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Father never paid income tax...that was why I never heard of this opprobrious thing when I was a student.
He started his earnings as a school teacher @ Rs 30 a month in the mid-1930s. India was then under British rule and our rulers didn't bother about peanuts. When India became free, and during my university years, Father was stagnating for a long while @ Rs 210 by when he was our HM. But then Nehru was in charge and he was a socialist. By the time he retired in 1969, Father was drawing a fabulous Rs 500 but I guess no IT official bothered about school teachers.
I joined IIT KGP in 1965 at the same salary as Father, Rs 465. So I thought it was all mine. But during the middle of the next February, there was a commotion and everyone was rushing to the Old Building. I asked them why. They were perplexed at my phenomenal ignorance and said that I better join them to meet Subash Babu of the Accounts Section to settle my IT. Else I won't get ANY salary on the 1st of March.
Needless to say, I ran to Subash Babu who looked at me and asked:
"Are you a bachelor?"
"Yes"
"Sign this form and go away...I will fill up the details. Your salary will be reduced next month by Rs 60"
I thanked him, signed, and marveled...Subash Babu had the names and salaries of every IIT employee on his finger tips. A veritable wizard!
On my way I met Prof D who was my senior by a decade and drew double my pay. I asked him:
"How much was your IT?"
"Nothing"
"Nothing?"
"Nothing"
"How come?"
"I have six children and I get a rebate because I am married, and on each of my children for their upkeep, education, health..."
It was a double whammy for me: I was an unwilling bachelor and an unwilling tax-payer.
Things reversed by the time I ultimately got married 14 years later and had a kid. The successor of Subash Babu laughed at my ignorance and said that married folks with kids are taxed more than bachelors nowadays...I was a victim of the newfangled Family Planning Drive. Indeed there were incentives for getting castrated...you get an extra Personal Increment throughout your service. But my wife was against such permanent benefits.
During my long bachelorhood many LIC agents used to bother me at my home and office asking me to take a Policy. And they would threaten me that life was at a tremendous risk for chain smokers like me and that I should ensure that my old parents wouldn't suffer on my account. They were all so solicitous. They also told me that under the new IT rules I would get a tax rebate. To get rid of them politely I took three policies at different times paying the first premium and then forgetting.
As the Indian Economy turned away from socialism to capitalism, the IT rates got increasingly heavy and so also inducements to tax-cuts. I never bothered about such IT-savings. Once we got a terrific amount as Fifth Pay Commission Arrears. But they were subject to heavy taxation. Folks advised me that there is a way to totally avoid tax on arrears.
"How?"
"Invest all your arrears in NSC. You get a very decent interest too"
"What is the catch?"
"You can't cash them for 3 years"
"After which?"
"Oh, you can withdraw the principal and the hefty interest"
"Are they tax-free then?"
"Oh no! You have to pay taxes on the entire amount at the prevailing rates"
"Thank you! I better pay the taxes now and live in peace...a la Jesus"
As it turned out, tax rates increased steeply and everyone who invested their arrears in NSC lost much more than they saved.
Generally I followed the Jesus dictum and was at peace. But towards the last five years of my service at KGP, I bought a flat at Nellore @ Rs 7 lakhs taking a loan from LIC at the hefty interest rate of 14%. The idea was sound and there was an added incentive that folks dangled in front of me, viz that the interest on the loan I repay is tax-deductible.
I was buoyant when I walked into the office of the fourth successor of Subash Babu.
"Please give me a form for tax deduction at source due to my repayment of home-loan"
"Do you stay in the home you bought?"
"Of course, no...I stay here as you can see"
"Do your parents or dependents stay there?"
"No"
"Then you are not eligible"
"Suppose I give it on rent?"
"You have to pay tax on your rental income too"
Phut went my IT-savings...
And after retirement and staying with my son in rented houses in Hyderabad I decided to sell my Nellore flat; and I got a fabulous Rs 16.5 lakhs as resale value, courtesy the efforts of my sambandhi.
My joy knew no bounds and I thought I would secure the entire amount in a Bank FD and pay the house rent from the interest.
But my IT consultant told me that in that event I had to pay a whopping 20% on Rs 16.5 lakhs as what he called "Capital Gains Tax".
I asked him how to escape it. And he said:
"Buy a flat in Hyderabad investing that entire amount jointly with your son"
"No capital gains tax?"
"Nil"
"So be it!"
...That is how I cheated the IT folks at last and am blogging from our OWN dream flat in Hyderabad...
Amen!
...Advertisement for an upcoming Gated Township, in ToI, Sunday, February 17, 2013.
In an article (ibid) titled: "Bengal is sitting on a powder keg", the Bengali writer shuttles alternately between "Calcutta Police" and "Kolkata Police" in the ratio 2:3.
I always write Calcutta by force of habit. And I am 70.
I guess the writer of the article must be in his 50s.
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Father never paid income tax...that was why I never heard of this opprobrious thing when I was a student.
