Tax Tax Tax and More Taxes

Published on: Sept. 28, 2020, 5:44 p.m.| Last on Updated : Sept. 28, 2020, 5:44 p.m. UTC TIME ZONE

Summary


Well a couple of months back (around August-September 2019), many pink papers published news that GST (Goods and Services Tax) will be reduced on automobiles (Cars, Two-wheeler, trucks …). The reason given by these grapevines was low sells of automobiles; however, GST was not reduced.


Well a couple of months back (around August-September 2019), many pink papers published news that GST (Goods and Services Tax) will be reduced on automobiles (Cars, Two-wheeler, trucks …). The reason given by these grapevines was low sells of automobiles; however, GST was not reduced.

Everybody must have wondered why GST was not reduced. Cutting GST could have increased demand and the automobile industry would have been out of low sells of its products. Did the government become greedy?

Well, let me explain you Indian taxation system in small detail. How does it work? why there is a high tax on some item and no or low tax on some items.

First, let’s go thorough a list of high tax items:

Salary income ( i will explain high tax on it later ): Tax rate based on your income tax band.

Petrolatum products (petrol, diesel, jet fuel): More than 50% is taxes.

Automobile: 28% GST plus state registration charge (Cess on some products).

Property registration: Around 10 % (registration charge/stamp duty) plus 5% GST.

Alcohol: More than 50% of taxes.

So there are five-six high tax items that contribute maximum taxes to the government. Data will be provided in the next post.

But why government taxes these items so high and the answer is close to 100% assurance that the government will get all its due taxes from these items.

You can not hide taxes on these items. let’s consider salary income first government has TDS ( Tax deduction at source) system in place. Taxes are deducted first, salary is paid after taxes are paid. No scope of doing any tax theft, some minor tax theft possibility in (LTA) Leave Travel Allowance. So whatever one earns as salary, he has to pay full tax on it. If we compare salary income to income from business or profession, one has hundreds of ways to pay zero or minuscule amount of money as taxes. One example; A person can buy a car on loan for personal use but declare it as a business use vehicle and show interest expenses as a business expense. No need to pay tax on that part of income. A person earning salary income cant do it even if he uses that car for going to the office. High taxes on salary clear!

Similarly, petrolatum products also give assurance of 100% tax collection because there is a limited number of supplier of products who will not under-report sells. The suppliers are a government organization or big companies that will not participate in tax theft.

Without number plates you cant drive your car anywhere you have to pay taxes.

To buy or sell the property you have to do registration at a government office. The government have a pre-decided price for the property (circle rate). One has to pay taxes based on circle rate no scope for cheating.

Tax on alcohol is high due to above-mentioned reason of assured tax collection, habitual consumption and being considered sin goods in India.

So did you get answers to your question Indian Taxes so much so few why?


The annual budget time has come. On 1st February 2021 finance minister of India Mrs Nirmala Sitharaman will present the budget for the financial year 2021-22 in Loksabh. Every pink paper and some white one also are publishing expectation from the budget. We also have a list of expectation from the budget.

Well a couple of months back (around August-September 2019), many pink papers published news that GST (Goods and Services Tax) will be reduced on automobiles (Cars, Two-wheeler, trucks …). The reason given by these grapevines was low sells of automobiles; however, GST was not reduced.