My Budget Wish List

It is the time of the year for budget wish lists. Lower taxes and better standards of living are on everyone’s mind. Reminds me of something a wise person said.

Everyone wants to go to heaven but no one wants to die.

Going with the seasonality effect, here is what I wish to see this year.

Tax farm income in excess of 10 lcs –

There is no reason for all farm income to be tax free. Also do away with all the tax incentives for farmers on purchase of all luxury vehicles.

Create a department of efficiency –

The same way as proposed in the US, a special ministry should be created to take a look at the government departments and their expenditures and suggest measures to cut flab and get efficient. 

Make PPF voluntary –

The middle class and lower middle class is leveraged with loan rates being much higher than what returns being offered on this mandatory investment. For retirement savings the NPS exists. Trust the citizens to plan for retirement with a combination of SIP, insurance and NPS. Will also improve ease of doing business by eliminating the PPF related compliances.

Make STT and brokerage paid deductible from capital gains –

STT was introduced when capital gains were abolished. Now we have both co existing. This will provide some relief of the increase in capital gains taxes undertaken last year.

Make GST paid by individuals as advance tax –

Up to 25% of the GST paid by individuals in the highest GST bracket should be allowed as advance tax. Will reduce the demand for items to be brought down from highest tax bracket, widen the tax base and improve compliance. PAN of the individuals can be provided at the time of consumption to get this benefit.

Create a scheme to encourage gold recycling in the country –

Incentive households and temple trusts to recycle the gold being held by them. Sovereign Gold Bonds was a good scheme. Channelise the domestic capital into areas of the economy where it can be productively used.

Stop export of domestic capital –

We remain short of domestic risk capital, in spite of the rise of the SIP and equity cult. The recent IPO of an auto MNC sets a dangerous precedent. A large consumer durable MNC is next. More will come. These MNC’s have already extracted their capital and profits out of the country. Now they are raising fresh capital and taking it back to their home countries. This should not be allowed. Any capital raise by an MNC in India should be strictly for reinvestment back in the country. Billions of dollars have already been taken out. Many more tens of billions will follow, if this is not stopped.

Make hospitalisation expenses not claimed under insurance deductible as expenses –

Many families suffer reversal of fortunes and loss of accumulated savings by medical emergencies where they are not covered/reimbursed under insurance. Such expenses should be allowed to be treated as expense without limits and deductible from income being offered for tax, up to the annual income of the year.

Retain different tax rates for different income types –

There is no rationale for the tax rates to be same on interest income and equity capital gains. The current system works well. There is no need to tinker with the same.