If you are thinking you are earning enough, think again. This article will open your eyes and I am sure you will feel uncomfortable. I will explain to you how much we pay to the government as direct and indirect taxes out of our hard earn money.
On a bank deposit of Rs. 2000/- for one year, what you get is Rs. 160/- @ 8% interest.
On a bank loan of Rs. 2000/- for one year, what you pay is Rs. 260/- @ 13% interest.
But when you eat food for same Rs. 2000/- you pay Rs. 360/- @ 18% to Government!!
Cost of your money
Just to remind… How much we pay for buying an item worth Rs 1000.
Assume that I need to buy an item of the base price of Rs 1000. Assume it attracts GST @18%. I will need to pay Rs 1000 + Rs 180 = Rs 1180 for that item. Now, I need to earn Rs 1180 first, to be able to pay this amount.
Assume that I am in the 20% Income Tax bracket (income between Rs 5 Lakhs and Rs 10 Lakhs per year).
If I earn Rs 1486.15, then I will have to pay Income Tax of Rs 297.23 (@20%), and a Cess of Rs 8.92 (@3% of the Income Tax), and that will leave me with an earning (after Income Tax) of Rs 1180. Hence, to buy an item of base price Rs 1000, I need to earn Rs 1486.15.
Which means that I pay Rs 486.15 in taxes on the purchase of an item of Rs 1000. And that, dear people, implies a tax of over 48.6% paid overall (through both direct and indirect taxes).
Now, this figure will be far higher for items in the 28% GST slab. (It will be 61.2% in total taxes).
And that, friends, is the real cost of money to you.