Indians are really very honest about paying income tax.

Socialists in India always moan about how few people pay income tax. The implication is that there are masses of people hiding their income so as to avoid paying tax. Which is partly true. All income from farming is exempt from tax and there are millions of people, such as plumbers, masons and electricians, who earn more than the tax threshold of Rs 250,000 per year, but do not pay tax because they are paid in cash. Village life is uncertain as it is dependent on weather, so every year millions migrate to cities. About 4 million Indians have migrated abroad while around 315 million have migrated inside the country. While they earn more in cities the cost of living, including rent, is very high. So, why do they come? Because they can earn throughout the year, quality of life is much better and they can avail of better healthcare and education. In the US life in cities has been found to be safer, healthier and wealthier. But the real truth is that most Indians do not earn enough to pay direct taxes. When the poverty line is pegged at an earning level of Rs 32 per day in villages and Rs 47 per day in cities then it is easy to see why the majority of people are classed as above poverty line, but they still do not earn enough to pay taxes. As these pictures show there is poverty in the US as well but see the number of cars in the background. If 47% of Americans are too poor to pay federal income tax then surely twice the number of Indians do not earn enough to pay taxes. At least we have a threshold of Rs 250,000 a year, there is no threshold in the US and tax rates start from 0 earnings. So how is it possible for so many people to pay no tax? Because the government provides social security for everyone. It is in the interest of people to file tax returns honestly, which is used by the government to provide assistance to those in need. In India, 51 million people file tax returns, out of a population of 1,250 million, and only 13 million actually pay income tax. Despite the phenomenal rise in the number of services being taxed, the rise in the rates of taxes and services contributing 52% to the GDP, direct taxes paid by such a small number of people contribute 51% of total tax collection. Is it any wonder that people feel aggrieved at paying so much to the government, for which they get nothing in return. No income support, no education support, no healthcare and no pension. It maybe that high levels of service tax are encouraging more services to demand payment in cash. Which may account for the sudden rise in the amount of cash in circulation. Indian firms are looking at transferring to Ireland where corporate tax rates are very low. Seems that Indians are really very honest about paying income tax. Congratulations to them.