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Wednesday, February 27, 2013

Budget 2013 Government Employees View

Highlights of General Budget-2013

* No revision in the tax slabs
* To continue with education cess at 3%
* Tax credit of  Rs 2,000 for income up to 5 lakh
First housing loan up to Rs 25 lakh would get additional deduction of interest of up to Rs 1 lakh 
* Contributions made to central and state government health scheme eligible to tax benefit.
* Pension funds and provident funds can invest in exchange traded funds and asset backed securities
 * Direct Taxes Code (DTC) bill to be introduced in current Parliament session.
FM: The insurance amendment bill and the PFRDA bills are before the house; 
        hope that they will be passed soon


 Demand  Tax Slab Revision in General Budget-2013 

In the Union Budget 2013-14 presented by the Hon'ble Finance Minister, Shri P. Chidambaram, it is stated that the inflation is just 6.9 %, and further it is stated, there is no need to change the income tax slab from the present Rs 2 lakhs to 3 lakhs.  In fact, the Trade Unions have demanded Rs 5 lakhs as minimum tax limit.    

The Consumer Price Index has shown an increase of 23 points in the last one year from 198 points in January, 2012 to 221 points in the January, 2013 as per the Labour Bureau, Government of India STATISTICS.  Refer the link  If the prices have gone up by 23 points and the DA we are getting is 16% increase in last year, in such a case, the minimum income tax slab should have been increased from 2 lakhs to Rs 2.5 lakhs as prices have gone up by 23%.  instead of that, a small tax savings of Rs 1100 is provided for the income upto Rs.5 lakhs. Earlier for income of Rs 5 lakhs, we used to pay Rs 30,000 as income tax.  Now we shall pay an income tax of Rs 28,840/-.

Everywhere across the country, salaried class are paid an increase in salary in the range of 15% to 25 % to compensate the price rise partially.  Hence, with the additional salary we some how compensate for the price rise.  The Hon'ble Finance Minister should have taken this point into consideration for revision in tax slabs. Now workers and employees have to pay additional tax for the additional salary due to inflation and also the additional burden to the higher prices.  

There is also a danger in regard to passing of PFRDA bill in this session. 

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