The Prime Minister talked of ‘Startup India’. He wants entrepreneurs to take risks, and be bold. Here is how India treats its startups.
Here is how honest tax paying enterprises are taxed.
– First they takeaway 14% of your total revenue as service tax.
– every thing you buy has about 20% excise/sales tax etc.
– then they make you tax upto 33% of your salary costs as TDS on salaries.
– If you survive this onslaught, they will demand 33% of the profits.
– If you still have profits and declare a dividend, another 17.65% is taxed as DDT.
And then, they say we are all for enterprise and start ups. After slogging, taking risks, investing your all, the margins we work for are about 15%. The money is of the government if profits are made. If we lose and fail, the government is nowhere to be seen.
So, let me put that in numbers:
A) If your income is = 100.00
B) Less. Service tax = 12.28
C) Net income (A-B) = 87.72
D) Expenditure(assumed) = 75.00
E) Tax on Exp. (20% of D) = 15.00
F) Net profit.(C – D) = 12.72
G) Tax on profit (33% of F) = 04.24
H) Profit after tax(F – G) = 08.48
I) Dividend tax (18% of H) = 01.50
So, this is what entrepreneurs work for:
Total income = 100
What the government collects = 12.28+ 15+ 4.24 +1.5 = 33.02
Expenditure Net = 60
What you take home as a stake holder = 6.98
The government makes 4.73 times of what entrepreneur makes.
Btw, this is if you make losses – Babaji ka thullu.
Entrepreneurs in India have survived despite the government, not because of them. Give them a transparent regime. Get rid of crony capitalists. Make sure even loss making startups can have M&A transactions. Make law equal for all. Let every one have a say in the market opportunities. Get away from the inspector raj. Ensure advance rulings to reduce uncertainty and avoid corruption. Today, it pays to be outside the tax regime than being a part of it. Service tax regime is a sinister tax that incentivises cash transactions, where the buyer and seller save 14%.
Now, Go. Create a start up. :)))))))
(This article was posted on FB by Peri Maheshwer )