I-T exemptions on home loans may go
The Govt is reviewing all 162 I-T exemptions, including PF contributions, pension, VRS package & farm income.india Updated: May 17, 2006 17:30 IST
In a bid to remove tax sops that cost the exchequer a whopping Rs 1,58,000, the government will review all 162 income tax exemptions, including housing loans, contributions to provident funds, pension, VRS package and sensitive farm income.
The list also includes premium on Life Insurance policy, subscription to notified savings certificates, apart from constituency allowance to MPs and MLAs.
Comments from the public and other stakeholders are invited by July 5, for removal or continuance of these exemptions, that also include payment of various forms of gratuity and commutation of pension to salaried class.
This is part of the exercise to simplify tax, minimise distortions and broaden the tax base.
The exercise follows similar efforts by the Government on 21 items in customs duty and 54 items in excise duty.
Finance Minister P Chidambajram has said in the Budget for 2006-07, "Broadly, exemptions that are end-use based or have outlived their utility or need certification or give rise to disputes are being rescinded, with only a few exceptions."
Surprisingly, the sensitive farm income is at the top of the review list. Presently, agriculture income formed part of the state list and if it has to be brought under income tax, the Constitution would have to be amended.
Exemptions from contribution to pension in the list include such funds set up by any notified Mutual Fund or UTI, insurance companies and pension schemes of the Central government.
The Government will also review medical insurance premium up to Rs 10,000, leave travel concession received by salaried employees and house rent allowance.
The Government has also invited public comments on bonus received under a life insurance policy other than single premium policies and keyman insurance policy, payment from provident funds, retrenchment compensation and tax on non-monetary perquisites paid by the employer.
Payments made under the Bhopal Gas Leak Disaster Act, hard duty allowances, counter insurgency allowances paid to the salaried class are also under the Government scanner.
Also being reviewed are interest, premium on redemption on securities, bonds, certificates and deposits, interest on Relief Bonds, interest on Gold Deposit Bonds issued in 1999 and interest on local body bonds.