizens will be discouraged to save anything due to EET and thus will loose present incentive of getting rebate for saving of Rs 1 lakh and will have to pay more tax to the extant of not saving due to EET. Keeping in view their deteriorating financial and physical condition from year to year and keeping in view their capability to pay tax and to ensure that their Net Worth does not get reduced, as provided in Paras 3.2 and 3.4 of Discussion Paper, rule of EET may not be applied to Senior Citizens.

3. As per definition of salary, all perks are also included in salary. This will be an additional burden on retired staff, who are enjoying free or concessional medical treatment and free or concessional traveling facilities etc after retirement as per their service conditions at the time of appointment. Senior Citizens need medical treatment as a natural consequence to ageing and travel for pilgrimage or for compulsory social obligations and as such, they should be exempted from tax on such facilities, keeping in view their reduced financial capacity.

4. As per Para 7.3 of Discussion Paper, some deductions are allowed to serving employees from their income. In absence of any employment and utilization of Senior Citizens by Government, it is necessary for Senior Citizens to go somewhere or other compulsorily to pass their time usefully like going to temples, associations, pilgrimage, doctors, hospitals etc. They should also be given some annual allowance.

5. Para 12.13 provides rebate up to Rs 60000 for treatment for prescribed diseases. Prescribed diseases are not mentioned in Code or Discussion Paper. This may be done. As all Senior Citizens are suffering from some ailment or other due to ageing, this provision should apply to all medical expenses and not restricted to prescribed diseases only. As medical treatment is very costly, this limit of 60000 should separately apply to self and dependent spouse. As ailments due to ageing is beyond control of Senior Citizens, this is a disability and provisions of Para 12.14 as handicapped may also be applied to Senior Citizens.

6. Para 12.18 gives rebate to self employed persons for rent in excess of 10%. Similar rebate may be given to Senior Citizens staying in rented houses.

7. Sec 67 of the Code allows deduction for fees of 2 children. There are certain families in which children are not earning much and depend upon their parents. In such cases, if any Senior Citizens pay such fees for 2 grand children, they should be allowed this deduction. Similar deduction for payment of Insurance Premium in Sec 69(3) by Senior Citizens for their children or grand children may also be allowed to them.

8. Sec 200 of the Code makes it compulsory for deduction of Tax at source above Rs 10000 from one source. It is difficult for Senior Citizens to obtain certificate for exemption from Assessment Officer every year. Present practice or similar practice as Form 15 H etc may be continued for Senior Citizens.

Above factors may kindly be considered sympathetically and proper care of Elders may please be taken.