Every year when the budget comes on the 1st of Feb, the government never forgets to pat its back for garnering and meeting its own set GST collection targets. In this year’s budget also, the government gladly declared the central GST collections of 4.5 lac crores, amounting to 29% of the Total Tax revenue of the union budget.
But, what tends to get either missed out or deliberately avoided in these number jargons is the PERSONAL INCOME TAX collection, which is also a whopping 3.5 lac crore, amounting to another 25% (one fourth) of the Total Tax revenue of the union budget.
The point where the shoe pinches is that,
while the GST of 4.5 lac crore is paid by the entire 140 crore population, amounting to an average GST of barely Rs. 3,215 per person per year,
the PERSONAL INCOME TAX of 3.5 lac crore is contributed by only 1.46 crore population (as per a series of tweets by the Central Board of Direct Taxes in 2019) amounting to an average burden of Rs. 2,40,000 per person per year on this 1% of the population. This is in addition to their average GST share of Rs.3,215.
But the million dollar question is:
Does only this 1% population (read middle class salary earners) earn an income above 5 lac annually (or 50,000 per month only), in a country :
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Where some of Asia’s and World’s richest men, CEOs, Film stars and Cricketers live, and is therefore known as the country of the RICH and the SUPER RICH;
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Where the average assets of the top 10% population is itself more than 65 lac;
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Where the average number of foreign travelers from India and the number of cars sold annually is itself double the number of this exploited 1.4 crore population;
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Where one of the world’s largest number of Professionals – doctors, engineers, lawyers, chartered accountants, architects, fashion designers etc. etc. etc. – live.
What’s even more depressing cum astonishing is that:
the total income tax contribution of this 1% middle class salary earning population is equal to the total Corporate Profit Tax collection from all the CORPORATE HOUSES of the country taken together !!! – including all the BIG CORPORATE HOUSES.
(Latest 2021-22 Economic Survey Report)
Note the conspicuous equality of the red (income tax) and the blue (corporate tax) sections.
If an average income tax rate of 20% is considered in the 10-30% income tax slabs, then for every Rs. 100 earned by an income tax payer, 20% (one-fifth) is deducted right away at source, leaving him with only 80% of the monthly salary (and mind it – many even fall in the tax slab of 30% and 40%).
This would tantamount to getting paid for only 24 days in a month despite working for the whole month. Will any other worker of this country MANDATORILY, EVERY MONTH AND EVERY YEAR accept a payment:
for less than 30 days of his work, or
for only 80% of the movie shot, or
for only 80% of the cases fought in the courts etc. etc. etc. ??
From the remaining 80% of the income left, he then goes on to pay a GST on his purchases.
Now, as if even this is not enough, when anything is left to save after meeting his necessary expenditures, a SAVINGS TAX also has to be paid on the savings done and the INTERESTS EARNED on savings !!!
Hence these 1.46 crore middle class salary earners are subject to all the three levels of taxation,
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INCOME TAX,
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CONSUMPTION TAX (read GST) and
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SAVINGS TAX,
although all the standard theories of Economics recommend imposing only one form of tax at a time.
AND for this Income Tax paid by them, they do not get any exemption in either the GST or the Savings Tax!!!
But Wait! The sad story is still not over.
These 1.46 crore people do not receive or rather do not qualify for any government service or benefits in return for:
1) bearing the burden of one-fourth of the total revenue collection of the government !!!
2) financing the provision of government services to the remaining 138 crore population.
All government schemes, subsidies and policies of free education, free housing, free medical, free electricity, free water, subsidized fertilizers, subsidized rations, subsidized loans etc. etc. etc. are either meant for the POOR or for the CORPORATE SECTOR. Since these 1.46 crore people fall in neither category, they qualify for none.
In fact, they don’t even receive a due respectful mention in the annual budget for shouldering 25% burden of the entire economy!!
YES … IT IS THEIR MORAL DUTY TO ASSIST IN NATION BUILDING BUT THEN SO IS EVERYBODY’S ….
For their own self, they arrange for their own house, kids education, medical treatment, vehicles, groceries etc. etc.
In addition, they :
….Pay a road tax for running their vehicles on the roads constructed partially out of their tax collection;
….Pay a toll tax while crossing states highways constructed using their tax collection,
….Wait outside government hospital OPDs constructed out of their tax contribution,
….Not entitled to preference in railway reservation for traveling by trains made by their tax contribution,
….Not entitled to use the airport lounges constructed out of their tax money,
….Not entitled to get preference in their kids admissions into universities and colleges constructed out of their tax money
….Not issued any privilege card that would at least entitle them to a respectable treatment at public places built out of their tax money
Even their precious little savings are unscrupulously siphoned off by corrupt bank employees in Bank Scams or
… their vehicles and houses are torched in rioting and looting by the NON INCOME TAX PAYING population, who obviously therefore neither have any remorse or any regard for the damage done by them.
and the list goes on..
At the rate of Rs. 2,40,000 per person per year, these income tax payers can easily buy a decent mid sized car, or go on a foreign trip every fifth year IF AND ONLY IF they could save this tax, but which they certainly can’t.
If an income tax payer works for 30 years on an average, then during his entire working tenure he pays a total income tax of close to 80 lac. And even this is a gross under estimation since no increase in salary, promotion and consequent movements to higher tax slabs is considered here, and of course forgetting the interest due and to be accumulated on this amount over the years.
Implying that, every income tax payer in India gifts a decent handsome house to the nation, while himself leading a life of penury, somehow managing his petty left over means and of course trying to somehow build a house for himself and his family….. a dream that many times remains unfulfilled owing to the confiscating means of the Real Estate Developers.
But the NON INCOME TAX PAYERS can comfortably and openly own and display their wealth, properties, fancy cars, foreign travels etc. etc. financed out of saving this potential tax money, without shame and remorse, and certainly without the need for government approvals and government questioning.
Since over the years, every successive government has repeatedly failed to bring the majority into the income tax net, it compensates for its failure by increasing tax rates on the already existing income tax payers, through SURCHARGES, even to REconstruct the infrastructure already created by the tax revenue of the INCOME TAX PAYERS but destroyed merrily by the ungrateful NON INCOME TAX PAYERS !!!
Many countries including China, USA, Japan, and even such small countries as Malta and Kenya have special schemes, provisions and protection measures for the Income Tax Payers:
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to honour them,
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to encourage tax paying by the others, and
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to discourage tax evasions.