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  • Category: Central Government

    I really don't understand this concept of collecting income tax from Government servants

    A government is responsible to care for the nation and its people. To do this job, the government needs funds. To make funds the government imposes the tax. It collects tax through various resources and makes funds.

    Now the government selects and employs people from the public to perform the duty to care for the nation and its people. They are called government employees. They form part of the government. They are the salaried class employees.

    While the government spends the fund for various reasons, It is the duty of the government to pay its employees.

    While it is so, is it not ridiculous to pay salaries and collect income tax from their own employees? Is it not wrong to give and take a part of it back? Why not they pay their dues and refrain from collecting some sum from them.

    Is it not like this - A guy goes out to earn, and feeds his family. In the end, he asks his family members to pay some percentage of their feed.

    I think my message is clear. Your views and comments, please.
  • #700858
    My thoughts used to be in similar lines once up a time. The core issue is, government cannot differentiate from a private sector employee and public sector employee in principle or accord tax exemption only to public sector employee.
    If we think a little broader, it is better to exempt the salary class from income tax. They constitute a very small percentage in amount of tax collected, and the infrastructure set up for that small percentage is big that the net earning is negligible.
    However the government is moving in a different way and squeezing the salary class more. The new Income Tax regime points to that. Earlier there was encouragement to small savings and savings in general. But the new tax regime does not give exemption or rebates to savings etc. It encourage spending. It encourages borrowing. I
    The new economic structure encourages financial indiscipline and rewards default and non-compliance by giving various reliefs and incentives for defaulters.
    Instead of income tax, it is needed to implement expense taxby compulsorily making transactions only through banking channels and digital routes. Then black money will come down. For any expense there should be a small percentage of tax components. Now big earners suppress portion of their earnings to avoid tax and get relief in various type of spending.

  • #700864
    Can you tell us the Private Sectors in India which provide Pension to their employees? They might give some bulk amount and say bye-bye to them. Pension is very rare in Private sectors not governed by Government. Please update us.

    No life without Sun

  • #700873
    According to my knowledge pension in the private sector comes from the provident fund. If an employee has served the company for ten years as a permanent employee and availed the provident fund scheme then he is eligible to get a pension based on the salary deducted every month along with accumulated interest in instalments.
    Lead the leader

  • #700899
    It appears ridiculous to collect Income Tax from the Govt employees. I also think that it is an unnecessary exercise by the Govt to collect its own money from the employees. But there are some other interesting things here to consider. Let us first talk about the pension. In Govt now there is no pension except for the armed forces. Others have to go for NPS or survive on their provident/gratuity funds. Old Govt employees are still getting pension as pension was abolished after their retirement date. In private there is no pension but funds are generally on higher side especially for the top employees.

    In Govt sector because of appeasement policy and considering the Govt employees as more important or privileged than private sector, the salary of Govt employees has risen to a comfortable level and Govt knows it but cannot do anything as there is a complex network of pay commissions and pay revisions through which the salaries of Govt employees is on the higher side considering all the economic and inflationary factors in account. So due to blind but favourable Income Tax rules Govt is levying tax on its own money but at least on that disguise getting a part of the salary back which compensates for the fictitious salary increase in the past. So these are the hidden things which many gullible people do not know.

    Knowledge is power.

  • #700917
    Maybe the government can say the salaries of government employees are tax-free. They may reduce the salaries of the employees to that effect. The total administration will become easy. No unnecessary exercise for them. But what about the salaries that are being paid to MPs/MLAs/ Ministers./ President/ Vice president and other public servants. They have huge salaries. If we want tax free income to government employees, the rulers will implement the same to the public servants also and will never go for reducing their salaries. They will get benefitted more.

    Coming to the pension issue, the private employees will get EPF pension and I have not seen any employee getting more than Rs.3000/- as pension in this scheme. Now the government employees are also may not get pension and they may also be given EPF pension as given to private employees.

    These days the salaries of government employees are also very good and they are no way less than the private employees. All the benefits what the government employees have are not there for private employees.

    always confident

  • #700920
    Income tax collection is done as per the income and not as per the branding of private or government employees. Who ever earns more than the prescribed has to shell down the income tax. By the way the govt is of the people, by the people and for the people. And when it comes to collecting tax there cannot be exceptions and every one need to pay and participate in the nation building. By the way the govt employees are also well paid and what is wrong if they pay the income tax because after retirement the pensions are enjoyed which is some times more than the last salary drawn.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #700921
    You are not understanding the issue. Government employees are to run the government. They are paid by the government. Why should a government pay and take back a part of it as an income tax? Why can't they adjust and pay and avoid income tax to their own servants? It is utterly a ridiculous one.

    It is more ridiculous to see them collecting income tax from the pensioners.

    No life without Sun

  • #700928
    In banks, if we just deposit money for years and do not withdraw at least a few times of the year, the account is considered inoperative. So the bankers inform us to draw and do a few transactions to change it to an operative account. This ensures the inflow and outflow of cash in banks.
    Similarly, the Government also collects a small portion as tax from its own employees to meet the cash flow requirements. This helps the government in a continuous flow of cash from time to time.

    Lead the leader

  • #700940
    I think Government should not tax the retired employees whether they are from private or Govt. But if they have some income from other than their earlier savings then it can be taxed. This will make same playground for all.
    Thoughts exchanged is knowledge gained.

  • #700946
    Not a convincing response from you by comparing it with the operation of bank accounts. The government receives funds as tax from various sources in lakhs of crores. The income tax collected from the individual salaried class taxpayers is a very negligible peanut sum that is only a few thousand crores. The amount so collected is like a small piece of halwa from its employees to a big elephant-like government.

    No life without Sun

  • #700960
    I want to mention that when we say about reduction in the salaries of the Govt servant to the extent of tax deducted then it is implied that the salaries of the MLAs, MPs, Ministers etc would also be proportionately reduced. They are also Govt servant in slightly under different nomenclature. One more thing that is also feasible is that Govt can raise the minimum limit at which one starts paying tax from Rs 2.5 lakh per annum to Rs 15 lakh per annum so that the lower level of society including the so covered Govt servants are free from the hassles of paying tax. This will also relieve the tax department as they would save a lot of time by removing a large number of people from their taxpayers list who are paying small tax but creating work load for them.
    Knowledge is power.

  • #700961
    Another funny thing is this - This is should be studied carefully.

    A person whose total taxable income after all the deduction is Rs. 500000/- (Rupees five lakh ) and below need not pay any income tax.
    A person whose total taxable income after all the deduction is Rs. 500001/- (Rupees five lakh one) just one rupee above 500000/- need to pay Rs. 12500 (5% of Rs. 2.50000/-) as income tax.

    Is it right? Is it a justified slab for income tax? Why it is so? Any logic in it?

    No life without Sun

  • #700985
    Some of taxation structure looks funny as hinted by SuN, it has been the right observation. Any annual income exceeding Rs 500000/- would attract the proportionate tax to be deducted. The income beyond this even exceeding Re 1/- has been rightly computed as shown in his calculation. What would you say for such persons affected due to cross over the bracket exempted from tax?

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