Let's make one thing very clear right up front: The Modi government's demonitisation plan would never have succeeded without the support and tolerance of the common citizen, who spent hours out of their busy days to stand in queues at ATMs and banks to withdraw their OWN money.
There were no riots, nor acts of civil disobedience because the common citizen believed in the government's intention to wipe out the scourge of black money.
Now is the time for Finance Minister, Arun Jaitley to reward the patience of the common man; reward them for their support and belief in the claims made by the government. But will the politics of finance take priority on Budget 2017 Day?
Here is what the common man would like to see from the FM and his budget.
Raise the taxable limit
The taxable limit should be raised so as to give people the extra allowance for savings, education, housing and maintenance, etc.
No Tax on income less than Rs3.5 lakh (up from Rs2.5 Lakh)
2. 3.5-7 lakh: 10%
3. 7-12 lakh: 20%
4. above Rs12 lakh: 30%
Protect senior citizens
For senior citizens the government has serious intentions to reduce interest rates thereby encouraging citizens to apply for bank loans for housing, vehicles, startups, industries, corporate financing, infrastructure, restructuring of bad debts, etc.
The main source of income for seniors is investments in Fixed Deposits, PPF, NSC certs, etc. This rate reduction will cause a serious depletion in their earnings and hence a revision in their tax deduction needs to be given serious consideration.
Senior Citizens 60-80 years of age
1: No Tax on income less than Rs4 lakh (up from Rs3 lakh)
2: 4-6 lakh: 10%
3: 6-12 lakh: 20%
4: Above 12 lakh: 30%
Senior Citzens above 80 years of age
1: No Tax on income upto Rs6 lakh
2: 6-12 lakh: 20%
3: Above 12 lakh: 30%
The maximum cap on Tax Saving Instruments should be raised from Rs1.5 lakh to Rs2 lakh. This limit could be increased by Rs5,00,000 for those with an income of more than Rs12 lakh.
The Short term and Long term Capital Tax structure should remain the same to avoid FIIs pulling out their finances, which would result in a major setback to the Indian Stock Market. The US plan to increase their interest rates and reduce corporate tax would result in an exodus of Funds of Foreign Institutions back to the US.
Increase in Housing Loan Tax exemption from Rs2 lakh to Rs2.5 lakh.
Set up government agencies and cold storage facilities in rural areas to assist farmers in procuring a better price realisation for their crops, thereby eliminating middle men, brokers and hoarders.
This direct investment by the government will lift the rural economy and result in a drop in market retail prices.
Cashless transactions will promote transparency and to encourage this the government should offer tax sops to card users as well as institutions that invest in machines for cashless/ digital transactions.
The recent government scheme on demonitisation was hampered largely by corrupt bank officials, brokers and hoarders of black money. The government should offer an incentive to whistleblowers so as to unearth the nexus of operators who illegally helped in converting black money.
Also the government must publish the degree of punishment to corrupt officials, whether they be bankers, law enforcement officers, Income Tax officials, corporate accountants, etc.
Declaration of funds received and held by political parties is a must. Limit the expenses they incur during elections. No promises that are detrimental to the financial welfare of the state/country, no freebies for the electorate just to win over vote banks. Politicians with criminal records and involved in hate speeches, money laundering, anti-national remarks, etc, should be barred from running for office.
Make it a punishable offence for event organizers to pay cash to entertainers, actors, sports persons, celebrities, etc, as this will result in non-payment of taxes and accumulation of unaccounted for black money. Those being paid should also be made aware of this penalty.