World of India!: BizNpersonalfinance : Taxing taxes e

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BizNpersonalfinance : Taxing taxes

I had gone for our anniversary dinner with my wife the other day, when I noticed that we were paying a full Rs.112 only as service tax (@12.5% of the total bill amount). It was then that I realized the full impact of indirect taxation. Consider- between me and my wife, we easily spend Rs.40000 a year on eating out (we stay in different cities and usually eat most meals outside, barring weekends). That means we end up paying a minimum of Rs.5000/- a year on service tax in restaurants alone, per year. And that's not all. Every time you are given any service, anywhere- from the neighbourhood barber, to the ATM, to your chartered accountant, you will have to pay the this tab.This is of course over and above the 30% income tax, Education cess, Gulf war cess (on petrol), which was never withdrawn a decade after the Gulf war, AND Professional tax we both pay.

Don't get me wrong. I am not against paying taxes. I realize it is my responsibility as a citizen of this country.

What I don't get though is after discharging my responsibilities what do I get in return? For one, only a miniscule % of Indians pay taxes. So effectively this tiny minority ends up paying for the rest. I understand that India is a poor country and this is the way it would be, but what I don't get (again) is the fact that a good number of people out of these so called 'poor' do earn enough to pay taxes, but simply escape doing so. Take traders for instance. Tax evasion is rampant, since these guys distort their P&L and massively underwrite their profits. Take rich farmers, who we taxpayers subsidize by providing them free water, electricity,fertilizer. To top it all they are not expected to pay any income tax at all ! A relative of mine is a fruit exporter and earns anywhere between 15 -25 lakhs per month. He pays zilch income tax and moves around in luxury cars on potholed village roads.

Take India's politicians. Its a documented fact that they have properties and sources of income in untold crores. Mulayam Singh Yadav, for instance, has properties worth hundreds of crores to his name. Yet, he did not pay a single rupee in taxes last year! We could count a score more right here and now, but lets not labor over the obvious.

Successive Govts. have understood that since salarymen cannot hide their salaries, they can be milked the best. So even before we get our income, they deduct our taxes.

Since I am a good boy, I would even disregard this obvious injustice. But taxes are supposed to be spent on giving me something back : good roads, schools, medical facilities. We all know the state of affairs on these in India. Much is made of the fact that our income tax rates have gone down to 30% levels, which is roughly the same as any other progressive western country. This is cited as a achievement by the Govt. But dude, the income tax paid by these people fetches them world class returns in terms of the facilities mentioned above. If you factor in the returns we get on the taxes we pay, our REAL tax rates are no doubt the highest in the world!

Oh well, grin and bear it, I suppose. After all, as some one has said so wisely, there are only two certainties in life- death and taxes.

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