Indian salaried people get net 55% of their gross pay
New Delhi: It’s a known fact that Indian salaried people single-handedly contributes to the country’s income tax base. But now a new study has found that Indians are among the most taxed in the world.
|Finance Minister P Chidambaram|
A survey by accountancy firm PricewaterhouseCoopers (PwC) has found that the take-home salary (after paying income tax rates and social security contributions) of a high
earner in India is less than that of salary earners in the UK, Canada, US, China, Russia and Saudi Arabia. (Read the survey at the bottom)
Indians took roughly 55 per cent of their salaries home, the survey said. In comparison, earners in Saudi Arabia took 97 per cent of their salary home, while those in Russia took 87 per cent of their wages home, the survey stated.
Individual earners in India are categorized in three groups for taxes – those earning between Rs. 2 lakh to Rs. 5 lakh fall in the 10 per cent tax bracket, while those earnings between Rs. 5 lakh to Rs. 10 lakh pay 20 per cent taxes currently. However, bulk of the taxes comes from high earners, who have incomes of Rs. 10 lakh and more and are taxed at 30 per cent.
Individuals (42,800 to be precise), whose taxable income exceeds Rs. 1 crore, have to pay a surcharge of 10 per cent from this year. That’s not all. Wealthy Indians (wealth exceeding Rs. 30 lakh) are also required to pay wealth tax of 1 per cent.
The skewed tax structure in India can be gauged from the fact that only 4 lakh people account for 63 per cent of tax collected in an economy with a tax-paying base of 3-4 crore people.
The government cannot lower rates because income tax forms an important source of revenue for the government. In 2013-14, the government is likely to target to get Rs 6.36 lakh crore income tax for the current fiscal.
The only alternative, then, is to widen the tax net to include many more Indians.