Not just in India but around the world, every political party tends to make and declare its manifestos among their citizen of people during their election times. And everyone knows that this document is the most irrelevant in the democracy world because it makes with full of vague intentions and suffer from an implicit bias against the income earner, tax payer and investor community. But this time, we do hope that our Modi Government would like to pay attention our concern personal finance and saving issues that never took by erstwhile government. Since, there is no dearth of issues relating to savings, taxes, real estates and stock markets etc., we have made a brief gist of the most important personal finance issues that Modi Government must take in its agenda of economic reforms so that every saver and investor to get prosper.
- Make Tax Slabs and limits Inflation-linked
In 2005, the renowned taxes saving investment under section 80C was enhanced to Rs1 lakh, which has been remained after almost a decade. The cumulative inflation over this period has been grown 112 percent. It means the existing limit of Rs1 lakh has now become effectively worth just paltry sum of Rs47,000. The same also holds true for medical insurance, education loans, housing loans, house rent and all other exemptions. Our earlier finance ministers are used to raise the tax exemption level and the tax slabs erratically appear to be grandstanding by announcing raised slabs in their budget speeches. They delivered statements and provisions in the favor of electorate, rather than as rightful and pace with routine inflation adjustment.
Modi Government should link all tax slabs and exemptions to inflation year on year basis so that inflation could not eat into post-tax income by putting ever- higher proportion of our income into its own pocket.
- Getting rid of absurd Tax Notices and Demands
Every finance minster talks in his own budget speech about simplified and cleaned up tax administration but they have been hiding the reality since last two years as we have already been seen the most hostile tax administration adopted by an incompetent revenue department. For two years, 2011-12 and 2012-13, lakhs of taxpayers had received absurd tax notices and demands whose sole aim was to boost immediate tax revenues even if they have to be refunded later. Corporates, rich tax payers and middle class taxpayers have been so much harassed into paying up taxes not due from them. Having this practice, CAs and tax lawyers get great business and they use colorable devices to avoid taxes and charge hefty fees from them. So, Modi government must clean up the tax administration and enforce an attitudinal change.
- Simplify and bring Direct Tax Code (DTC)
Going back 2009, the previous government has been proposing a new Direct Tax bill to replace the half-century stale Income Tax Act. The proposed code was genuinely simper and fairer. But over the years, several rounds of changes have been made the DTC is becoming more complex than it needs to be. Modi Government should quickly bring in the simplest possible version of the DTC and implement accordingly in the early of financial year of 2015-16.
- Eliminate meaningless KYC activity
Repeated and redundant KYC, I would say ‘Kill your customer’ not ‘Know your customer’ activity has become a major obstacle in spreading the financial inclusion as KYCs that do nothing but harass customers. Every financial institution and service providers could be held liable and thus do repeated own KYC requirement whether our banks, AMCs, stock broking houses, insurance, telephone and mobile operators and so on. Modi Government must make the Prevention of Money Laundering (PMLA) law less onerous, mere tinkering with rules are not going to rescue citizens from the KYC menace.
- Regulatory Changes for Mutual Fund Investors
Mutual fund industry has been undergoing a lot of regulatory changes over the last few years. The abolition of entry load was the biggest revolutionary change for the interest of investors to increase their returns. But aftermath, distributors are being getting paid for the transaction in the form of trail commission. Modi Government must ask SEBI to create a completely new remuneration framework wherein everyone is rewarded in proportion to how long the investor stays invested and how much returns he generates.
- Regulation on Real Estate
Over the decade, real estate is the under-regulated as large proportion of real estate developers are crooked and the housing industry is full of shady practices. No government is willing to do anything about it because politicians are involved in real estate business themselves. There is a Real Estate Regulation Bill that has happened is that several versions of the bill have been made more and more lax under pressure from builders. And it is now awaiting parliament’s nod for Lok Sabha and has lapsed yet again. We urge to Modi government that should bring in effective, undiluted real estate regulations that can protect consumers from the industry’s practice. Developers who have been cheating investors must be given exemplary punishment.
Suresh Kumar Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner’s Guild, India. He is also a member of Financial Planner’s Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in