INDIA: Dignity Foundation Concerned at Tax Regime

MUMBAI (Rediff News), May 14, 2007: Sucheta Dalal, MoneyLIFE, gives tax tips in today's column A couple of weeks ago, a Mumbai daily published a depressing article by Gool Bhujwala, a senior citizen who pleaded with the government to legalise euthanasia because life had become extremely difficult as "hard-earned money we carefully saved for our old age" is used up in taxes, sky-rocketing prices of essential commodities, unaffordable health care and worsened with the tension of coping with crumbling infrastructure and impossible crowds. For a country that has no social security, there is nothing more shameful than this plea. Dr. Seilu Srinivasan of the Dignity Foundation, which works for senior citizens, has received several letters regarding a "series of harassing measures that have been unleashed on the hapless senior citizen" by a thoughtless government. Leading tax consultants agree that the finance minister has made life difficult for seniors under the pretext of preventing tax frauds. The government is trying to squeeze out additional tax from their tax-paid savings. Remember, these savings were earned over a lifetime of paying extortionate taxes in a regime that offered no concessions even on gratuity or on their housing loans! For instance, the 9 per cent Senior Citizens Savings Scheme 2004 promised not to deduct tax at source and the Union Budget of 2005 raised the tax threshold to Rs 185,000 giving a lot of relief. At the same time, the cancellation of the Rs 20,000 rebate on actual net income tax has brought some seniors back into the tax net although it was supposed to compensate for earlier rebates. The government now plans an about turn and wants to deduct TDS even on the interest earned on the scheme and that too with retrospective effect! This may require seniors to file revised IT returns for 2005-06 and claim refunds, which is sheer harassment. They are already a harried lot, trying to cope with filing tax exemption forms (15-H), chasing TDS certificates - form 16 (1) and now the government plans a New Saral 2F Form that requires cash flow statements to be filled out. This is ridiculous in case of most retirees. There are also plans to withdraw tax concessions on Public Provident Fund investments. How can seniors deal with this? The first is to make their voice heard through organisations such as Dignity Foundation so that adequate attention is paid to the worries of seniors in framing tax policy. One leading tax expert says, "I think there should be an organised protest against targeting senior citizens with harassing tax provisions. The laws should be very simple to understand and comply and should be free from the possibility of abuse by corrupt tax officials". Another suggests that the government must also be petitioned to increase the Mediclaim limit to as much as Rs 50,000 per annum and with increased coverage of medical expenses and no TDS on SCSS. Until that happens, here are a few suggestions from a leading tax expert who wishes to remain unnamed. Inflation, coupled with a drop in interest rates over the last five years, have eroded the income of most seniors. Firstly, senior can reduce the hardship of collecting interest refunds on SCSS by filing a declaration under section 197A(1A) asking the Government not to deduct tax if the income does not exceed Rs 185,000. Secondly, if the income justifies a lower deduction of tax under section 197(2), get a certificate to this effect from the Assessing Officer. Thirdly, avail of all deductions such as Mediclaim premium (Rs 15,000) under Sec. 80D. Also, remember the rather restrictive deduction of Rs 60,000 under Sec. 80DDB applicable to specified ailments. These are merely helpful hints, the more effective solution to an unjust taxation system would be litigation proposed by Dignity Foundation on behalf of senior citizens. © 2003 rediff.com India Limited. All Rights Reserved Sucheta Dalal's Feature attracted many comments: Sankar Easwaran commented: One who has heart and soul will understand. For the past few days,ever since PAN was made compulsory and related news about filing return, my father 64 years old retired, who is alone, suffered fracture in his limb last year. He is visiting his banker, consulting some friends, and discusses with me the whole issue of taxation. Is that the government wants? There should be some sense. Your investment in bank and post office fetches you less than 10%. Inflation is eating into the purchasing power of money. The money derived from one's retirement benefit is deposited and income generated out of it is used for living and for future. Another issue - 60 years is Senior Citizen for other practical purposes, 65 yrs as per Income Tax law. You are troubling elders! Ramprasad commented: We as tax payers have a right to ask the finance department to give an account for the amount collected and how much is spent for useful purposes for the development of the nation and uplift of the poor. How much is spent for development of the riches from this amount. As we see the goverment is not spending any thing for the goodness of people and to control the price rise. Pankaj Zaveri commented: Is Mr. Chidammbaram a Finance Minister Or Tax Minister ????? He is working only on taxes to be collected from real tax payers. He has no time to look after the prices. How are prices going up? So he is not FM but he is TM. Let us ask the Prime Minister to create one more post of Tax Minister. For this Mr.Chidambaram is absolutely fit. N. Srinivasan commented: Let the FM revise the definition of Senior Citizen as one above 50 years of age and announce an Income Tax exemption for senior citizens of Rs.12 Lakhs (Rs.1.2 million) per annum and impose all taxes without exemptions. A senior Citizen needs a free income of Rs.100,000 per month. Give a pension of Rs.12 lakhs per annum for all Senior Citizens. At this level any senior citizen will not grumble and pay the taxes with pleasure. Mohan Ramaswamy commented: The FM and the Government should seriously consider a total exemption from payment of Income Tax for senior citizens. There are many other ways of collecting tax. Tula Taraju commented: It's disgusting that age prescribed for senior citizens is different for different arms of Governmentt. It's 55 for Varistha(Senior) Bachat(Savings))Yojana(Policy)announced two years back.It's 60 for rail/air concessions, 65 for Income Tax department. Its different for mediclaim purpose! Whats all this? Sunil Dodeja commented: Use the Right to Information rules and 1) Find how many Senior Politicians and Beauraucrats above 65 years file tax returns - How much tax do they pay and whether they file their returns on time. 2) Find out the total number of Senior Citizens (above 65 Years) who file tax returns and the revenue government generates from such citizens. 3) Find out the average tax liabilty of a common Indian paying Income Tax (forget those not paying Income Tax). 4) Decide what should be a minimum contribution that an Indian should make for his country in the form of Income Tax. 5) Multiply that amount by an average working life of 35/40 years. Once a citizen has paid that amount, his income tax rate should be reduced by a factor which keeps increasing with the amount of tax being paid by that individual - until the tax rate is 5% of income of that individual. Only then will all Indians pay tax sportingly and happily. 6) BEYOND age 90 years - NO INCOME TAX - REST IN PEACE.