Few months ago, I reviewed the election manifestos of both congress and BJP and given a thumbs up to BJP manifesto. Despite it the election results were below average and 400 seats remained a dream. The budget which attempts to realise the promises made in the manifesto has failed to evoke the public response in line with expectations. Industry and share market have responded reasonably well, then why the public is not cheering up FM for the budget.
I analysed the income tax in our neighbouring countries and found that we are not too heavily taxed nor we are least taxed country. Instead of doing research I opted for interviewing the people and listen to what is hurting them.
I chose senior citizen, common man and the students. Surprisingly they were angry yet not anti-establishment. Their grievances are more about insensitivities and anomalies. Solution suggested were simple and implementable. The gist of these suggestion reminded of the great strategist our own Chanakya who said,
“Just as one plucks fruits from a garden as they ripen, so shall a king have the revenue collected as it becomes due. Just as one does not collect unripe fruits, he shall avoid taking tax that is not due because that will make the people angry and spoil the very sources of revenue,” Arthashatra.
The senior citizen I interviewed first is 86 years old ex public sector executive with meagre pension to support. I knew him for a long time and he along with his friends, is a strong nationalist and a great admirer of our prime minister. The gist of our question and answers is given below.
Author: you are a well-versed person with personal finance, how you rate this year’s budget proposals?
Senior citizen: The budget may stimulate economy, industry or stock market but it has remained insensitive to the needs of the common man. Proposals are being implemented in such a way that basic tenet which were offered by the PM in first term are drown in the complex language of the bureaucracy.
Author: India has improved on the ease of doing business index. Your comment is not in harmony with this fact. Will you elaborate more to make me understand?
SC: Ease of doing business and ease of managing personal finance are two different things. The budgets have made life easier for businessman but have taken away too many things from individual tax payers.
As a senior citizen my pain is limited to my health insurance, investment income and long-term gains being taxed and I will explain these issues only.
Insurance: Providing Social security is the job of the government. If government fails to do this, it should provide incentives to people for taking suitable insurance at their own.
It is the height of killing an initiative that on one hand insurance premium is eligible for tax deduction under section 80 C but the same is taxed with heavy GST. While the deduction has lots of restriction and limits, the taxing is for each premium paid.
The saddest part is that buying insurance is being taxed at the higher level along with luxurious items.
As I am getting older, my insurance premium is increasing and so is increasing the tax collection of the government. I never expected this cruelty.
Author: you are very right here minister Mr Nitin Gadkari has taken up this cause yesterday.
“Withdraw 18% GST on life and medical insurance premium” Gadkari writes to FM Sitharaman
SC: It surprises me, IRDAI might be recommending the same for years, then why two departments of the same ministry are not in harmony?
My next grievance is on dividend tax. Initially it was tax free, then It was taxed at source at the rate of 10 percent. Even though it jeopardised my 40 years old investment planning for retirement I accepted it. But the business houses and FII were unhappy as they could have saved this tax owing to other losses to be set off. So, they were arguing against it. The government listened and then tax deduction at source was changed to tax collection at the hands of the receiver.
Author: you are appreciating the move where is the problem?
SC: The problem is in implementation, the babus did not keep it at 10 percent but it is being taxed at the rate of whatever slab my income is qualified for. In my case it is being taxed at 30 percent. This is how Babus kill the good initiative.
Author then what should be the solution.
SC: the best solution was to allow credit for tax deducted at source as done in GST, then any body eligible to set of it with other losses would have done so.
The common man would have been saved from complication it is causing in filing tax return.
Author: It would be amazing.
SC: Long term capital gain tax is another issue created by Babus, reading the economic survey this year I could sense the worry of the FM about the extra ordinary growth of stock market and possibility of the creation of bubble there. I expected the government to come heavily on speculation. I never expected them to kill the long-term investors by increasing the long-term capital gains tax. Taxing is not the right way to control speculation else heavy taxation on horse racing would have killed the betting. The better way would have been increasing the lot size and the margin requirement for the future and option trading.
Author: you have made a valid point, but what is the harm in taking this route as well.
SC: equity investment is not a safe investment every profit is preceded by many losses. Masses are not educated in prudent investing and the regulators are always failing in controlling the fraudsters. Scams after scam like Mundhra scam, Harshad Mehta, Ketan Parikh and recent lapses at NSE, had put ordinary investor at disadvantage. Indian investor should be given better treatment, at present the rules favour DII and FII more. Even if one wants to tax long term capital gains in equity it should be at a lower rate. Kindly tell me what can justify increasing it by 25 percent in a short period of one year. To my mind it is the helplessness of the investor which is being exploited by the babus. There is no rational to increase it so fast to so high level.
