Thread by @sri9011

1. "No significant tax sops have been provided to the middle class."

Totally incorrect
🔹Threshold IT limit raised by 50,000
🔹Sec 80C raised by 50,000
🔹Home loan interest deduction raised by 50,000
🔹Additional 50,000 for NPS
🔹Tax rate of 10% tax slab lowered to 5%

🔹New section 80TTD allowing deduction of interest on bank and postal deposits to senior citizens upto Rs.50K
🔹Section 80D mediclaim limit raised
🔹For self-employed, deduction of house rent u/s 80GG raised from Rs.2000 pm to Rs.5000 pm
🔹Standard deduction of 40K for pensioners

The above tax cuts for the middle class in Budgets of 2014 to 2018 have been substantial. Net net, it can be said that a middle-class income-tax payer is better off by Rs.57,500 (20% tax bracket) and by Rs.77,500(30% tax bracket) than he was under the UPA in FY 2014-15

2. "The middle class has not received significant tax breaks, which could have otherwise acted as a balm. "
Totally incorrect. Facts set out as above. Taken all 5 budgets of Modi Govt together , middle class much better off than in 2013 or 2014

3. Due to prudent fiscal management, inflation reined in. As a result, home loans cooled off from int. rates of 11.75% in 2013/2014 and 11 to 12.25% between 2007 and 2014 to 9.5% in 2016 and 8.35%. Recently, only 0.20% increased which is flea bite to UPA-era rates

The author has not factored in huge savings in interest
On 50,00,000 loan EMI @ 11.75% for 20 years: Rs.54,185

On 50,00,000 loan EMI @ 8.7% for 20 years: Rs.44,026
hdfc.com/home-loan-emi-…
That is some Rs.10,159 per month savings in EMI

4. "Petrol prices are at a four-year high despite crude oil prices declining globally. "
Petrol is:
🔹Polluting fuel..so higher taxes justified on 'polluter pays' basis
🔹Petrol used by well off. 2-wheelers dont cost less than Rs.60K these days. They dont come for 5K/10k

🔹Petrol tax cant be evaded .It is progressive while income-tax is regressive.I earn. So does my neighbour. I pay income-tax. My neighbour can evade. Hence, IT is regressive.I have a car. So does my neighbour. I buy petrol & pay tax. So does he. Hence petrol tax is progressive

What is the maximum one is paying more for petrol? Only the increase in excise duty as cascaded by the ad valorem VAT of states. Petrol tax by Centre is on "specific basis" ie per litre basis. Therefore, it doesnt cascade whenever international prices go up.

State VAT cascades as it is on advalorem basis. Every time intl prices go up by Re.1, I end up paying 1.20 to 1.40 varying from state to state. State should change from advalorem VAT to per litre VAT to eliminate cascade effect

That said for someone who travels to and fro office and residence some 60km, taking a mileage of 15, that is 4 litres/ day. Increase in excise is Rs.10 compared to UPA era. That is Rs.40 per day.For 25 days, it is Rs.1000 more . Add 20% to 40% VAT. That is additional 1200 to 1400

Rest of the increase/decrease due to international prices would have been passed on to you regardless of party in power as petrol was deregulated much before diesel. So, if you are travelling 60 Kms a day, you are saddled with Rs.1200 to Rs.1400 per month due to excise increase

Now, the best solution would have been to eliminate personal income-tax altogether as it is not evasion-proof and is evasion-prone in the best of legal systems and to increase petrol/diesel taxes suitably say be Rs.30 per litre. However, this was not practical. so via media taken

And also it is not practical to identify at petrol vends who is income-tax payer or not and charge differential rates of excise duty and fuel price. So decent tax cuts of Rs.4500 to Rs.6500 per month passed on to IT -payer against which he has to fork out additional 1200/1400

Add to it the 10K per month home loan interest savings also. Tax-evaders dont go for home loans. They take entries for white component and pay rest in black when they buyt homes
Now the guy who is evading Income-tax also has to fork out additional 1200 to 1400 per month

The income-tax reliefs given to honest income-tax payers have been made good by recovering Rs.1000 excise from lot of people who may or may not be income-tax payers. This is the fiscal balancing done.

"The senior citizens, who depend on interest income, are suffering because of a low-interest regime on account of demonetisation"
Not at all. The interest rate reductions were there in bank deposits, not on postal savings. Postal int rate down by barely 0.25% to 0.40% in 4 yrs

Besides senior citizens having demat accounts can invest in PSU tax-free bonds issued in 2013/2014. These can be bought from secondary market after checking their yields

The Vajpayee Govt brought down postal int rates by 4% in 6 years..from 12% to 8%. The home loan rates were brought down by some 6% from 13.25% to 7.25%.

In Contrast Modi Govt cut postal rates by 0.25% to 0.40% and gave 3% cut in home loan rates

Vajpayee was like a weight-trainer who reduced weight by 20 kilos in one year and made the client feel tired and drained out.

Modi in contrast made client shed weight by 12 kilos in a year without feeling anaemic or weak and make him feeling fresh and energetic

In this thread--my rejoinder to the Swarajya Article "Is the Middle-Class looking beyond BJP? @threadreaderapp Unroll