The Government sucks - literally!

Note: Rant follows

Some clarifications - I am not an anarchist (not yet anyway), and not even a pro-laissez faire libertarian. But sometimes, the government just screws your entire day. This is how.

I thought we had all our tax liabilities figured out (Income tax, Service Tax, VAT, Professional Tax, Tax Deducted at Source, etc.), when in walks a lady "inspector" from the "Maharashtra Labour Welfare Board", and asks us how many employees we have. Based on this information, she shows us the Mumbai Labour Welfare Fund Act, 1953 according to which we are supposed to pay them on a per employee per month basis every 6 months! Argh!

Apparently, here are the rules:
If a company has more than five employees then that company is liable to pay for Labour Welfare fund twice in a year (i.e in June & December).

The rate slabs are as follows:
Salary below Rs. 3000/- (employee's contribution is Rs. 6/- & employer's contribution is Rs. 18/- for six month)
Salary above Rs. 3000/- (employee's contribution is Rs. 12/- & employer's contribution is Rs. 36/- for six month)

A bit of Googling shows http://www.on-lyne.info/legal6.htm, which gives slightly different rates than what the lady prescribed.

Based on her calculations, and with 16 employees she has given us a claim letter which says that we have to now pay Rs. 3,360/- in first week of July. Well, agreed, it's a piddling little amount, but it's just an irritating impediment to getting on with work.


I mean, if you look at all the taxes we end up paying, let's say we get paid Rs. 100, here is how the cookie crumbles:

• Rs. 5.25 is deducted by the client as Tax Deducted at Source (TDS)
• Rs. 12.24 goes as Service Tax and educational cess
• Rs. 15.75 from the gross profit on the Rs. 100 goes as income tax - paid every quarter for that quarter. This is calculated as follows. We assume a gross profit of 45% on the total receipts for that quarter, and apply a tax rate of 35% on that. Which comes to 35% on Rs. 45 for the Rs. 100 earned.
  
• Rs. 200 per employee per month goes as Professional Tax. Amortize that over our earnings
• For every employee, their tax component is to be paid for by the company, or we are liable for penalties

It's not that we don't pay our taxes on time or evade them. It is also not the case that starting one's own business in India is difficult - we were up and running relatively quickly. But just when you think you've got it all figured out, in traipses an inspector and squeezes a few more thousands out of you. Sheesh!