news details |
|
|
| DEARNESS ALLOWANCE SHOULD NOT BE TAXABLE | | | R.B.Suri | 2/20/2015 11:22:21 PM |
| Dearness Allowance (D. A.) is con
sidered 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 , which is how in India DA Scheme started. 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 or so , 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 D.A. 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 D.A. 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 .DA payable to the Employees is determined with reference to a calculation based on the All India Consumer Price Index Number (AICPIN) for the Industrial Workers (Base - 2001=100). The Central Statistics Office of the Ministry of Statistics and Programme Implementation releases the AICPIN data every month.According to 5th CENTRAL PAY COMMISSION (CPC) , 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 of the Government are being paid Dearness Allowance twice in a year
2. Income Tax Act --- Provisions.
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 D.A. and the Medical Allowance (M.A.) out of the ambit of the Income Tax Act .
3. 6th CPC 's Visit to J&K
When the team of 6th CPC visited our State ten years back , I made a representation to it regarding keeping of the DA portion of the salary out of the ambit of the provisions of the Income Tax Act as also about Medical Allowance. The Commission did not pay any heed to this despite of the fact that they were convinced but practically did nothing on this score. My contentions were based on logics and strong supporting which are being discussed in the coming paras of this article . 3.Justified Contentions for Consideration of the Union Finance Ministry. Employees of the State / Central Governments are getting the Dearness Allowance (D.A.) as a part of their salaries every month on regular basis. The Government gives the DA to the Employees on the basis of rise in Consumer Price Index (CPI) , just to neutralize the 'MEHANGAI' in the Open Market.In these hard days of 'MEHANGAI' every where, the Employees are struggling hard to carry on with the day to day life. It is just not understandable as to why the DA being taxed when the same is being paid to the Employees in order to NEUTRILIZE the effect of 'MEHANGAI'. 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 . "DER AYE DARUST AYE". It is the high time to act. But only thing is that the instant issue be pleaded before the Central Government in the right earnest . 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. 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 plead this case before the 7th CPC. otherwise it would be so late in projecting the things in the right earnest before the Competent forum. Since the pleadings I am making in my this article have a sound logic & support as such merits consideration. I am reiterating again that it is understandable that all the earnings made by an employee in a particular year are taxable under the provisions of the Income Tax Act owing to the reason the employee earns his salary after putting his best services or hard labour /work to the Organization/ Government department in which he or she works. It is a fundamental one as a base for the purpose of calculation of the Income Tax. But on the contrary, the employee what he or she gets as the COMPENSATORY PAYMENT in the shape of the DEARNESS ALLOWANCE to meet with the effect of EROSION made in his salary with reference to the PRICE HIKE in the open market ---- should not be taxable at all. WEIGHING THE SALARY EARNED AND THE COMPENSATORY PAYMENT (D.A.) IN THE SAME BALANCE IS NOT JUSTIFIABLE AT ALL. This is a burning issue which should be given well thought consideration by the Central Government and the 7th Pay Commission as well . Employees are the GENTLE COWS from whom the Government can fetch the Tax as per its choice. But the need of the hour is that all leakages/or tax evasion made by the Big Corporates should be looked into seriously from where the Government can have a good yield in the shape of TAX RECOVERY which may be ploughed back for the overall development of the Nation . While winding up my this article on the issue which is of paramount importance for the employees, I strongly plead before the Central Government for consideration and the Chairman of the 7th Pay Commission as well to give some thought on this aspect while preparing the Commission's Report in the right earnest.
( The author is a socio - economic and political analyst ) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
|
|
|
|
 |
|
|
|
|
STOCK UPDATE |
|
|
 |
| BSE
Sensex |
 |
| NSE
Nifty |
|
|
| |
CRICKET UPDATE |
|
|
|
|
| |
| |
|
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
