Sunday, June 24, 2007

I, Salaried class

I am the salaried citizen in India. I work in so called "glamorous" IT or in other sectors like manufacturing or even government enterprises. I am, perhaps the most law abiding class of citizen in the whole country, yet most tax laws are made to target me, while criminals, gangsters, politicians stay conveniently outside, usually forming the laws, for me, the law abiding salaried citizen.

I, the salaried citizen pay the taxes expected out of me. In fact, they are deducted at source. The Income Tax, which is the single largest direct tax to the kitty. About 35 million of the population (via) thats about 3.4 percent (some say it is just 2 percent) of this country of a billion pay income tax. The rest, well, they dont pay any income tax. I subsidise them. Dont they earn money? Oh yes, they do, but they are not taxed. Lets keep it simple. Theres also something known as tax evasion - I do tax planning and the honourable finance minister and tax officials try and curb this as much as possible, since there is little they can do about tax evasion.

I, the salaried citizen, earns white money. For most of the rest black money rules. The difference is that the laws pretend black money doesnt exist - like the dark lord in a popular series - the money that must not be counted. There is an entire parallel economy here which is not recognized anywhere and with a nudge and a wink you can convert any transaction into black. I cannot do it since my money goes directly into a bank and if I withdraw my own money, more than 50K, there are chances that the taxman will take a second look at me. The rich have hawala, the richer have Swiss banks and then some gold and real estate, farm land etc.

I, the salaried citizen also in most cases, pay most of the service tax, the value added tax and the central excise too; directly or indirectly it all hits me. In some cases, I pay it in full since my grocer passes it on in entirety to me or in some cases, I pay more than it since the pharmaceutical shop charges all taxes and "extra" local taxes that I have to pay - or else he wont give my medicines.

I, the salaried citizen. If I take the service of any accountant - even to straighten out my taxes, lawyer, doctor or any self employed professional, chances are that I will pay him his share of service tax and income tax depending on how much of it he shares with the taxman. Every tax levied on the end user is ultimately paid by me.

I, the salaried citizen. I cannot even convert myself to a firm, like many well off individuals do. If I called Salaried Citizen Corporation Limited, I would be well off from almost the next day. All I need to do is show a loss on my income, which is quite easy, with the services of some of the above worthies, even after paying their service tax.

I, the salaried citizen. I belong to no caste, no formation, too fragmented to form a vote bank for anybody and never riot. Therefore, I am not targeted by any politician for any votes and therefore know that this tax system will never change. And there are some people who want to remind me of my responsibility. Thanks!

16 comments:

ggop said...

Thanks for this informative post - the stats are depressing. I poked around out of curiosity and 40% of the US population pays no income tax according to taxfoundation.org.

http://www.taxfoundation.org/news/show/1410.html
gg

Vinod Khare said...

Yes, the condition of the salaried class is really pathetic. To top it all, the bank interest rates, which is the only means of investment and moreover social security for any salaried citizen is forever at the mercy of the finance ministry.

Kavi said...

Well, well, as usual incisive and deep. i just finished watching Sivaji ! And could here the echoes !!

Well, well, so is the case with the salaried class !

Dev said...

Great article, picked the thoughts right out of my head as of every salaried person. I guess when the finance minister says he wants to widen the tax net he means within the salaried class. It can be pretty frustrating to see your ration shop owner who earns a multiple of your salary not pay a paise or the rich farmer sitting in his AC house with electricity you paid for.

Devasis

Sudipta Chatterjee said...

Very well written... but do we have a choice when we vote?

Aparna said...

Ditto to everything you say...couldn't have put it better....it is so damn frustrating sometimes to fund reforms with your money through the taxes and then being ignored when it comes to reforms....

GasquetFan said...

But what happened to the maanga?

B. Ramana said...

One thing the salaried Indian can do while he is getting screwed by the State is to enjoy the screwing. As I say in my blog, use a vibrating condom while it still lasts! ;-)
Seriously now, I like your blog. Only it is injurious to health to take India too seriously.
Its dysfunctionality is tolerable only with a heavy dash of humor and scotch.

Sriram said...

Brilliant post...our (the salaried class) conditions are really pitiable but what can we do but lament when we are just 3% of the population...even if we vote against such tax structure, we won't stand a chance against the rest 97%.

usha said...

u said it!!

savitha said...
This comment has been removed by a blog administrator.
Amit Kumar said...

All the more incentive for entrepreneurship - to convert to a tax saving (read evading) company.

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Daniela said...

Interesting post. I have been wondering about this issue,so thanks for posting. I’ll likely be coming back to your blog. Keep up great writing.

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Guha Rajan said...

Salaried class has very little option is Tax are deducted at source. Post 2008, salary increase might not happen like those florishing days of 2003 to 2007 period, hence it might get difficult.