[HM:255273] WHY PAY TAX – PART 2

Indirect Taxes

This is the real issue in India. While paying indirect taxes, you will not know how much tax you pay to our governments. Most of the traders do not even bother to remit the indirect taxes they collect from their clients. But still we continue to pay such taxes. Most are really useless…

Times of India notes that the share of indirect taxes was about 4.56% of total Indian GDP. One thing we need to remember here is only 10% Indians are paying direct taxes, on the other hand 99% Indians are paying indirect taxes. But still, the collection of indirect taxes is less than that of Direct Taxes. So, where does the remaining money goes? Isn't there a discrepancy?

You pay indirect tax on most of the products/services you buy, but why should I pay tax on these products? For what fun they are collecting such indirect taxes ranging between 2%-14%?

There are several indirect taxes, however, I am trying to cover only a few of them here...

·         Anti Dumping Duty

Yes, it is required to help Indian manufactures to compete with cheap imports from countries like China, Taiwan, etc. But, this doesn't help Indian consumers, as you will have to pay more for such products. Indian manufacturers will be happy as they can command better prices and Indian customers will continue to suffer.

·         Custom and Import Duty Duty

I want an electronic gadget or a motor car or a motorcycle or some jewelry, which may not be available in India. Whenever I go out of India, I buy them and bring it to India. As and when I land in any Indian port, customs officials will ask me to pay a tax on such products!! "It is another way of saying, we are incompetent to make such products, better don't buy from other countries." If Government is incompetent, why should we pay for it? In most case, the imported product's price goes up to 300% of its original value. Isn't it insane?

·         Excise Duty

Whenever you buy petrol, tobacco products, alcohol, etc., unknowingly you pay this tax. Petrol costs just about Rs42. But you have to pay a 32% excise duty, customs of 4% and sales tax ranging between 17%-32%, which hikes up your petrol cost to a range of Rs.70-80 per liter. What does govt. do with that money?

·         Sales Tax and Value Added Tax (VAT)

This is the most exploited tax in India. Even govt. is not sure how much money it could generate through Sales tax. As I said earlier, most people who collect sales tax do not remit that to govt. treasury. So, Indian consumers are cheated every day and in every transaction.

·         Service Tax

With the recent amendments to tax laws, the govt. has brought in several services under Service Tax. That means you will end up paying about 12.3% more price for whatever service you avail. But you are not sure of remittance of this service tax to govt. treasury!!

There are some more nonsense taxes like Securities transaction tax, Stamp Duty, Property tax, Dividend Distribution Tax, Estate Tax, Gift Tax, Road Tax, so many more taxes… Is it right to collect such taxes?

If government is collecting Road Tax, why is it collecting a toll to use roads in India? Even after collecting such taxes, why roads still have potholes? Where did the road tax money go?

I buy a property, I am asked to pay a tax on such property purchase in the name of Stamp Duty? Why should I pay a Stamp Duty? Did government help me in buying that property? Did govt. negotiate the price on my behalf? So Why Pay Stamp Duty?

I am using the property I bought with my hard earned money. Now, the municipality is asking me to pay a tax!! What for?

I invest my money in a company's equity shares. Company pays me a dividend whenever it makes profits. Now govt is asking that company to pay a Dividend Distribution Tax!! Is our govt. pays up whenever these companies make losses? Who will bear that loss? If govt. is not bearing the loss of a company, it has no right to ask for a tax on profit distribution…

Continued….

Regards

Aditya Nadig

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