With the Vijay Kelkar Committee report of 2003 on direct taxes on the United Progressive Alliance government's agenda, it makes sense to revisit the report to find out what were the recommendations in it for the individual taxpayer.

Of course, the report may not be accepted in toto, and there will obviously be adjustments for the Common Minimum Programme, but considering that Finance Minister P Chidambaram has taken note of the report, what lies in store?

• The task force has recommended a two-rate schedule for personal income tax from the three-slab rate that we at present have.
• The committee also landed twin blows: It wants to do away with Section 88 benefits which are expected to hit the salaried class very hard. Remember how you benefit from the insurance premiums, ULIP, house rent allowance, provident fund etc? The second blow is that there should be no standard deduction for salaried individuals. The current structure of standard deduction is thus:
• Special benefits given to women and senior citizens be done away with.
• The panel says the ceiling on the amount of home loan interest deductible for taxable income purposes should be drastically brought down to Rs 50,000 from Rs 150,000.
• There's good news for those dealing in shares. The task force basically says short-term gains should continue to be taxed. And full exemption has been recommended for long-term capital gains on listed shares. There is a 10 per cent or 20 per cent levy currently. And if long-term gain is made on a share that's part of the BSE 500, there's no tax at all.
• The committee has recommended that the current dividend distribution tax of 12.5 per cent plus 2.5 per cent surcharge be abolished. Payouts should be fully exempt, it feels.
• Tax waiver has been recommended for long term gains from mutual fund investments.
• Also, long-term gains waiver is mooted where the investment is in a house or the National Highways Authority of India bonds.
• Wealth tax, which currently stands at 1 per cent of the value of assets exceeding Rs 15 lakh (Rs 1.5 million), is proposed to be abolished.
• Interest income from specified instruments under section 80L, which currently stands at a maximum of Rs 12,000, has to go, the task force says. Interest from investment in gilts up to Rs 3,000 is exempt.
• Rebate on medical premium, with a raised ceiling of Rs 15,000 from the current Rs 10,000, will be at 20 per cent up to a maximum of Rs 3,000. Under the current regime, the rebate depends on your tax slab.

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