E-Paper
Kelkar report
The government would consider the recommendations of the task force before framing the Budget 2003-04.
Love it or hate it, but you just cannot wish away the Kelkar report. Over the past few months, Advisor to Finance Minister Jaswant Singh, Vijay Kelkar and his report has come under attack time and again, even from the BJP.
The Rajnath Singh committee, which was set up by the BJP soon after there was an uproar following the submission of the Kelkar report, opposed the proposals for lifting tax sops on savings and housing loans. It also rejected the suggestion for levying income tax on agriculture and advocated a continuation of tax benefits available to employees, senior citizens, women, small industries and co-operatives.
To put things and dates in perspective, let's rewind to September 2002. The government set up a task force headed by Vijay Kelkar to rationalise and simplify procedures governing direct and indirect taxes, with the objective of improving compliance and thus revenue mop-up. The government would consider the recommendations of the task force before framing the Budget 2003-04.
But the Kelkar report, which was supposed to lay a road map for restructuring of the tax system, drew flak from almost all quarters, when it was first submitted in November. The middle-class, a major contributor to the direct tax kitty of the government, felt cheated, thinking that it would again be at the receiving end of the taxman's stick.
Kelkar was told to tone down the "harshness" in the report and the Rajnath Singh Committee was set up, which unveiled its own report. Both the reports are now with the government.
Kelkar, however, has tried several times to dispel what he called the misconceptions that the middle-class would have regarding its growing tax incidence. Kelkar says based on the recommendations of the report, the tax incidence on various income groups would be "much less and not more" as claimed in certain quarters.
Kelkar said a salaried person earning Rs 80,000 to Rs 100,000 would pay Rs 1,224 less as Income Tax while a person earning above Rs 10 lakh (Rs 1 million) would pay Rs 69,597 less.
The relief to non-salaried taxpayers ranges from Rs 382 for an income of Rs 50,000-60,000 to Rs 82,946 for persons earning above Rs 10 lakh, he says.
For senior citizens, the benefit ranges from Rs 3,402 for income bracket of Rs 150,000-200,000 to Rs 77,196 for income above Rs 10 lakh.
Kelkar also justified the rationale behind the abolition of standard deduction for salaried class, by saying that a large number of perks are available to salaried employees, which are either concessionally treated or fully exempt, thereby reducing the effective tax burden.
The panel had also suggested doubling of Income Tax exemption limit to Rs 100,000 and a two slab personal Income Tax structure of 20 per cent for income of Rs 1-4 lakh and 30 per cent for income beyond Rs 4 lakh. It has also raised the Income Tax exemption limit to Rs 150,000 for senior citizens and widows.
