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….