Many would be eager not to pay taxes to the government and save up. It is a good thought to do so but have you ever thought in these lines?
1. Why does government always give tax break when we are in debt and that too long term debt such as home loans and why not for personal loans?
2. Why does government give tax break for investing in mutual funds and not for shares?
3. Why does government give tax break for Insurance?
4. Why is tax deducted at source (for Salaried People)?
These are some of the questions that keep ringing me.. I don’t have any answers for these but all that I can understand is, the taxes are made by the Rich people to ensure that middle class people pay the taxes and they can manage to save up the taxes legally. Government ensures that they try to take out every penny from the people in order to provide facilities to the people. I don’t know how far this is true but the intension is this only.
What is meant by Tax Deducted at source?
That means Before you lay your hands on your hard earned money, government takes its share and provides you the left over. 🙂
Salaried class always gets the Tax Deducted at Source, in short TDS. Whereas the Business class always enjoys the money and at the year end pay the Tax to the government. Honestly Business class is a best way to earn and save up rather than the Salaried class.
Consider this situation: I am a Salaried employee and I need to organise a party for my friends. I need to do that with after tax money (Government takes its share). If I am a Business man and I want to throw a party then I would do that with the money which is not taxed and later I would write it off as a Business meeting expenditure. There are various options for Business man to avoid tax where as the Salaried class is not so blessed.
I can sense many loop holes for a business man. This draws me to a conclusion that Tax rules are made by the Rich and they have made sure to pay less and in turn burden the salaried class.
Many of us are bothered about taxes and we try to minimize the taxes as much as possible. I want to make few things clear.
1. Don’t invest your hard earned money to reduce your taxes.
2. Investment and Taxes should be two different things.
3. Make sure that you learn the basic tax rules that are required.
4. There are lot of loop-holes in the Taxes provided by the government for the good reasons, try to use them and ensure you don’t pay more in taxes.
There are various components in our pay slip such as Basic, H.R.A, and so on. Try learning what each one means and how it is taxed and learn means to minimize the tax as much as possible.
Just for an example:
If you are living in your own house and still you want compensation for House Rent Allowance then this is what you should do.
Pay your Parents or Grand Parents an amount every month as Rent. This is not illegal. By this way you will get your tax benefit and also if your parent’s income is less even they wont be taxed. To be on the safer side you pay the rent to a non-working parent in your family.
There are various loop-holes that is present. I don’t know many. I shall update you guys whenever I get these kind of information.