Memo to FM Sitharaman: Put more money in people’s hands
Indian households, which have seen their incomes drop during the Covid-19 pandemic, have a loud and clear message for Finance Minister Nirmala Sitharaman ahead of the 2022 budget: Put more money in the hands of the taxpayer to fuel the recovery budding economy.
employees said DH they want the government to provide more tax relief and end the practice of taxing interest income from savings instruments such as recurring deposits and term deposits.
They also hoped to see an increase in the standard deduction limit, currently at Rs 50,000 per year.
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They also urged the government to increase the Employees Provident Fund pension rates so that older people can better cope with the rising cost of living.
Retired citizens demanded better interest rates on fixed deposits while those who invest in the markets wanted the government to consider a reduction in long-term capital gains tax on mutual funds.
Most respondents to a pre-budget survey conducted by KPMG said they expected an increase in the basic income tax exemption limit of Rs 2.5 Lakh.
Respondents also supported an upward revision of the top income bracket by Rs 10 lakh and above, and an increase in the existing Section 80C deduction limit by Rs 1.5 lakh.
Anshul Gupta, 30, a Delhi-based software engineer, said he wanted to see more than just a tweak in the tax slabs this year.
“It’s not just the tax slabs that will help the middle class. Various tax brackets for income tax are only part of the problem. I wish the government would stop taxing interest on recurring deposits (RD) and fixed deposits (FD) and also guarantee decent interest rates, because a large part of the population is like me – who does not understand and doesn’t want to take the risk of investing in the stock market,” Gupta said.
Gupta is among the majority of Indians who are not exposed to capital markets. Despite being home to a population of 138 crore, India has only 1.2 crore of active investors.
Indians are trying to find a way to save more after seeing their household incomes plummet during the Covid-19 pandemic-induced lockdowns and have been borrowing heavily to cope with inflationary pressures lately.
Data from the Reserve Bank of India in September 2021 showed an increase in bank deposits, with private sector banks registering a rise of 16% and public sector banks a rise of 7.4%.
“Besides taxing the salaried class, interest rates have also been cut sharply and are impacting the income of retirees, and except for retired government employees, few people receive a pension and even those who benefit from it are a pittance. The government should raise the interest rates on FD,” said Sri Krishna, a retired Delhi journalist.
Others, like Vidyadharan Mangalath, a communications professional, wanted the government to increase EPFO pension rates.
“Most of the elderly in our country who worked in the private sector do not receive a reasonable pension. EPFO pays a maximum of Rs 3000 per month. This pension should be increased to a reasonable level,” Mangalath said.
Those catering to retail investors had different expectations.
“Many customers we work with want the government to drop LTCG. We also agree because through this, the government would encourage long-term investment and not just trade,” said Kshitiz Mahajan, co-founder of wealth management firm Complete Circle Capital Private Limited.
Individual customers also wanted an upward revision of the standard deduction.
“Middle-class investors want more in their hands so they can spend more on investments,” said B Gopkumar of Axis Securities.
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