Why the present system of Individual Taxes need to be radically changed?
Rahul Kumar
Senior Finance Manager |NBFC Accounting| Head Finance Operations| Treasury |Accounts Payable |Payroll | Taxation| |Co-lending MIS |BC Settlements| Direct Assignment (DA) |Ex-Shuttl ,Mobikwik, Unacademy, Opera, Dentsply
1.??????Average Tax a Poor to Middle class person pays to Govt. (15 to 28.5% )
a simple calculation using Income tax rates (with all benefits of deduction Exemption) and assuming a GST rate of 18% (ignoring Taxes on Petrol, Alcohol, Higher tax rates, Toll Taxes, muinicipal taxes etc.), assuming a person earnig upto 10 lakh saves 20% and Income upto 15 lakh saves 25%
Income upto 5 lakh- 14.4%
Income upto 8 lakh- 20%
Income upto 10 lakh- 23%
Income upto 15 lakh- 28.5%
2.??????The Present system is discrimantive between the Salaried Individuals and businessmen
The benefit of 1.5 lakh deduction under Section 80 C and 25k +25k for Section?80D is only benefit to Salaried class. Salaried class is given a standard deduction of 50k, whereas in case of business,/ profession presumptive taxes allows upto 90% or 50% respectively.
Illustration of Calculations
Discalimer: don’t get offeneded by the term poor or middle class, no govt index is used to identify this range. Given lifestyle of a metrocity, the author has classified Income of 5 lakh to 15 lakh as middle class and less than 5 lakh as Poor. The Calculation of Taxes are on Assumptions,as mentioned above. The views presented are completely that of the autor and it does not relate to views of any organization.