There are various types of individual assessee i.e.
1. Salaried
2. Professionals - specified
3. Professional -others
4. Proprietors who owns business of trading or manufacturing
5. Proprietors in some specified businesses
6. Others
The tax slabs, rate of tax and deductions are almost same for each one class of individual tax payer; the differentiation is on the calculation of taxable income.
All individuals (professionals, businessmen etc.) except salaried class are allowed to claim all the expenses incurred on generation of income.
They can claim depreciation on assets, rent, insurance of self and assets, office expenses on electricity, telephone, internet, books, staff welfare, travelling, fuel, finance costs and so on and also can carry forward the losses for set offs. But the poor salaried class though he also incurs expenses to earn that salary is not entitled to claim any expense as deduction for example commuting to office in his car, employing a driver, car insurance, car EMI, car servicing, telephone expenses, internet expenses, attending seminars in personal capacity, reading books for professional requirements, his health etc.
For example a salaried person getting a salary of Rs. 30 lakh in a year will end up paying at least Rs. 6 lakh as tax after claiming all the available allowances/interest on loan etc.
However a professional can keep books of accounts and can claim whole lot of expenditure including indirect taxes paid on purchase of goods and services. Effectively declare loss at the end of year with no income at all or minimum income and pay few thousand rupees as tax.
Alternatively he can keep books of accounts and can claim whole lot of expenditure including indirect taxes paid on purchase of goods and services. Effectively declare loss at the end of year with no income at all or minimum income and pay few thousand rupees as tax.
Similarly the businessmen, traders (earn at least 30% margin on the trade), banquet hall owners (80% profit), caterers (60% profit), cloth merchants (60% profit), shopkeepers (20 to 30% profit), doctors (90% profit) etc., also follow the same route and do not pay taxes even on fraction of their income.
This was evident from the speech of Finance Minister that the salaried class the most taxed community. How our policy makers failed to realise this malice in the Income Tax Act? But even after acknowledging this fact, the Government does not have vision to give special exemptions to salaried class.
Imagine a situation when a person is sacked or without job due to any reason, will he get any support from the Government or can he claim the unemployment allowance in the years to come from the future income. The answer is no. But all the businesses can claim all the losses due to any reason.
I met with an accident and loss the salary for a year but end up spending on treatment/operations besides the usual house hold expenses, how I will recover tax on this loss? No way. I cannot claim any deduction for the indirect taxes paid on purchase/consumption of goods and services.
Salaried class community is paying tax on behalf of others. It is high time to create separate slab for these holy cows. Why not presumptive gross total income of 8% on the salary drawn in a year? Or the basic exemption up to Rs. 10 lakh at least. Take back all your exemptions under 80C to G, housing loan interest etc. and put us in the same category of presumptive income or allow us to claim all the expenses as deduction just like the business and profession.
In my view there is discrimination and it violates the equality principle of the Constitution of India.
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