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Those who pay the highest taxes are not the richest…film stars for example!

May 1, 2007

The media often writes about individual tax payers who pay exorbitant taxes and the individuals mentioned are often film stars. Sort of gives us the impression that film stars are the richest individuals in the country and make an obscene amount of money. Specially so when one reads about Hrithik Roshan being the highest taxpayer in the country (he forked out Rs 15.10 crore this year) and about Amitabh and SRK (Shah Rukh Khan) who have been paying over Rs 5-6 crore in taxes for several years.
The reality is different. Businessmen are far far richer, and ofcourse we do realise this…after all, these guys own planes and throw more lavish parties than film stars and marry of their offspring in exotic locations abroad. The problem is that when it comes to the highest individual tax payers businessmen are not mentioned. Why should they be? They aren’t the highest taxpayers. Simply because they get tax breaks, which makes them even richer!

On the other hand, films stars and certain very successful professionals like lawyers, specialists and consultants don’t get tax breaks and tend to pay very high individual taxes.
A lot of the lifestyle expenses of businessmen are clubbed under “business expenses’ and they can lead a luxurious life without spending from their own pocket. Also, a lot of their income is classified under ‘dividend income’ which is tax-free.
Sucheta Dalal, a columnist for the Indian express, explains:

The government extracts all it can from actors in their short career of high earnings and fame. In contrast, companies and traders have successfully lobbied for minimal tax payments. Stock market traders and investors do not figure in the list of top tax payers anymore, despite vast trading volumes and incomes that runs into hundreds of crore rupees, because they pay an insignificant Securities Transaction Tax (STT)…also, capital gains tax is only 10 per cent if shares are held for less than a year. For more than one year, capital gains tax is zero. This means that if you sell the shares, they pay no tax.

And besides, businessmen keep earning well into their twilight years while film stars have a short shelf life. Other professionals like surgeons too cannot practice after they pass a certain age.
Another band of people who are not taxed are those with an agricultural income. So there are some rich farmers who may earn the same as say a surgeon with a thriving practice, but pay no tax.
These priviliged people (businessman, farmers) can save tax legally. We aren’t even talking of tax evasion!

Where tax evasion is concerned, thats what the well earning professionals or film stars are adept at! Few people in this class are honest with their taxes. In fact India is quite notorious for its blatant tax evasion which is common because of a combination of high, unfair taxes (India has one of the highest tax rates in the world, even when compared to developing countries), tedious collection processes and corruption amongst the income tax officials. A simple google search will show that taxes in India are very high as compared to many countries in the world, and its all the more unfair because our government does not provide us healthcare or other good public facilities.

Salaried employees have their tax deducted at source and they have few tax breaks. The rich either evade or get a tax break!
I wonder when our the government will overhaul the taxation system? When it comes to changing laws and regulations we do it very slowly…unless ofcourse it is a question of introducing caste and class based quotas for political gains.

Related Reading: Bollywood cheques keep rising
Lot of jobs for animators in India
Competition from Hollywood will improve our films
Hollywood audiences and Bollywood audiences have different tastes
Bollywood all set to invest in a big way in Hollywood

One Comment leave one →
  1. vivek mittal permalink
    May 17, 2008 2:48 pm

    whether businessmen or film starts, they are doing good to our country by paying taxes and providing employment.
    I dont understand when some people say, being an underdeveloped country we dont need individual rich……….and that too when these individual industrialists provide huge amounts as corporate taxes and generate employment which is vital for our economy

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