Close

	Receiver's Name:		*
	Receiver's Email:		*
	Your Name:		*
	Your Email:
	Your Message:

Raise exemptions in Budget to Match Economic Reality

We are thankful that the tax law offers many exemptions on allowances such as HRA, LTA, Children's Education Allowance, Hostel Allowance and Conveyance Allowance. However, many of these were last updated in 1997 and are at levels that are totally outdated given today's economic reality. We would like to see the limit on some of these allowances extended to match the reality of today's level of expenses.

The following are some of the most relevant allowances that affect the common person and that need to be updated:

Children's Education Allowance: This is currently set at Rs 100 per month per child, maximum up to 2 children. Considering the school fees being charged today, we think even government schools, let alone private schools, don't charge a fee that is this low. Why not update this allowance limit to match the reality of what school fees really are?

Hostel Allowance: This is currently set at Rs 300 per month per child, maximum up to 2 children. Living costs have gone up a lot since 1997 when this allowance was last updated. Its unlikely that this allowance is suitable for today's level of hostel expenditure, even if the facilities are very basic.

Transport Allowance: This is currently set at Rs 800 per month for commuting between one's residence and place of employment. Petrol prices have gone up dramatically and have raised the cost of running one's own vehicle, or of using public transport. Now with a government panel's latest recommendations (announced in February 2010) to raise petrol and diesel prices again, the current level of the allowance is even more out of touch from the actual expenditure that a common person faces.

We would recommend a reality check on the level of the above allowances so that they match the current level of prices in today's India.

Comments

Thanks for your comment