Subhash Lakhotia has been an income-tax practitioner for over 25 years. He is the Executive Director of R N Lakhotia Investment & Taxation Consultants, Director of Studies of Lakhotia College of Taxation & Management and Editor of Tax Saver, a well-known monthly journal on tax planning and tax saving. He answered questions related to Union Budget 2008-09 on IBNLive.com on Friday. Here is the full transcript of the chat.
Preeti: Do you think that this Budget has been pro-growth in India or is largely motivated by political profit?
Subhash Lakhotia: Overall I feel it will benefit the tax payers but surely political profit cannot be denied. More particularly when we see the waiver of loans by farmers.
Yagnadatt N: How the relief given to farmers will be adjusted from the income of the government?
Subhash Lakhotia: The government has yet to announce the manner in which it will adjust.
Vikram Singh: Sir, farmers have received a Rs 60,000 crore package, but where do you think these finances will come from ? Will the middle class suffer again?
Subhash Lakhotia: I don't think that consequent to the relief given to the farmers, the middle class has to suffer. Only the deficit of the government would go up. This is what I feel. Government cannot aim at giving benefit to the farmers at the cost of middle class persons.
Aditya: Hi Subhash. Can you please tell what are the detailed implications of this Budget for a salaried person? Is the personal investment cap of Rs 1 lakh same or altered?
Subhash Lakhotia: The salaried class like any other individual tax payer will benefit a lot specially because of the increase in the basic income tax exemption. The limit of Rs 1 lakh remains unchanged.
Jai Kishen: As FM has not extended STPI scheme, as per your view what will happen to IT companies who are already suffering because of US recession, rupee appreciation?
Subhash Lakhotia: They will be governed by the provisions as they appear in the IT Act. They will enjoy no special benefit.
Jaimin Deliwala: An assessee incurs loss under derivative transactions fulfilling the criteria of section 43(5)(d) of Rs 2,00,000. His business profit is Rs 5,00,000. Can he set off the derivative loss against the business profit as section 43(5)(d) do not deem the derivative transaction as speculative transaction? Kindly advice.
Subhash Lakhotia: Happy news for you. Yes you can adjust the derivative loss with business income.
Prasad: Sir, my present income is Rs 10 lakh per annum. By availing all the benefits under Sec 80 and with the new tax slabs what would be my savings on IT?
Subhash Lakhotia: You would save nearly Rs 45,320 income tax as a result on new Budget proposals.
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Avinash Kiran SM: Housing loan interest and principal portion is exempted to the tune of Rs 2.5 lakh and Rs 1 lakh to both applicant and co-applicant or confined to applicant only.
Subhash Lakhotia: The benefit will be available separately to each individual hence in joint purchase of property both co-owners would enjoy tax benefit.
Prashant: Do you think that in a country where so many people are below poverty line, raising tax slab an good idea?
Subhash Lakhotia: Yes, it is a good idea to inspire tax players to declare their correct income.
VV Singh: How do I utilise the Rs 15000 tax benefit under section 80D for insurance of parents. My father is 67 year old?
Subhash Lakhotia: You can take out a policy in his name and claim the benefits.
Girish: Hello What would this Budget mean for IT professionals in the around Rs 10 lakh salary range?
Subhash Lakhotia: Relax and save income tax up to Rs 45,320.
Harish: Why can't Mr Chidambaram have tax holidays for the common man (salaried class) say for five years?
Subhash Lakhotia: Great idea, but the FM has also to collect taxes for the country.
Sunny Ahuja: Sir, could you tell me that by giving relaxation on tax would the number of tax payers going to increase or it is the only step for the benefit of common people. My question to you is what will going to be the profit of the Indian government by giving this relaxation?
Subhash Lakhotia: It will inspire people to declare correct income and more tax payers will ultimately come in the tax net due to simplified tax provisions.
Xans: What is overall your opinion about this Budget?
Subhash Lakhotia: Overall it is really a great Budget.
Preeti: With all his noble intentions, Mr Chidambaram does not really seemed to have helped the farmers. Most have landholdings larger than two hectares or have borrowed from the moneylender. What policies can the FM take to combat this?
Subhash Lakhotia: Large holding farmers will not benefit from the relief announced by the government.
