Welcome Finance Enthusiasts !!

A common man is invincible, however there is one thing he is fearful of – the dangerous three letter word “TAX”. Nobody wants to give away their hard earned money under the pretext of development and public welfare. The Finance Minister in every Union Budget decides how much of your hard earned money will be left in your pocket/purse ( pun intended). When Nirmala Sitharaman announced that 12 lakhs will be exempted in the new tax regime, it is a mathematical wonder for different classes of people. In a household if both the spouses earn 12 lakhs then they pay zero direct tax. If only the husband earns 24 lakhs then his entire income is taxable. The deductions of 80C which I believe motivated people to invest in the Government sponsored schemes (PPF, Tax Saving FDs, National Savings Certificate etc) is absent in the new tax regime.

Money, more money, financial freedom and for the dream of a better life people want to move/settle abroad. The better picture comes with the benefits of free education, potholes free roads, state – funded transportation, and good healthcare. Basically you have good social security and a pay package whose exchange rate is higher in your home country. In India, a salaried person paying 30% tax is struggling for decent amenities. If you think India has a very high tax rate then you are mistaken, other countries also levy rates in similar lines or more but every citizen reaps benefits. When you live abroad the picture perfect life comes with a high cost of living. With payment in foreign denomination comes PPP (Purchasing Power Parity). It means the exchange rate at which currencies can buy goods and services in different countries. Suppose you earn 50 LPA in the USA but it equals to 15 LPA in India because the cost of living is very high in the USA.

Another way of avoiding tax is through DTAA (Double Taxation Avoidance Agreement). This income tax rule allows individuals and non-individuals to avoid taxes on income earned in foreign countries. The catch is what if the foreign country lays no or minimal tax. Countries like UAE, Switzerland, The Cayman Islands etc are called tax haven countries which impose minimum tax liabilities. Rich people deposit or invest in these countries to evade tax in their home country. Many multinationals have their subsidiaries and shell companies operate from tax haven nations to minimize their tax liabilities. Why do people want to settle in Dubai? Who doesn’t want Gross Pay in hand (salaried people can understand the emotions here).

Rich people always get away with the taxation rules and the middle class end up paying for services which only the rich can afford. To buy a house in metropolitan cities you need to shell out 1 crore in a decent locality and accessible neighbourhood. Planning your finances and investments can contribute a lot on how much money you can take home. You just have to start early and always keep on learning to compound your assets.