Help a Poor Family & Save good Amount of Money on Income Tax Return – through “Adopt a Family” SCHEME

Finance

Economists at State Bank of India (SBI) have proposed an “Adopt-A-Family” scheme where a taxpayer is incentivized to adopts a BPL family, whose income has been hit due to covid-19 impact.

“Echoing the concept of Jan Bhagidari to public goods, we proposed a scheme called “ADOPT-A-FAMILY”. Under this scheme, which is purely voluntary, a taxpayer (probably annual income of 10 lakh or more) may be incentivized to adopts a BPL family for a year with a specified amount (say 5,000 per month),” SBI economists said in a note.

In this way, they say, a BPL family which is badly hit due to Covid-19 will get support of 60,000 without any fiscal burden on government.

In India, there are around 70 lakh tax-payers whose gross annual income is more than 10 lakh, according to their estimates.

“Even if 10% enroll under this scheme, it will benefit around 7 lakh families (or 28 lakh family members). To boost the scheme, government can ideally incentivise at least 50,000 tax deduction over and above 80C limits to the taxpayer. This can be monitored by Bank accounts enabled through Aadhaar payments,” SBI economists said.

Under this scheme, they note that the cost to government is only the income tax, foregone of 1050 crore. However, if government gives 50,000 support to 7 lakh families, the fiscal cost would be 3500 crore, that could result in a consumption boom of Rs, 11,666 crores, they added.

SBI economists cite the example of “Give Up” campaign of subsidized LPG cylinders to emphasize why incentivisation is required for greater adoption of the “Adopt-A-Family” scheme.

“When the Government had announced that well off people could surrender cylinders so that the government could save on gas subsidy bill, there was resistance as people thought let others give up and I will do later. Thus even after the intense campaigning there has been thus only 1 crore people have surrendered (out of almost 30 crore consumers) indicating that it is only incentivisation and deterrent that will result in agents giving up subsidy,” they said in the report.

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