Harish Ravi: Why should one lock their money at least for three years to save taxes under section 80(C)? I mean if they want to control liquidity it is not logical considering there are millions and billions rolling in the street in the name of IPL and markets?
Subhash Lakhotia: You stay tuned for three years in 80 c investment and you enjoy big tax saving right now and also when the money gets matured
Jai Kishen: I have serious doubts about the growth story that FM is projecting. Can we achieve nine per cent growth amid US recession, no bonanza for IT, export and with Rs 60,000 crore loan waive. Your comments.
Subhash Lakhotia: We can achieve the growth rate if the policies are properly carried out.
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Prasad: I have already availed housing loan previously and propose to take one more. Both these loans will entitle for tax benefit and if yes to what extent of principle and interest?
Subhash Lakhotia: No. Only tax benefit for first house. If second house rented out then interest deduction also allowed for second house.
Rama Sharma: What about he surcharge on the Income Tax? Does it continue?
Subhash Lakhotia: Yes it continues, no change at all.
VV Singh: How much a person stands to gain under new tax slab. my income is Rs 10 lakh per year.
Subhash Lakhotia: You will gain Rs 45,320.
Jai Kishen: Don't you think by waving farmer loan government has given pain killer to a disease, but it did nothing to cure the disease. So once pain killer effect is over again farmer will be in pain.
Subhash Lakhotia: Yes I personally agree with your view point. There should be permanent solution indeed.
Abhisek Naidu: When a lot of flow is talking place in security market and also SEBI is making a lot of money. Is it necessary to increase the tax on short term gain?
Subhash Lakhotia: This only FM knows. But I feel in short term if you make money you find no problem in making payment of 15 per cent tax.
Jai Kishen: Has FM clarified when capital gain tax will be considered if one involves in share market.
Subhash Lakhotia: Sorry, Budget has not clarified it.
Umesh: Hello sir, My net taxable income is around Rs 4 lakh after taking exemption of Rs 1.10 . With the new tax slabs what will be the total tax?
Subhash Lakhotia: Your income will be almost Rs 3 lakh. You will pay only Rs 15,000 Income tax. Relax and enjoy
Mohan: What about the cost of laptop? Will it increase or decrease?
Subhash Lakhotia: See the market price and than buy.
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Jigar: what you say about FBT?
Subhash Lakhotia: Virtually no removal of the problems relating to FBT
VV Singh: The farmers who are indulging in suicide are the one who have taken loan from money lenders at hefty interest and not the one who have taken from bank. Has finance minister looked into this problem?
Subhash Lakhotia: The loan which will be waived is only when taken from bank and not from private financer.
Venkatesh Kulkarni: What are the benefits from this Budget to a salaried man/women who are mid management category in respective industries.
Subhash Lakhotia: They will save income tax like any other individual
Prasad: Is there any other change with respect to HRA, conveyance or FBTs etc in the Budget proposal?
Subhash Lakhotia: No, FBT Small change not relevant to you.
Naveen: Hello, ironic that cars are becoming cheaper when petrol prices are rising! What can the FM do to relieve the common man of this burden of increasing fuel prices?
Subhash Lakhotia: He has lowered the price of the cars
Prashant: Why share market is not responding with enthusiasm to this Budget?
Subhash Lakhotia: Ask the operators, but I think it will settle down shortly
Saurav Chandra: 1. What changes about the rate of CST ? 2. Please clarify the additional deduction of Rs.15,000 u/s 80D towards insurance premium for parents ? Previously it was Rs.10,000+Rs.5,000= Total Rs.15,000. 00. Now, it will be {Rs.10,000+ Rs.5,000+Rs.15,000=Rs.30,000 or not?
Subhash Lakhotia: Now it is 15000 + 15000 for parents. If parents are senior citizens than 15000+20000. Happy news.
Nazir: Sir, is there any change in interest payments on housing loans?
Subhash Lakhotia: No, Not at all
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Srinivas: Sir, A specific question. I already have a house in my name in Delhi although not got possession. I have bought a second house on loan in Chennai where I live. Now my questions are: 1. Can I treat my Chennai house as "deemed to be let out" and set off the loss on this (as EMI is more) against my salary income. If so, to how much extent? 2. With the present Budget, what is the net increment of taxation I get taking into account only the slab change? I am not planning to invest in the other 80 C benefits given.
