The thing that pinches me the most about the current demonetization scenario is that we were not a prepared economy to go through such torture. People who have a li’l unorganized business are equally putting efforts and hard work as any salaried person working in an organized structure. Not disclosing the a part of that income doesn’t make it black money. It still remains hard earned, right ?
I will again say that we, as an economy, were not ready for such step. Why? I will tell you why.
Many people might have not disclosed all their income because they wanted to save some, read, a li’l tax, because medical facilities and education are something which are not that affordable. And yes, we all know the situation at the Government aided and supported schools and hospitals. Anyone, who is working hard to earn a li’l money wouldn’t want him or his parents or his children to suffer because he can not afford medical treatment. Come to think of it, in a set up like ours, the whole burden lies on a single bread-winner for a family of 4-6. Doesn’t make your earning “black” in any sense! Things are a li’l different now because scenario is changing with a more nuclear set up and a combined family income.
Having said all of that, paying tax is important and yes, now that we have finally started to transform in contemporary and modern day economy, it has become all the more important.
We need to understand that by paying the central taxes we are just empowering our nation and that is important. Be it our defense or the infrastructure or the social challenges, tax revenue helps the nation in the long run. Oh yes, the debts are also being paid back with the help of the tax revenue. Okay, now let us not bring in corruption in between. This debate can go on forever then!
However, that is not today’s agenda. As a common man, who is a honest tax-payer, the budget 2017 is all the same. There are not much changes. You should just know that you have to save smartly, invest smartly and just remember that money can not buy you happiness.
So yes, though the tax rates have slashed, you will be paying more surcharge if you earn a rupee more than 50L or a rupee less than 1Cr.
Let us examine this more clearly!
Apparently, this tax structure should not be affecting a lot of people – only the honest tax payer, as I said before. According to the PMO’s report after 6 weeks of demonetization, only 10 percent of the tax payers in India are having an annual income of more than 10L!
However, let us not criticize the tax structure that we see today.
- Factually, your grandfather started paying tax at an annual income of INR 80, 000. You don’t pay tax on an annual income of up to INR 2.5L.
- The tax rate was lowest in 1949 – 1950, i.e. 25% on an annual income of more than 10L. It was highest in 1970-1971 with a peak of almost 93% for an annual income of 50L. Now it is 30% for annual taxable income of more than 10L, which is pretty near to the historic low.
- The tax structure is simple with only 3 slabs. So is the ITR filing. Please note that our history has seen 11 tax slabs as well.