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from India Insight:

Budget 2014: Give Indians tax breaks, more ways to invest – experts

Arun Jaitley's first budget as India's finance minister should allow individual taxpayers to invest more money in vehicles such as government savings bonds, mutual funds and employee savings plans, and provide them with tax credits that would bolster their savings and boost economic growth, tax experts say.

Income tax rules allow for an annual exemption of 100,000 rupees ($1,700) in investments and expenditures such as life insurance and home loan repayments, a rule that has remained unchanged for about a decade. Such investments, along with public provident funds, employee provident funds, five-year term deposits in banks and equity-linked mutual fund savings plans are good for individuals and also help keep the economy on a strong footing, said Suresh Surana, founder, RSM Astute Consulting.

“Savings need to be channelized into economically productive avenues which are what Section 80C essentially provides for, investment either in government securities or bank deposits or life insurance,” said Surana.

These comments come as the Bharatiya Janata Party, which won parliamentary elections and installed Narendra Modi as prime minister in May, releases its first annual budget for the country on July 10.

from The Great Debate:

The lost promise of progressive taxes

By midnight on April 15, roughly 140 million Americans will have filed their federal income tax returns and breathed a sigh of relief. Politicians from both parties, however, will spend most of the day criticizing our current tax system.

Conservatives bemoan that not enough people are paying taxes. They insist that a minority of “job creators” and “makers” are underwriting the social benefits that go to the “takers.” Liberals cite the growing concentration of wealth and lament that the rich don’t pay their fair share. In this new Gilded Age, they say, the 1 percent should be paying far more of their annual earnings.

from India Insight:

Revised India tax code proposal targets foreign companies, wealthy people

Companies with as little as 20 percent of their global assets in India could find themselves facing tax bills in deals involving their domestic units under changes to the tax code that the government proposed on Tuesday.

The government’s Direct Taxes Code 2013 recommended the change along with a new income tax bracket that would require rich people to pay higher taxes.

from The Great Debate:

States act on tax reform

The United States needs tax reform -- and soon. Our corporate tax rate is 35 percent, while the European average is 25 percent. We are not competitive. Our individual tax code has rates too high and too many politically driven tax credits and deductions. All true. But it’s also likely that no real tax reform will move in Washington for the next three years.

Why? Because the Democrats,who control the White House veto pen, oppose any reform that does not include at least $1 trillion in higher taxes on net and the Republicans, who control the House of Representatives, will never vote for such a tax hike.

from The Great Debate:

IRS at 100: How income taxation built the middle class

Exactly a century ago, on October 3, 1913, President Woodrow Wilson signed the first modern federal income tax into law. The sky did not fall.

That may have surprised the eminences of the American plutocracy. For years they had predicted the most dire of consequences should the federal government begin taxing the incomes of America’s most comfortable.

from Expert Zone:

Tying up loose ends after filing your income tax returns

(Any opinions expressed here are those of the author and not of Thomson Reuters)

There was a record increase in tax returns filed electronically this year after new rules made it mandatory for taxpayers with a taxable income of more than 500,000 rupees to file returns online. This change added to the last-minute rush, with the government extending the deadline by five days to Aug. 5.

Tax filing season can be painful and the last-minute rush has been known to cause a few errors. Here’s how you can make the process more efficient.

from India Insight:

Taxing times for reporters on the Chidambaram beat

(Any opinions expressed here are those of the author and not necessarily of Thomson Reuters)

Finance Minister P. Chidambaram’s drive to shore up government coffers is not just giving businessmen sleepless nights.

from The Great Debate:

Jindal’s model for tax reform

With dueling budgets being introduced on Capitol Hill this week, the possibility of tax reform is the talk of Washington. As we predicted before last November’s elections, tax reform will be on the agenda in 2013 – but has its best chances in the states. We are seeing that demonstrated Thursday by Louisiana’s Republican governor, Bobby Jindal.

Jindal unveiled what could be, if approved by the legislature, the boldest, most pro-growth state tax reform in U.S. history. His plan, outlined in Baton Rouge this morning during a joint meeting of the House Ways and Means Committee and the Senate Revenue and Fiscal Affairs Committee, calls for the elimination of all state personal and corporate income taxes, as well as the state franchise tax on capital stock. This would be replaced by an increase in the state sales tax rate to 5.88 percent, up from 4 percent. The sales tax would also apply to a broader base of goods and a number of services previously untaxed.

from Expert Zone:

Time for a shift in the tax incentive regime?

(Any opinions expressed here are those of the authors and not of Reuters)

The Indian economy is currently on the path of reform with the government liberalising FDI policy and relaxing overseas debt funding. And with the union budget just around the corner, investors are hoping for incentives on the tax front as well.

Traditionally, the government provides profit-linked tax incentives to promote investment in specified industries/states. However, considering the increasing need for investment in developing economies like India, the government is considering a shift from profit-linked tax incentive schemes to investment-linked tax incentive schemes. The desire for such a shift was clear under the proposed Direct Tax Code Bill.

from The Great Debate:

Populists, plutocrats and the GOP sales tax

February 1913 marked a turning point in U.S. history. One hundred years ago this month, the states ratified the 16th Amendment, clearing the way for adoption of a federal income tax. Two decades before, in 1892, the Populist Party had first put a progressive income tax on the national agenda.

The income tax faced steep conservative opposition. Since it was enacted, in fact, the political wars over income tax have never stopped. Conservatives battled against it when it was first proposed and have continued the struggle ever since. Now, Tea Party conservativism has given that fight new force.

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