Subhash Lakhotia: No special deduction for house loan. You can take the benefits however actual facts required to be seen in greater details.
Taxy: How will it affect tax benefit margins?
Subhash Lakhotia: Yes, I think so
Harish Ravi: Housing loan was considered as a tax saver but with housing loans at nearly10 per cent and tax rate at 10 per cent for people who earn in that range, I feel cheated somewhere had I taken a loan before this Budget?
Subhash Lakhotia: No cheating, long range benefit by housing loans.
Amrendra: How the senior citizen person get benefited from this Budget, if they are earning interest of Rs 3 lakh per year?
Subhash Lakhotia: Their tax rate comes down due to Budget. They will save
Jai Kishen: What is the point in giving tax holiday to 3,4,5 star hotels?
Subhash Lakhotia: Please ask the FM. But I feel it is to encourage the hotel industry to meet the growing demand.
Ankita Sharma: sir how the present Budget have affected the manufacturing sector?
Subhash Lakhotia: Definitely all are happy.
Harish Ravi: Can 2008 Budget be called as Dream Budget for aam aadmi?
Subhash Lakhotia: Yes I think so.
VV Singh: No one is keen to join armed forces now a days. Finance Minister could have given an attractive tax slab for defence men at par with the senior citizen to attract young people to defence forces?
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Subhash Lakhotia: Your suggestion will be forwarded to the FM
Dev: My question is regarding TDS and tax return with regard to the new tax slab announced by the FM.
Subhash Lakhotia: Please remember the new tax rate will be applicable for the FY 2008-09.
VV Singh: Is there a limit on tax exemption on the loan for purchase of second house?
Subhash Lakhotia: No, but if let out than interest deducted
Prasad: Sir, If I close my previous housing loan and avail afresh, will I get exemption for the fresh one?
Subhash Lakhotia: Yes.
PV: Hello sir, my gross income is Rs 4.4 lakh per annum. How much tax I have to pay approximately after new tax slabs being introduced?
Subhash Lakhotia: You will pay tax for the next FY as per the new slabs namely up to 3 lakh - 10 per cent and after 3 lakh at 20 per cent. After availing basic new exemption.
Neeraj: What will be the impact of tax rates on security market?
Subhash Lakhotia: Short run adverse impact. I feel few day's later it will be ok.
VV Singh: Sir how do we utilise the Rs 15000 old parents insurance tax waiver?
Subhash Lakhotia: Buy medical insurance for your parents.
Harish Ravi: If I have to get refund from Income tax can I ask my employer to offset that money and deduct remaining tax?
Subhash Lakhotia: No, not at all
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Ganesh: Is there is any reduction of excise duty on bio fertilizers?
Subhash Lakhotia: Please see the exact Finance Bill.
Preeti: Considering the current recession in America and here in India as well, o you think it was the right time to come out with a populist Budget like this?
Subhash Lakhotia: This can be answered only by the FM
Prema: Why no change in corporate tax rate?
Subhash Lakhotia: I think government feels they are reasonable
Ganesh: What are the benefits of excise duty give to bio science sector?
Subhash Lakhotia: Ultimately cost will come down of the products.
Neeraj Bhatia: Do you feel construction in power sector is for generating more new employment? But then what will happen to blank space in government?
Subhash Lakhotia: This is the government's thinking.
Srinivas: Sir, with the raise in the exemption limit to Rs 1.5 lakh how much I am benefited as my salary is Rs 17 lakh per annum.
Subhash Lakhotia: You will save Rs 45,320
Amit: How do you calculate tax slabs. Is Rs 150000 is taxable income or non taxable?
Subhash Lakhotia: It is net taxable income
BP Rai: What will be the IT exemption limit and tax slab for HUF?
Subhash Lakhotia: Same as individuals
Sindhu: I don't agree with the FM's stance of taxing AMCs. This will pinch investments for salaried individuals. Please comment.
Subhash Lakhotia: You definitely have a point. Will pass on your sentiments to the FM.
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