Author: what about long term capital gain tax on other instruments?
SC: again, here the reason given for changing the rules, is to simplify. If that is the case then why not provide both options, as being done for filing of income tax return. In my case it is very painful change. I was in the process of selling my house as I plan to live with my daughter as now it is difficult to manage alone but due to some reason the process got delayed and my tax liability under new regime is much more. Hence it is not for simplicity but to extract the last pound of flesh.
Author: Don’t you think that there is a bubble being formed in real estate market which needs intervention?
SC: you may be right but the real culprit is black money not the lower middle class or upper middle class. Rules framed to curb the black money or hoarding of properties should not hurt common man. Had there been right thinking they would have excluded one house owners or people above 60 years selling their houses. It is the job of the Babus to study, identify and mitigate the pain being caused due to anomalies.
Author: Before I leave, I will like to ask, “you are frustrated yet I do not see anger towards the government, why it is so”?
SC: The basic spirit behind the working of the government is good. Corruption has definitely reduced in central government, terrorism is in control, area under the control of Mao Vadis, is reducing, infrastructure has improved. There are reasons to be happy.
The harsh fact is that beneficiaries may not vote in favour but the annoyed one will definitely leave. It may not hurt the Babus but the leadership should remain in touch with their vote bank and listen carefully. The listening ear is not visible these days that is what is hurting people. There should be another “Man ki Baat” where citizen speak and the leaders listen._
The conversation ended but not the introspection. The next interview was with an MBBS student and luckily his father was also there. I expected the student to be happy for the concession given in the budget but the response was not as expected. Language is bit harsh but not the content!
Author: This budget is Kind to you as it has appreciated the hardship being faced by the students perusing higher studies, please respond.
Students: I am sorry to say that the person who wrote this benefit for FM to read in her budget speech as, “E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3 per cent of the loan amount” has no idea of the ground realities and does not have a sensitive mind.
Author: your response has surprised me; will you explain it in simple terms!
Student: I don’t have full data but my friends and myself competed for engineering, medical and management studies and there the total seats available in 2022 were; 15lacs, 91000 and 3.2 lacs which adds to 19.1 lacs and the courses are for 2 to four years hence we can multiply this number with 3 at least making it 57 lacs plus. I hope there are more professional courses in other fields as well. Which may take this figure to 75 lacs at least. So, the wizards of our finance ministry have made the minister to take the cause of one student for every set of 75 student that too if he or his parents qualify for loan. One will either pity on the wisdom or laugh at the most.
Author: it is easy to mock any initiative but very difficult to come out with solution! Being young you are future of India! Do you have any suggestion which can be implemented with ease.
Student: GST of 18 percent has been imposed on the fee. It is unfair to tax higher education. No sensible leader can put education at par the luxurious items. Only the civil servants living in AC room can think so. Every well-educated person will pay huge taxes once he starts earning then what is the reason to overburden the students with this tax. Our group feels that there should not be any GST on educational expenses. You remove it or not but don’t fool the youth with statistical ‘bhool bhulaiyya’. If you are really serious replace this provision with 3 percent reduction in GST on our fee. It will help every student. Why force higher loan and then pay part of interest. Why direct transfer of subsidy is not implemented here. It will save administrative cost, and hassles. Why students should waste their time for a benefit which 74 out of 75 are not going to get.
Author: you seem to be very angry! May I ask, whom did you vote in last election!
Student: Who else then present leadership!
Author: surprise, why it is so despite this anger?
Student: These anomalies will go sooner or later, moving from free ration to free education is not impossible. Eliminating terrorism is more important one of my friends is studying in Shillong now, which was impossible to think a decade ago.
I listen to man ki bat of PM. Some day he will also listen to my man ki bat as well.
I was speech less but not sure that the red tape and babus will take note. People have started believing that only voice being listened by the leadership or courts, is of alleged terrorists who win election from prison, Rohingyas who get houses despite not being citizen even! or that of protestors taking the nation to ransom. The loyal middle class is facing the music by paying taxes for these anti national forces. The common man is sleeping despite pain, when awakened it brought the Na Khaunga Na khane Dunga” man as Prime Minister. Now the only worry is, whether implementation of the pious intention,”na khane dunga” will lead to common man not able to eat until he qualifies for free ration?
Time to simplify, time to be caring to the middle class.
(The content of this article reflects the views of writers and contributors, not necessarily those of the publisher and editor. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Delhi/New Delhi only)
By Rakesh kumar
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