Whoa! I come back to write an article after a hiatus & I am taxed. Read me out, because I have a question for the Government. I think even you’ll second my opinion & question.
This article is directed towards the Government of India and all its States & Union Territories too. I am aware that you are trying to make India a better place to live in and you want to remove corruption (we did see the demonetization fiasco) and make people adhere to the law of the land. But, I also want to pull your attention towards a pressing issue that I think might just help you out.
Taxation system in our country is as complicated as our television daily soaps. Believe me, they are as useless as well. Ouch! That hurt right? That did hurt your egoistic personalities. Well, I am talking about the country’s well being, I hope you can take a bout for it.
I was going through a variety of articles and I came across an article that stated about the type of taxes we pay in India. Let’s go through them, one by one.
Taxes in India are divided broadly in three parts:
- Direct Tax
- Indirect Tax
- Other Tax
Direct tax is further divided into many sub-parts. Let us look at what we are taxed for.
It is paid when one’s income increases the given limit. In layman terms, we are being taxed for earning.
Capital Gains Tax
It is paid when one makes a profit on selling of a capital, i.e. property, bonds, shares etc. Basically, a tax for making the right investments.
Securities Transaction Tax
It is a kind of tax that is paid on every transaction done at the stock exchange. So, even if you gain a profit on purchasing & selling of shares or not, the Government does get its share.
Well, this one is a good one. If your employer provides you non-monetary benefits, the Government will extract monetary benefits out of these too. A fair market value is decided by the GoI, and anything that exceeds it, whoosh goes the money.
Well if individuals go through the taxation slog, so will the corporates. So any company, be it domestic or foreign, if you are operating business on Indian soil, be ready to toil hard to pay the GoI.
Let us also look at the Indirect Taxes.
Sales tax charged on the sales of movable goods. It is basically a trading tax. It is further classified into (a) Inter-State Sale (b) Sale during import/export (c) Intra-State (i.e. within the State) sale. VAT (Value Added Tax) & CST (Central Sales Tax) come under this category.
Believe me when I say it, ‘If you as much as ask someone to scratch your back, be ready to pay the tax on the service you just asked for.’
That is, service tax. A tax on each & every kind of service you can imagine.
Value Added Tax
The Sales Tax is the most important source of revenue of the State Governments; every state has their respective Sales Tax Act. The tax rates are also different for respective states. Tax imposed by Central Government on sale of goods is called as Central Sales tax; same is called as Value added tax by State Government. So, the same tax also has so many different litigations by different authorities. Phew.
If you imported goods in India, please pay this. It is a custom among Indians, to welcome guests. The GoI has also made it a ‘Custom Duty’ to welcome foreign goods.
Octroi is tax applicable on goods entering in to municipality or any other jurisdiction for use, consumption or sale. In simple terms one can call it as Entry Tax.
An excise or excise duty is a type of tax charged on goods produced within the country. This is opposite to custom duty which is charged on bringing goods from outside of country. If you are producer / manufacturer of goods or you hire labor to manufacture goods you are liable to pay excise duty.
Anti Dumping Duty
Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. So, if you export goods at lower prices than others, you have had it.
Some taxes those are left are:
If you are earning professional you need to pay professional tax. Professional tax is imposed by respective Municipal Corporations. This tax is paid by every employee working in Private organizations. The tax is deducted by the Employer every month and remitted to the Municipal Corporation and it is mandatory like income tax. So if you did not manage to do business, don’t worry we have a tax ready for you.
Dividend distribution Tax
Dividend distribution tax is the tax imposed by the Indian Government on companies according to the dividend paid to a company’s investors. Dividend amount to investor is tax free. At present dividend distribution tax is 15%. So, may be this is the reason your invested companies don’t like paying dividends to you.
Municipal Corporation in every city imposed tax in terms of property tax. Owner of every property has to pay this tax. God, should I say more.
If entertainment in the Parliaments is not enough for you, well sorry. you have to cough up money if you want to get entertained. This is applicable on entertainment such as movie tickets, major commercial shows exhibition, broadcasting service, DTH service and cable service.
