CA. M. Lakshmanan, Madurai

1. Formerly a deduction was allowed under section 80L for ‘Bank Interest’. This may be restored by giving deduction upto Rs.10,000/- for interest received from Banks form Savings Bank Account. At present the interest earned in such Savings Bank account is to be included in taxable income as ‘Income from other sources’, however low the amount may be, which is cumbersome. 2. Now at the time of assessment the credit for TDS is denied if the same does not appear in Form No. 26AS (consolidated statement wherein all the TDS of the particular assessee appears) though Certificate for TDS is available with the assessee. If the person who has deducted tax does not pay the TDS in time or file the TDS return properly the tax deducted will not be found in the Form No. 26AS. For the fault of the ‘Deductor’ the ‘Deductee’ is penalized. It is like the preamble of Income Tax System which says “Robbing Peter to pay Paul”; here Peter is penalized for the fault of Paul. So a procedure is to be evolved to overcome this anomaly. 3. As at present the entire Dividend is exempt at the hands of the recipient without any limit and the limited company pays DDT(Dividend Distribution Tax) @ 10% at the time of distribution of dividend. The assessee who earns Rs. 100 as well as an assessee who earns Rs. 1,00,000 are taxed at the same rate i.e. @ 10%, which is paid by the company. One who earns more has to pay more tax and who earns less has to be either exempted from payment of tax or has to pay less tax. In order to overcome this type of disparity a deduction may be allowed under section 80L upto Rs. 10,000/- and if the Dividend is more than this exemption limit of Rs. 10,000/-, the same may be added with Total Income as Income from other sources and the DDT may be allowed as rebate form the tax payable so that the income will be taxed at appropriate tax slabs.4. The limits for section 269SS&T relating acceptance and repayment of loans and for section 40A(3) relating payment for any expenditure are to increased to Rs. 50,000/- from the present limit of Rs. 20,000/-, which overdue for a long time. The latest modes of payments such as direct payment by cash into the recipient’s bank account, (which is a boon to the businessmen due to ‘anywhere banking’), transfer through internet banking and RTGS (Real Time Gross settlement) are to be exempted. These sections may be amended so as to take cognizance of direct cash payments to the parties concerned only for initiating penalty proceedings.

CA. M. Lakshmanan, B.Com., F.C.A., DISA(ICAI), FIIISLA, Partner, M. Lakshman & Co., Chartered Accountants, 16, Pandian Street, Alagappan Nagar, MADURAI 625003