Thursday, June 22, 2006

How much tax do I pay?

Lets start from the ground up. I would create a hypothetical situation and try to figure out the amount of tax i pay per month. Well suppose i have a taxable salary of 10,000 per month and since i am a well paid indian, i would come in the 30% tax bracket.

So i would pay up 3,000/- as tax per month. Next, except home cooked food, everything else is taxed at 12.25%. Which means that if i spend around 100/- on say having my diner outside, i would be paying 12.25/- as tax. On an average, i end up spending 100/- every day on one thing or the other. That makes up for 3000/- per month and 3000*12.25 = 367.5/- as tax.

Moreover, in India, petrol is priced at 50/- per litre out of which 25/- is tax+duty. So if i spend around 1000/- on petrol, i would be purchasing only 500/- worth of petrol and paying 500/- worth of tax. Lucky for me, my office is close to my home, so i end up spending not more than 1000/- on petrol. Some people from my office end up spending something around 5000/- to 6000/- on petrol. its called luxury.

Atleast one movie a week makes sense to me. Currently all movies in noida - Delhi/NCR is priced at 125/- out of which 30% is entertainment tax which comes to about 29/-. So if i am watching 4 movies in a week, i would end up paying around 120/- as entertainment tax. Plus on purchase of any commodity, i am supposed to be paying 4% VAT. Well, i suppose, i must be getting around 1000/- worth of FMCG stuff and as a result pay around 40/- as tax.

To sum it all up, out of 10,000 i would be paying 3000+370+500+120+40=4030 as tax. I pay 40% of my salary as TAX. So, in a year, if i get a salary of 3 Lakhs, i would end up paying 1.2 Lakhs to the government as tax. Do i get the comparable returns is a big question, the answer of which is "not available" as of now.

No comments: