People's Democracy

 Central Govt Employeesand Workers
 

THE Confederation of Central Government Employees and Workers second budget presented by the UPA government has conceded one of the long pending demands of the salaried class in as much as the personal income level of taxation has been raised to Rs 100,000. The proposal made in the last budget to have nil tax on income upto Rs 100,000 had not benefited the salaried employees in the tax bracket at all. It is, however, incomprehensible as to why the standard deduction has been done away with. It has no rationale and tends to be discriminatory in as much as all the expenses incurred to earn income by the business community continues to be an admissible deduction. The concept of standard deduction was based on the fact that the salaried class of taxpayers does have to incur certain expenditure incidental to earn the income. The removal of deduction under Section 80-L will further increase the tax burden of the employees.

Another disturbing factor concerning the salaried class of tax payers is the proposal to change the EEE system on selected savings schemes to the EET. The switch over from the rebate regime to the deduction mode is a facilitator to usher in the proposal for taxing the withdrawal or repayments on maturity of the savings. The 0.1 per cent tax on all cash withdrawals exceeding Rs 10,000, ostensibly to curb the black money operation, is not practicable and would only go to create difficulties for the genuine account holders in the bank besides taxing the already taxed income.

The revised estimate on excise and corporation tax collection is down by a whopping sum of Rs 17,148 crores. The actual are likely to be much lower. In the context  of overall reduction in excise duties on variety of items, and almost 5 per cent reduction of corporate tax, this looks like a wishful dream.  The allocations for various projects announced by the finance minister in the budget would in all probability be much less at the end of the year. A failure to realise this phenomenal increase in tax collection will have a further cascading effect on all plan allocations, revenue and fiscal deficits.

The decision to continue with the contributory pension scheme and to make available the fund so created for lucrative or risky investments, in replacement of the existing pension benefits, is not acceptable. The concern expressed in this regard by the body of the central government employees has been visibly disregarded.  The administered interest rate on General Provident fund continues to be pegged down to 8 per cent despite the 9.5 per cent agreed on EPF scheme.

In short this budget further gives stress to the reform process and the finance minister has remained focused on the reform agenda.