news details |
|
|
| Dearness and medical allowances - should not be taxable | | | R.B. Suri | 6/5/2019 11:27:59 PM |
| | According to 5th Central Pay Commision (CPC), the Dearness Allowance was considered as a Compensatory Payment to the Employees for the EROSION in real value of the salaries resulting from price increase. To meet with this EROSION in the real value of Salary, the Employees and the pensioners of the Central and the State Governments are being paid Dearness Allowance twice in a year. As per the provisions of the Income Tax Act, all the ALLOWANCES are taxable. Simply it can be taken this way that any part of the salary and the item where the word ALLOWANCE is suffixed is taxable - which is 'HARSH' in nature and the cognizance of the same should be taken on priority by the Law Makers of the Country particularly the Finance Minister who may if satisfied with the various contentions to keep the DA out of the ambit of the Income Tax Act. Just for the convenience of the readers based upon the recollection of the memory, I am to describe that the Dearness Allowance (D. A.) is considered as a part of wages. In India Dearness Allowance is being paid since Second World War. During the War, DA became payable at various rates. It became payable as a result of different costs of living in different cities not known to each other. Originally, it was the textile Industry in Bombay which introduced Dearness Allowance (D.A.) Scheme firstly under the bipartite settlement and subsequently they took the shape of arbitration, adjudication and finally after knocking at the doors of Industrial Courts got into Awards, how the DA Scheme was started in India ? Based upon the rise in cost of living as also cost of consumer goods prices in particular, DA made as a part of the salary paid to an employee by the Employer. This Scheme was adopted in most parts of the World. Within the periodicity of 5-10 years, the system of DA became a Common system through the World but basic principles remained the same.In most parts of the World, though not everywhere, common platform DA became payable though, not on the same rates. Ultimately the question of DA became a subject matter of the Apex Court.The Court initially laid down General Principles for fixation of DA grant and the link with cost of living index.Slowly and gradually, the Supreme Court gave effect to DA in terms of rise in the cost of living higher prices and higher cost of living. This gave rise in the Whole of the Country for Consumer Price Index which is linked with rise in Index in different cities in the Country. It is pertinent to mention here that the declaration of the Dearness Allowance twice in a year is being done by the Government because of the reason that by doing so, a signal to the employees is given that there would be no uncertainty in the minds of the Government employees in regard to the periodicity of grant of compensation for the price rise in the open market. When the Central team of the members of the 6th CPC visited our State ten years back, I made a representation to it in writing while in regular service in the State Government as a junior bureaucrat regarding keeping of the DA portion of the salary out of the ambit of the provisions of the Income Tax Act as a part of their Salaries or the Pensions every month on regular basis. The members of the Commission did not pay any heed to this despite of the fact that they were convinced but practically they did nothing on this score. My contentions were based on the sound logics and strong supporting which are being discussed in the under mentioned paras of this article. In these hard days of 'MEHANGAI' due to the high inflation every where, the Employees are struggling hard to carry on with the day to day life in meeting the expenses for purchasing of the essentials of life for their family members. It is just not understandable as to why the DA is being taxed when the same is being paid to the Employees and the Pensioners in order to neutralize the effect of 'MEHANGAI ? This is a major question which comes in the minds of the employees and the pensioners. In accordance with the principles of administration of natural justice, D.A. should not be taxable under the Income Tax Act. I fail to understand why the serving community as a whole is not coming out in raising the issue involved with full vigor and force for reaching at a logical conclusion? It is the high time to act. Similarly it is funny to note that the Medical Allowance (M.A.) too has not been spared and this too has been bought under the ambit of the Income Tax Act. The notion of considering and treating the DA and the MA as the "Perks" is totally wrong and misconceived one. The general practice adopted by the various CPCs in the past was that they prepared the scales of the employees thereby merging and adjusting the 100 % DA which accumulated from the implementation of the previous CPC into the scales of the employees working in the various levels of the Central Government. The new scales are always effective from the beginning of the CPC and reducing the DA portion as zero. As long as some amount becomes due as the DA to neutralize the effect of the MEHANGAI should not be taxed at all. The moment DA is merged or adjusted in the various scales of the employees as a part of their Incomes then only it should be taxed and before that it should not be taxed. Similar is the case with the MA which the employees and the pensioners are being paid to meet with the medical treatment and for purchasing of the various medicines, should not be made as taxable under the Income Tax Act. Both these stipulations are harsh in nature and have no sound logics for treating them as taxable. A big chunk of Intelligentsia is in the Government jobs, they should rise to the occasion and act promptly for demanding and keeping the DA and the Medical Allowance out of the ambit of the Income Tax Act. It is worth mentioning over here that majority of the law makers in this country are generally illiterates and they don't have the sense in analyzing the things properly in the right perspective resulting which the concerned are being treated as sheep and goats in this civilized society. This is very much unfortunate. The sorry state of the affairs is that the learned judges and the Lordships who too are getting the same and being taxed arbitrarily, even they don't react over this important issue involved. The situation demands that they should also apply their minds coolly on this score and do the concerted efforts for keeping the DA and the Medical Allowance out of the ambit of the Income Tax Act. This requires an amendment to the definition of the term Income as defined in the Income Tax Act and the DA and the Medical Allowance be kept out of the ambit of the Income Tax Act. The trade unions and the employees associations across the country should rise to the occasion and make the decisive struggle for keeping the amount the DA and MA out of the ambit of the Income Tax Act. Individually one can go on fighting with the government on his own but collectively this means much. Therefore, the trade unions and the employees associations across the country should go to the Apex Court in filing a Petition praying therein for keeping of DA and MA out of the ambit of the Income Tax Act. I am 100 % sure that they will get the verdict in their favour. Presently, the son of the soil - Dr. Jatinder Singh is a MOS PMO and is working under the direct command and control of the Prime Minister of India Narender Modi should give his appropriate advice to the PM Modi in this regard. Dr. Jatinder Singh who is a straight forward and quite intelligent political personality of the state should plead with PM Modi about this just genuine cause of the employees and the pensioners in the right earnest. It is expected that shortly the Modi government would announce the various welfare schemes for the employees and the pensioners as well besides the removal of the DA and the MA from the term Income as contaibed in the Income Tax Act. This, the popular government at the Center led by PM Modi can do very easily in the very interests of the employees and the pensioners. PM Modi's action on this score would go a long way in getting the whole hearted support of the employees and the pensioners to his government at the Center. This act of the Modi government would certainly give the sigh of relief to the working class and the pensioners across the country. |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
|
|
|
|
 |
|
|
|
|
STOCK UPDATE |
|
|
 |
| BSE
Sensex |
 |
| NSE
Nifty |
|
|
| |
CRICKET UPDATE |
|
|
|
|
| |
| |
|
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
