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Toll Tales

With the deadline to file the annual returns of income tax ending in a couple of days, as a conscientious member of the salaried class you must be harried with all the last-minute rush to cheat.

When I say you may be cheating, am, of course, joking. I am pretty sure that you won’t be doing that. Especially since there are qualified professionals to do that for you.

The thing is there is no point in getting all het up over paying taxes. Just remember that what you pay as taxes is exactly what helps to fund public programmes and facilities that are so important for the common good of politicians putting their names on and claim credit for.

(On way to my office, there is a huge bus stop with sprawling girders providing the much-needed shelter to those waiting. The thousands and lakhs we pay as taxes are what have contributed to its construction. Every day, when I come to office and pass through that bus stand, I look at that steely structure standing stoically as a silent symbol of welfare economics, carrying all over it the larger message —- this is why intellectuals and right thinking men harp on the need to preserve political democracy — ‘Built by T R Baalu from his Constituency Development Fund’).

At any rate, if you are a salaried person there is no escaping taxes. But you can always fool yourself that you are escaping them if you plan your income and investments in some prescribed manner.

Here is a small idiosyncratic snapshot of a few of them:

Allowances

We will start with the obvious: Keep the salary low.  The best way to accomplish this, as far as I know, is to become a journalist.

But what chartered accountants actually mean when they say keep your salary low is, get a big chunk of your emoluments in the form of allowances.

Your example in this matter has to be Narayana Murthy. The Infosys doyen has, as is well known, gets a salary of one rupee every month. But what is not well known is that he takes home around Rs.75 lakh every month in Sodexo coupons. He even pays his ‘ironwallah’ with Sodexo papers these days.

(Some of you outside of those employed in the IT and BPO industry may not know what Sodexo coupons are. Well, companies these days prefer to pay a part of the non-taxable allowance of their employees through Sodexo coupons, which can be exchanged for goods and services at many merchant outlets. What companies and individuals save in not having to pay as tax, they pay as Sodexo’s service charge. If this does not make you a fan of capitalistic economy, I don’t know what will).

Home loans

The government understands the aspiration to own a house is in every person. This quintessential ambition stems from the fact that deep down —- this is something that the Constitution also acknowledges — every person is a sucker.

At any rate, only a sucker would accept the conditions that banks lay down for extending a home loan. But the beauty of home loans is that no one knows to what conditions they are committing themselves. Because, for a home loan, one has to, by a conservative estimate, sign in 11,356 pages, and by the third page one would stop caring what is written in the page.  I, for one, would not be surprised if one of the conditions read: ‘The bank, in the event of it not liking the spelling of your name at any point, reserves itself the simple right to seize one of your kidneys, which has to be maintained in complete working condition all through the tenure of the loan’.

It is just as well that the government provides tax benefits for home loans because after paying the EMI, forget about taxes, most salaried people are basically left with money that would be just enough to make it to the income tax office on a public transport.

Insurance

Investment in PF schemes and insurance policies are one of the preferred modes to avail tax cuts. But PF schemes don’t fetch attractive returns because the investment model is pretty conservative.

This is how they seem to attempt it:  You give money to PF managers, they, in turn, carefully take it to a deep vault and put it there and close it (vault) with the rather reasonable hope that the rupee notes, in the cosy darkness of the place, start copulating among themselves and start breeding more notes. For some reason, this doesn’t happen. So when you get back your money after 18 to 20 years there is hardly any addition to it.

On the other hand, some insurance policies provide better yields.

For instance, I ‘parked some funds’ in a children’s education policy in my daughter’s name. The thing is I had to keep putting money at regular intervals. And then at one point, I was asked to take it easy. The insurance company is also taking its easy now. But it says that from the eighteenth year of my daughter — the time she will go to college — the particular policy will start providing monthly payments that I hope will be handy to cover any shortfall in the all important canteen expenses for a couple of days.

For her actual education expenses, I think I may have to sell my kidney, the medical fitness certificate for the same will be, of course, given by my bank manager.


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