He started his earnings as a school teacher @ Rs 30 a month in the mid-1930s. India was then under British rule and our rulers didn't bother about peanuts. When India became free, and during my university years, Father was stagnating for a long while @ Rs 210 by when he was our HM. But then Nehru was in charge and he was a socialist. By the time he retired in 1969, Father was drawing a fabulous Rs 500 but I guess no IT official bothered about school teachers.
I joined IIT KGP in 1965 at the same salary as Father, Rs 465. So I thought it was all mine. But during the middle of the next February, there was a commotion and everyone was rushing to the Old Building. I asked them why. They were perplexed at my phenomenal ignorance and said that I better join them to meet Subash Babu of the Accounts Section to settle my IT. Else I won't get ANY salary on the 1st of March.
Needless to say, I ran to Subash Babu who looked at me and asked:
"Are you a bachelor?"
"Yes"
"Sign this form and go away...I will fill up the details. Your salary will be reduced next month by Rs 60"
I thanked him, signed, and marveled...Subash Babu had the names and salaries of every IIT employee on his finger tips. A veritable wizard!
On my way I met Prof D who was my senior by a decade and drew double my pay. I asked him:
"How much was your IT?"
"Nothing"
"Nothing?"
"Nothing"
"How come?"
"I have six children and I get a rebate because I am married, and on each of my children for their upkeep, education, health..."
It was a double whammy for me: I was an unwilling bachelor and an unwilling tax-payer.
Things reversed by the time I ultimately got married 14 years later and had a kid. The successor of Subash Babu laughed at my ignorance and said that married folks with kids are taxed more than bachelors nowadays...I was a victim of the newfangled Family Planning Drive. Indeed there were incentives for getting castrated...you get an extra Personal Increment throughout your service. But my wife was against such permanent benefits.
During my long bachelorhood many LIC agents used to bother me at my home and office asking me to take a Policy. And they would threaten me that life was at a tremendous risk for chain smokers like me and that I should ensure that my old parents wouldn't suffer on my account. They were all so solicitous. They also told me that under the new IT rules I would get a tax rebate. To get rid of them politely I took three policies at different times paying the first premium and then forgetting.
As the Indian Economy turned away from socialism to capitalism, the IT rates got increasingly heavy and so also inducements to tax-cuts. I never bothered about such IT-savings. Once we got a terrific amount as Fifth Pay Commission Arrears. But they were subject to heavy taxation. Folks advised me that there is a way to totally avoid tax on arrears.
"How?"
"Invest all your arrears in NSC. You get a very decent interest too"
"What is the catch?"
"You can't cash them for 3 years"
"After which?"
"Oh, you can withdraw the principal and the hefty interest"
"Are they tax-free then?"
"Oh no! You have to pay taxes on the entire amount at the prevailing rates"
"Thank you! I better pay the taxes now and live in peace...a la Jesus"
As it turned out, tax rates increased steeply and everyone who invested their arrears in NSC lost much more than they saved.
Generally I followed the Jesus dictum and was at peace. But towards the last five years of my service at KGP, I bought a flat at Nellore @ Rs 7 lakhs taking a loan from LIC at the hefty interest rate of 14%. The idea was sound and there was an added incentive that folks dangled in front of me, viz that the interest on the loan I repay is tax-deductible.
I was buoyant when I walked into the office of the fourth successor of Subash Babu.
"Please give me a form for tax deduction at source due to my repayment of home-loan"
"Do you stay in the home you bought?"
"Of course, no...I stay here as you can see"
"Do your parents or dependents stay there?"
"No"
"Then you are not eligible"
"Suppose I give it on rent?"
"You have to pay tax on your rental income too"
Phut went my IT-savings...
And after retirement and staying with my son in rented houses in Hyderabad I decided to sell my Nellore flat; and I got a fabulous Rs 16.5 lakhs as resale value, courtesy the efforts of my sambandhi.
My joy knew no bounds and I thought I would secure the entire amount in a Bank FD and pay the house rent from the interest.
But my IT consultant told me that in that event I had to pay a whopping 20% on Rs 16.5 lakhs as what he called "Capital Gains Tax".
I asked him how to escape it. And he said:
"Buy a flat in Hyderabad investing that entire amount jointly with your son"
"No capital gains tax?"
"Nil"
"So be it!"
...That is how I cheated the IT folks at last and am blogging from our OWN dream flat in Hyderabad...
Amen!
Mono Lisae
"Welcome to a world where children and their parents never stop smiling"
...Advertisement for an upcoming Gated Township, in ToI, Sunday, February 17, 2013.
Calcutta Dating
In an article (ibid) titled: "Bengal is sitting on a powder keg", the Bengali writer shuttles alternately between "Calcutta Police" and "Kolkata Police" in the ratio 2:3.
I always write Calcutta by force of habit. And I am 70.
I guess the writer of the article must be in his 50s.
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