Date:27/01/2005 URL: http://www.thehindubusinessline.com/2005/01/27/stories/2005012700100801.htm

Back Simplifying income-tax

A large section of the population is eagerly looking forward to a simplified income-tax structure and lower tax rates in the coming Budget.

The tax exemption slab could be increased to Rs 2 lakh. For incomes from Rs 2 lakh to Rs 5 lakh, the tax rate could be 10 per cent; between Rs 5 lakh and Rs 10 lakh 20 per cent and above Rs 10 lakh 30 per cent. This will make things easier for both the taxpayers and the I-T officials.

Again, getting rid of unnecessary exemptions and raising the tax-free slab will help those involved in deducting tax at source.

One often hears of exempting savings but taxing the same as ordinary income during withdrawals. This may not encourage savings. Even if such a measure were to be introduced, withdrawals exceeding, say, Rs 10 lakh may be taxed, leaving lesser withdrawals tax-free.

Of course, the easiest and most simple measure would be to abolish the income-tax, as suggested by Dr Subramanian Swamy.

V. S. Venkatavaradan

Salem

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