Kanaga Ranaut on the wrong foot

While promoting her latest movie, Panga, Kangana Ranaut pointed out that only 3-4% of people paid tax and how the rest of the country was dependent on them. Many a twitter follower bombarded her for the error in her statement

The first one to call out Kangana for her ill-informed statement was a parody account of Raghuram Rajan, the former RBI chief (which many mistook for the real Raghuram Rajan, but he had a point) saying, “I am sorry, it’s a myth only 3-4% Indians pay (sic) taxes. Every Indian pays tax. From Biscuit (sic) to Burnol, everything is taxed!” Kangana’s sister Rangoli stepped in clarifying that Kangana meant income tax. But that didn’t abate the backlash.

Back to the basics

Offering Kangana a lesson in basic economics, Ajay Gandhi-founder of the firm Gandhi & Gandhi Chartered Accountants — stepped in, explaining, “Kangana clearly doesn’t know what she’s talking about. There are two types of taxes — direct and indirect. IT is the fraction of an individual’s income that he’s to pay. Also, inco me-tax payers are those with an income of over `5 lakhs per annum.” Ajay then explains that direct tax includes other taxes such as wealth tax (tax on a one’s assets), inheritance tax, gift tax, etc.,which aren’t applicable in India. However, indirect taxis levied from a business on goods manufactured or services provided by it.

“The biggest indirect tax in India is the GST — the Goods & Services Tax. Every sale of goods or services attracts GST on the manufacturer or provider, levied on the first transactor and often passed on till it’s finally paid off by the consumer. For instance, the price of a toothpaste costing `100 includes the tax of approximately ` 15 (at 18% of ` 85), which is collected from the consumer and paid to the government,” he adds.

In contrast to income taxes, indirect taxes are all-pervasive and imposed on even unemployed people when buying any goods/services.

“So, saying that only a small percentage of Indians pay tax is incorrect because the total tax paid by the citizens is the aggregate of direct and indirect taxes. And the total amount is quite significant and, importantly, covers almost the entire population,” clarifies Ajay.