Stamp Duty, Registration Fees, Transfer Tax
In simple sense this tax is imposed on the handing over of the title of property ownership by one person to another. It incorporates a legal transaction fee & stamp duty. This amount varies from property to property based on cost.
Education cess is deducted and used for Education of poor people in INDIA (Yet we seem to be illiterate). All taxes in India are subject to an education cess, which is 3% of the total tax payable. The education cess is mainly applicable on Income tax, excise duty and service tax.
Surcharge is an extra tax or fees that added to your existing tax calculation. This tax is applied on tax amount.
If you receive gift from someone it is clubbed with your income and you need to pay tax on it. This tax is called as gift tax. This tax is applicable if gift amount or value is more than 50000 Rs/- in a year.
Wealth tax is a direct tax, which is charged on the net wealth of the assessee. It is actually a tax for being rich.
Note:- Wealth tax is abolished by Government in budget 2015.Now onwards surcharge of 12% is applicable on individual earning 1 crore and above.
This is a tax on tax. The Government develops infrastructure (road, bridge etc.) from the money given to Government as Tax. When we use these infrastructures, we have to pay a tax known as, toll tax.
Swachh Bharat Cess
Swacch Bharat Cess is recently being imposed by the Government of India. This tax is applicable on all taxable services from 15thNovemeber, 2015. The effective rate of Swachh Bharat Cess is 0.5%. After this tax we need to pay 14.5% service tax.
Krishi Kalyan Cess
In budget 2016 finance minister has introduced new tax namely Krishi Kalyan Cess. This cess is introduced in order to extend welfare to the farmers. The effective rate of Krishi Kalyan Cess is 0.5%. This tax will be imposed on all taxable services. Krishi Kalyan Cess would come in force with effect from June, 1, 2016. Once this cess is applied we need to pay service tax @ 15%.
In budget 2016 finance minister has introduced a new tax on the dividend amount. It is proposed that 10% additional tax will be imposed on dividend income above 10 Lac from 1st April 2016 onwards. Shoot the right investments away.
A tax for driving a vehicle.
This entry tax is imposed by Gujarat, Madhya Pradesh, Assam, Delhi and Uttarakhand State Government recently. The tax rate is variable 5.5-10% depending upon the state. All items entering in the state boundaries ordered via E-commerce are under this tax boundary.
So basically we are paying taxes for;
- Non-monetary Benefits
- Operating business as Corporates
- Operating business as Traders (Inter State, Intra State & Import or Export)
- Using Services
- Entering a municipality
- Selling products at lower prices
- Doing jobs as professionals
- Paying dividends to investors
- Getting Dividends as investors
- Owning a Property
- Buying a Property
- Getting Entertained
- Getting Gifts
- Being Rich
- Owning a Vehicle
- Driving a Vehicle
- Buying online
- Purchasing Offline
- Cess for Education, Cleanliness & Farmers (Conditions of all of these has never improved)
- Just an extra surcharge if all of these wasn’t enough
This bloody hell is our stupid taxation system. Moreover the Government is planning to get the GST act soon. In that we will have to file returns around 37 times a year. So one person of a family or a small organization will just complete tax litigations all the year round.
Does the Government understand the cost involved in doing all of this. There are so many slabs, so many different categories. A common man is unable to comprehend and act on such complicated systems. That is the primary reason that only 3-5% of Indians pay income taxes etc.
Believe me, if things were kept simple, it would be much better. Why doesn’t the Government keep a flat 10% tax slab on income & investments etc. Like total earnings. I think most people will be happy paying up. You would see less tensed people & a more happy country. Bureaucrats & red-tapism would have brakes put on them and corrupt officers would have a hard time making money.
Instead of trying to leech the money out of the public, be honest with them. Then only the common man will be honest with you.
If you think this isn’t possible, do one thing. Take my money and go. I will deposit all that I earn in the Government’s account, on one condition. You will have to take care of my expenses and savings. You handle everything. My family’s needs. Functions & parties. Old age savings. Investments. Taking care of my day to day affairs. Also, if this Government has to go before I die, it is your responsibility to give me back all that belongs to me.
Tell me, are you up for it? Are You?