Tax is the most powerful instrument on the part of policy makers and the necessary tax reform to meet the economic goal should be of utmost importance. A well-defined and targeted tax reform can propel the economic growth of the country to greater heights and otherwise can cause the whole economy to fall apart.
Thus, the process of successful implementation of
tax reform is a tedious job and it needs utmost care. Any such tax reform should include utmost rationality with respect to economic status and future needs of the country. The India's reformed tax structure is more liberal, more investor friendly and less critical than any other previously drafted tax structure of India.
The list of key tax reform that has been incorporated in the latest Indian taxation system is as follows -
- Share of partner in total income of a firm which is assessed separately
- Receipt in respect of commutation of pension as per specified limits
- Leave encashment not exceeding 8 months salary and subject to specified conditions & limits
- Receipt of amount on voluntary retirement up to Rs. 5,00,000
- Payment on a Life insurance policy, including bonus thereon but excluding therefrom amounts received u/s 80DDA(3)
- Receipt of Payment from Public provident fund or Statutory Provident Fund
- Receipt of Payment from superannuation fund
- Special benefits and allowance to employee viz., house rent allowance
- Interest payable to any bank incorporated outside India and approved by RBI
- Scholarships granted to meet the cost of education
- Agriculture income and its subsidies
- Receipt of any amount in connection with an award instituted by Government etc
- Income of approved scientific and research association
- Income of a university or other educational institution
- Income of a hospital or other such institution working exclusively for philanthropic purposes
- Income of news agency having been set up in India for the sole purpose of collection & distribution of news
- Income of specified mutual funds registered and/or set up under /by SEBI Act, 1992
- Income of Exchange risk administration fund having been set up by public financial institutions either jointly or separately as per specified conditions
- Interest on securities and bonds including premium on redemption of bonds by Non Residents
- Interests on amounts in Non-resident (External) account in any bank in India being maintained as per FERA, 1973
- Interest on specified central Government's savings certificates which were subscribed to in convertible foreign exchange remitted from a country outside India as per FERA by an individual citizen
- Income of individuals engaged in research work in India under duly approved research schemes and remuneration received from foreign government for training in a government office or undertaking as employee
- Gratuity not exceeding Rs.3.5 Lakh
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