Sunday, 19 June 2011

Who is bigger tax payer and how?

        Suppose a person earns yearly Rs. 500000, he needs to pay direct tax of Rs.20000 after all the deductions etc. That is to say 4% of salary. This is not all further he pays many other indirect taxes, such as on medical facilities, education, transportation, cooking gas, petrol, diesel and so on.
        Now these indirect taxes are paid by every Indian where he earns are not. because these are on basic facilities. No one can live without water and so a poor.
        Here is the case in Indian context, persons who do not earn sufficiently do not attract any direct tax liability. But these Indians pay their 100% by way of indirect taxes and still do not get basic facilities as the deserve.The person who pays 4% as direct tax and a minor part of his income as indirect taxes, have access to all sort of government facilities as well.
       Now you draw a comparison between these two, one who pays maximum 10% of his income (4% direct + max 6% indirect ) and other 100% of his income.
       Who is bigger tax payer? Simple mathematics says the person who pays 100% of his income. Let me know if there is some other mathematics which can change my mind. I will be thankful to all of you.
       Thanks.




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