For last few days, there was much noise about the tax on EPF. Thankfully the government has reversed the same now. But there is a feeble cry in my mind for a long time. This is about the non-taxable nature of Leave and Travel Allowance (LTA). To makes things simple and not to waste time on things that are not related to this post, please read about LTA here: http://taxguru.in/income-tax/taxability-of-leave-travel-allowance-lta-and-relevant-aspects-to-keep-in-mind.html
So what is the problem with LTA? I am not against LTA tax exemptions. But I am asking why traveling alone is given a privilege over other forms of recreations or entertainments? It is correct to argue that travel encourages tourism and indirectly benefits the economy and hence the tax exemption. But this can be said to anything. For example, a good guitar costs around 7,000 to 15,000 rupees. A good set of encyclopedia costs around 5,000 to 10,000 rupees. A hobby telescope costs around 4,000 to 8,000 rupees. Can you get tax deduction on these? They also encourage trade and business. It is profitable for the business and pays the craftsmen. It also encourages the "scientific temper" among the public which in turn may result in more inventions, discoveries, creativity and overall progress of the nation. Why there is no tax exemption on these things?
Also not everyone likes to travel. For example, I like to spend days together in a locked room than visiting 10 locations in 3 days. It is neither relaxing, not informative to travel that much in the small vacations we avail now-a-days. Some people may have a working spouse or studying kid or bedridden parents and hence couldn't plan for a travel. Physically challenged people, people with chronic diseases etc. also prefer to stay home instead of taking that extra risk of travelling. Also travels result in increased number of accidents, which indirectly harm the economy through reduced productivity, insurance cost and loss of life. As we can see, LTA is skewed towards people who like to travel a lot. But why leave behind the considerable population who don't want to travel?
A group of friends can travel to Goa or Pondicherry and booze and happily claim the travel expenses under LTA while another group of friends interested in astronomy have to fund their telescope without any encouragement like tax benefits. Is this acceptable? I think it is not! I try my best to list few of the things that can be exempted from tax. This can be clubbed under one new category "Recreation and Hobby Allowance" or RHA!
a. Exercise and Fitness Equipment
As an encouragement towards a stronger and healthy India, fitness equipment with valid scientific backing can be excluded from taxation. Why I say they should have valid scientific backing? Because claiming tax benefit for a magnetic amulet that can "cure" obesity is not what we want end of the day, right? Indian Medical Association and other such Government bodies should have a transparent process to identify valid fitness equipment so that people can get tax benefits for them. Also spending on proper sport gears like balls, nets, helmets etc. for children should be non-taxable for the parents. The price tag on a 600 rupees shoe will look like 540 rupees for a salaried middleclass parent. Will it not encourage a student somewhere to become a Olympic gold medalist holding the Tricolor?
b. Musical Instruments, Drawing and Painting Tools and the Likes
Music is integral part of our culture, so are the various arts. Music, drawing, painting, dancing, sculpting and other forms of arts demand lot of money for the equipment and tools involved. We all know that it is not cheap to learn any art. And art has no age too! Art is long and life is short, right? Is it wrong to learn Tanjore painting at 35? I am not even saying that the fee amount should be non-taxable (I will be happy if it is!) At least the money spent on the articles, tools and instruments involved should be non-taxable. Again, institutions like UGC should strongly scrutinize the candidates for this exemption as pseudo-science and religion can sneak in to this category easily.
c. Books, Infotainment Media (CD/DVD/e-Books/Downloaded Contents)
We are reading lesser and lesser if we don't consider our WhatsApp and Facebook ASCI diarrhea as reading. Good books are indicators of a good culture and civilization. In this modern era, not only books, but interactive software, videos and audios can also play a good role in shaping us. Again, government should make sure that no religious or pseudo-scientific books or media slips in to this category.
d. Scientific Hobbies
Young children often ask their parents "Dad, can you buy me a microscope?" or "Mom, can I get a electronics kit for this birthday?". Even if the parent is willing, when they check the price of the "gift", they get upset and settle with a video game console or a cricket bat, for which the kid shows no interest. But when the kid doesn't get what it loves and forced to love what it gets, we are silently murdering a scientist in making. If the government gives a double tax benefit on scientific equipment (again no pseudos!), we can see more and more kids looking in to the night skies or testing the salinity of the nearby pond. Who knows how many Sir C. V. Ramans and Satyendra Boses are going wasting time on WWE only because they couldn't get their hand on a book or an instrument they wished for? Giving a 10 or 20% tax benefit on these items can return the nation in many ways. Even if only 1 out of thousand becomes a scientist, given the population of India, we will be world's number 1 in few decades.
