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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Tax, Silence & Walk

Posted by Muthu on March 5, 2013

I recently attended two full day workshops. One on equity investing in general by Uma Shashikant and the other on Value Investing by Vishal Khandelwal. I would write about some take ways in these in my future postings.

All of you would have read in detail about the budget. Now a days budget has become a significant event for all kinds of media. There is too much of forecasting before and analysis after the budget which is nothing but information overload.

Tax receipts for government have been significantly increased. Buoyant tax receipts usually start the virtuous cycle- less fiscal deficit leading to lesser inflation leading to lesser interest rates leading to investment cycle leading to economic growth. Let’s wait and see what happens.

Talking about tax receipts, there are only 42,800 people in the country who earn above Rs.1 crore in the country. Tax rates (in terms of increased surcharge) have gone up for these people. This is more of ornamental in nature as the increased tax collected from them as a percentage of over all tax receipts would be very less.

Out of 125 crore+ people in our country, around 10 crore people have Pan Card. Out of the 10 crore, only 3.5 crore pay taxes. This means only 2.8% of the population pay income tax. And majority of these would be salaried people.

Interestingly 89% of the tax payers’ income is less than Rs.5 lakhs.

Only 5.6% (18 lakh) of tax payers earn more than Rs.10 lakh. These 18 lakh people contribute for more than 75% of the tax collected.

I wonder how just 0.1% of the people (18 lakh / 125 crore) alone have more than 10 lakh income in the country. It is difficult to believe this number and the opinion that business people in the income range of Rs.5 lakh to Rs.20 lakh under state their income looks valid. Efforts need to be made to make the shop owners, traders, brokers, agents etc. in these categories, who have been evading, to pay tax.

Initially super rich in India was defined as individuals who are earning more than Rs.20 lakhs per annum. As per government, there are only 4 lakhs people who earn above Rs.20 lakhs every year.

Considering the purchase of expensive villas, luxury cars, vast land, queue in gold shops etc. I feel that there is a huge deficit in the tax payer numbers. I’ve been reading some columns on this issue and the general consensus seem to be that there may be around one crore people in the country who can be considered super rich (i.e.) earning above Rs.20 lakhs.

Government keeps taxing only salaried people who are low hanging fruits. Based on the above data, notices need to be issued to people if they pay tax disproportionately lesser than income. I don’t see obtaining data as a difficult thing. Luxury car segment is dominated by Audi, Benz, Bentley etc. Getting the details of people who bought from dealerships is no big deal. Same logic hold good for many other luxury expenses.

Given the current IT infrastructure of IT:-), I mean Information Technology of Income Tax department, this is definitely possible. The government instead of increasing taxes should start broadening the tax base.

We always discuss the importance of keeping things simple. For your financial health: term insurance, medical insurance, emergency fund, asset allocation and SIPs are recommended. We don’t believe in making financial life complex. 

Here I’m going to talk about Health and well being. I’ve a severe migraine problem and so cannot be called as in best of my health. Still I feel healthy more so in the recent months. 

I do two simple things very regularly. 

I sit quietly with my eyes closed for 30 minutes in the morning. I just watch my breath or thoughts during this period. I sit in a chair and not on the ground. Keeping eyes closed automatically reduces half of distraction. The idea of doing this is not to have any mystical experiences or an aura around my head. There is no visualization to attract money or health or any thing else. Being calm due to slowing down of thoughts itself is the best reward. 

Likewise I walk for 30 minutes in the morning. Thirty minutes is minimum and the maximum is 45 minutes. I used pedometer for a while as some one sponsored me for a walk program. I always fell short of 10,000 steps a day; as suggested by fitness experts. Since I walk 3Kms to 4Kms every day in my morning walk, I feel this is sufficient regardless of what expert say. 

It’s not that I did not try to sit quietly or walk before. It’s always there on and off for last many years. Why I failed repeatedly? I found it a hard way. Whenever I adopted a regimen for body or mind, I committed a lot of time to it. It will be yoga for 90 minutes, Vipassana meditation for 2 hour a day, walk for 30 minutes both in morning and evening, 3 times anilom vilom for controlling migraine and so on. This is just an illustration. Every time the combination varied:-)

I preferred in the past to do yoga in the yoga centre and not home. Getting ready, commuting, traffic, chat with instructors and others… So whenever there is a time constraint, I simply missed the entire yoga. Instead I could have spent 20 minutes in house doing some stretch exercises.

A very tight and tiring schedule is the fastest way to loose interest and motivation. So I decided to spend only 1 hour a day for both my body and mind put together. When I made it one hour a day, suddenly it looked easy and I’m able to do it on most of the days. I’m writing this after doing it for not less than 5 months. When I do it regularly, the confidence develops. I’m sharing it public for the sake of positive reinforcement!

Medical experts say that walking and sitting quiet helps in secretion of good chemicals in the brain. My take is that a 30 minute walk is worthy than reading a self help book; It’s like investing. You don’t gain only by reading. Reading and learning is definitely the bedrock. But it becomes utterly useless if nothing is done in experimenting or implementing them.

More than me probably by virtue of association:-), Partha is also disciplined.  Most of you know my colleague Partha. He has a term cover, medical cover and also a personal accident cover because he travels a lot in two wheeler. He saves and invests 30% of his salary through SIPs. For last 2 years, he makes it a point to walk for 45 minutes every day, including Sundays.

We always need to bear in mind that discipline doesn’t guarantee anything though in most cases it would help. My father is 84 years old and never had any exercise or dietary discipline in his life. But for arthritis, he is healthy even at this age. My sister is a highly disciplined individual. She used to walk, do yoga, took very less salt and sugar, minimize oily items etc. We were all shocked when she had a heart attack recently and is scheduled to under go a bypass surgery this month.

I’m saying this not to discourage but to highlight the usual pointer that all we can control is what we do and not what happen to us. What we do is based on our will and what happens is based on innumerable factors which are beyond our control.

Be it health or wealth- Keep it simple and keep doing regularly. All the best.

One Response to “Tax, Silence & Walk”

  1. kishor said

    Hello Muthu ji,
    We don’t know each other personally,
    But I have been reading your post at your site since last 10-15 days, and found it an eye opener for a guys who wants to create an asset over a period of time. I am also a follower of safal niveshak posts, they are also very much value enriching just like your posts.
    I read your latest post and learned regarding the by-pass surgery of your sister,
    In this regard I would like to give some advice, I don’t know whether it would be appropriate to give an unasked advice ( as I have learned that suggestions should be given only in two instance 1. When it is asked/seeked 2. When you life is in danger),

    1. I request you to have a second opinion, if you haven’t had it yet.
    2. Ramdev baba advocates on astha & sanskar channel that usage of “lauki “ juice is a really effective way to clear the heart blockage, I request you to see some ramdev baba centre in your city. There are many example where it has been totally cured.
    3. Now a days in US, there are alternate therapies available known as non-invasive treatment for heart disease and other illnesses, they are very cost effective and also guarantee that blockage won’t happen in future, where as regulary by-pass surgery don’t guarantee of the future occurance.

    I am very averse to debates, as I feel medical treatment is a case of faith over logic, so we all should keep our logical or active / conscious mind at bay.

    The above suggestion are my personal views, and I don’t intent to promote any company / individuals and also don’t intent to derogate any company / individual.


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