The present law on interest income has not generated more than Rs 1,200 crore. This is because of Section 80-l, under which banks are not required to deduct tax on interest up to Rs 2,500 per annum. We, therefore, suggest a uniform levy of 5 per cent service tax on interest payable on deposits. This will curb black money without affecting bank deposits.
Nationalised banks pay over Rs 1 lakh crore as interest. The total interest payable by other institutions crosses well above Rs 2 lakh crore. A levy of 5 per cent tax may generate well over Rs 15,000 crore. This may reverse the trend of splitting money into smaller deposits.
Life Saving Drugs: The cost of essential and life-saving drugs should be brought under the lower slab of excise duty, without eroding revenue.
Tax On Interest: The present proposal needs to be replaced with 2 per cent tax on interest income from deposit as service tax. The TDS proposal during the last fiscal year created panic among the public and led to the splitting up of deposits.
Misleading Offers: New generation banks provide attractive offers to consumers, but hide vital information. Many EMI calculations lack transparency. The government should bring in a legislation to oversee that these institution clearly state the terms and method of calculating EMI, etc. The liberalised insurance business has been attracting foreign direct investment, but companies seldom give necessary information, resulting in heavy loss to consumers. While the insurance sector should spell out the end product unambiguously, the Insurance Regulatory Authority should be asked to initiate proceedings against hearing committees.
Farm Produce Distribution: The co-operative sector should be given a new lease of life through suitable legislation against fraud and misuse of income. Involvement of cooperative sector in marketing agricultural produce should be aimed at protecting the interest of farmers and consumers equally.
Mass Housing Schemes: A national housing scheme should be initiated to free middle class urban dwellers from the clutches of property dealers.
Housing Loans: Housing generates employment avenues besides stimulating old economy industries. So, interest payable on housing loans should be exempted from the income, irrespective of the year of construction. The exemption should be extended to the loanee even in cases where ownership of property vests with the co-applicant.
Group Filing Of Returns: Online filing of IT returns and certificates may be implemented. If a government employee has an income other than salary, then only he/she should be required to file returns. In other cases, group filing should be allowed.
Medical Treatment & Educa-tion: Expenditure incurred on medical treatment for self and dependents by the assessee may be exempted from the income for the purpose of calculating tax. Besides, expenditure incur-red during higher education, including tuition fee and hostel charges, should be exempted.
— The Author is Secretary-general, Centre of Indian Consumer Protection And Research