Conclusion
There can be more such things which can be classified as both entertainment/hobby and beneficial to the individual and society. I am not here to list them all. This post is just to share my opinion on the skewed nature of LTA benefits. Why I am saying this is because, government cannot decide that travel alone is what everyone wants and it is not sufficient to give travel alone some tax benefits while things far better and beneficial than travel are given no encouragement at all. As we have seen in above examples, there are lot many things people like to get involved in their free time. Given the direct positive effects on trade and economy and the indirect benefits of building a stronger and brighter nation, tax exemption on these secular and scientific areas of human interests is need of the hour!
 |
| Why traveling alone is given a privilege over other forms of recreations or entertainments? |
Also not everyone likes to travel. For example, I like to spend days together in a locked room than visiting 10 locations in 3 days. It is neither relaxing, not informative to travel that much in the small vacations we avail now-a-days. Some people may have a working spouse or studying kid or bedridden parents and hence couldn't plan for a travel. Physically challenged people, people with chronic diseases etc. also prefer to stay home instead of taking that extra risk of travelling. Also travels result in increased number of accidents, which indirectly harm the economy through reduced productivity, insurance cost and loss of life. As we can see, LTA is skewed towards people who like to travel a lot. But why leave behind the considerable population who don't want to travel?
A group of friends can travel to Goa or Pondicherry and booze and happily claim the travel expenses under LTA while another group of friends interested in astronomy have to fund their telescope without any encouragement like tax benefits. Is this acceptable? I think it is not! I try my best to list few of the things that can be exempted from tax. This can be clubbed under one new category "Recreation and Hobby Allowance" or RHA!
a. Exercise and Fitness Equipment
As an encouragement towards a stronger and healthy India, fitness equipment with valid scientific backing can be excluded from taxation. Why I say they should have valid scientific backing? Because claiming tax benefit for a magnetic amulet that can "cure" obesity is not what we want end of the day, right? Indian Medical Association and other such Government bodies should have a transparent process to identify valid fitness equipment so that people can get tax benefits for them. Also spending on proper sport gears like balls, nets, helmets etc. for children should be non-taxable for the parents. The price tag on a 600 rupees shoe will look like 540 rupees for a salaried middleclass parent. Will it not encourage a student somewhere to become a Olympic gold medalist holding the Tricolor?
b. Musical Instruments, Drawing and Painting Tools and the Likes
Music is integral part of our culture, so are the various arts. Music, drawing, painting, dancing, sculpting and other forms of arts demand lot of money for the equipment and tools involved. We all know that it is not cheap to learn any art. And art has no age too! Art is long and life is short, right? Is it wrong to learn Tanjore painting at 35? I am not even saying that the fee amount should be non-taxable (I will be happy if it is!) At least the money spent on the articles, tools and instruments involved should be non-taxable. Again, institutions like UGC should strongly scrutinize the candidates for this exemption as pseudo-science and religion can sneak in to this category easily.
c. Books, Infotainment Media (CD/DVD/e-Books/Downloaded Contents)
 |
| Good books are indicators of a good culture and civilization! |
d. Scientific Hobbies
Young children often ask their parents "Dad, can you buy me a microscope?" or "Mom, can I get a electronics kit for this birthday?". Even if the parent is willing, when they check the price of the "gift", they get upset and settle with a video game console or a cricket bat, for which the kid shows no interest. But when the kid doesn't get what it loves and forced to love what it gets, we are silently murdering a scientist in making. If the government gives a double tax benefit on scientific equipment (again no pseudos!), we can see more and more kids looking in to the night skies or testing the salinity of the nearby pond. Who knows how many Sir C. V. Ramans and Satyendra Boses are going wasting time on WWE only because they couldn't get their hand on a book or an instrument they wished for? Giving a 10 or 20% tax benefit on these items can return the nation in many ways. Even if only 1 out of thousand becomes a scientist, given the population of India, we will be world's number 1 in few decades.
Conclusion
There can be more such things which can be classified as both entertainment/hobby and beneficial to the individual and society. I am not here to list them all. This post is just to share my opinion on the skewed nature of LTA benefits. Why I am saying this is because, government cannot decide that travel alone is what everyone wants and it is not sufficient to give travel alone some tax benefits while things far better and beneficial than travel are given no encouragement at all. As we have seen in above examples, there are lot many things people like to get involved in their free time. Given the direct positive effects on trade and economy and the indirect benefits of building a stronger and brighter nation, tax exemption on these secular and scientific areas of human interests is need of the hour!
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