MASQUERADER

Tax and debt

Anoop Kohli, 18 February 2010, 03:28 AM IST

Tax and debt Valentine’s Day gone by, if you see a stranger, man or woman, giving you an unexpected smile, or a faintly acquainted somebody suddenly admiring your shirt or shoe-shine, chances are he is an insurance agent or someone who would like to sell you a mutual fund or anything from the all and sundry 80c/c category, whereby parting with say, a lakh, you save the same amount on tax, and even on a modest interest, end up making another at the end of three years, provided you don’t default on deposits the subsequent years. They don’t use euphemisms. Appropriately, this is called a ‘lock-in’ period. Quite simply, you have signed a legal liability, whereby you will support this company with your hard earned money for three years, after which they will reward you with some gains. They’ll show you how two of their products gave more than 50% returns per annum in 2008. Finally, previous performance is no guarantee for future returns. Sounds funny, because if you were working in a similar concern, and applied for a job with them, and expressed the same terms regarding your past and future inputs, you will be shown the door. Ridiculous still is the fact that you actually part with your dough, and feel so obliged to this unknown someone with his visiting card, who five minutes ago was tentative whether he would even get a hearing from you. A crude analysis of the emotional role reversal of this encounter gives you the feeling that you have just given into a ‘financial flirt’ of a much larger industry called ‘Economic Affairs’.

Money does not grow on trees; it grows in banks, at a rate decided by extremely intricate methods. It shrinks, by an absolutely reverse terminology, called ‘inflation’. In the end, I believe it all squares up. Like gaining nine hours on a flight to New York, and losing a Sunday on your return, a week later. Everything else, including you goes the same way, but it is stupid to think that far. Buying, in a way is losing money, but you get a percentage back next year, if you apply for depreciation. So, besides what an appliance makes for you, it returns you its cost over a period of time, due to the same punitive practice called ‘taxation’. They tell you it is wise to save, but at the same time, spending appears as lucrative. Anyway, the immediate gratification of spending far exceeds the contemplative security of saving.

So, whether you spend or save, it is the way you tackle the equation that gives you your net worth. Actually, net worth is a myth. True valuation is mostly speculation. The market lists you in a manner that by tossing you up, or crashing you to bits, money spills into others’ pockets. Good returns have long been uncoupled from good endeavours. All skills and aptitude can be bought for an amount. If you have that much it actually fetches you twice as much in half the time. That is why the mutual fund guy had the last laugh. Of course, you never had a choice.

Debts are safer and surer to handle. Negative accounts attract no taxes and no envy. To be bankrupt is a situation reserved for the financial elites. Besides, if you are important enough, you get a ‘stimulus’. You have not lived enough, if you have not lived beyond your ‘known sources of income’. And why on earth (as in heaven) should anyone want to know the ‘unknown’ sources. The Budget. When Manmohanji was in finance, he would always use an Urdu couplet in his speech. That romance seems to have faded. We were poor and were overjoyed even with a ‘feel good’. Now, slightly better off, even a ‘feel bad’ is put aside. We already know what’s coming. Pranabda, just make it bearable with matching poetry. Finally, it is wiser to be ‘in debt’, and survive by being ‘indebted’ to someone else!

5 Comments | Comments are closed

Bookmark / Share

Hotklix this	Google Bookmarks

Facebook	Buzz up!

StumbleUpon	Reddit
	More

Rated

Related Blog Posts

Scoring On Fuel, Failing On Food!

No intelligence, no failure

Ram vs Shyam

Subscribe to comments on this Post Comments:

Sort by: Oldest | Newest | Recommended (5) | Most Discussed

Sharda Bhargav - The Confiscated Soul says:

February 18,2010 at 08:23 AM IST

Sir, in a mechanical contrivance output is in some definite proportion to input. But in financial juggles, there is are no rules of expansion or contraction. Money wizards tend to rule their way mentioning risks and not telling the details of risks.
Financial management to save taxes, is in fact to defer tax payment with our past earnings deflated.

Pravin says:

February 18,2010 at 09:26 AM IST

hehe...comical...but true in some points :)

Venkatkrishna Pisipaty says: Bookmark this discussion

February 18,2010 at 12:00 PM IST

All that needs to be done is the country gets back the 7.000.000 crores of black money stacked up in Swiss banks & with this, by the mere interest that the amount would generate we could pay a significant portion of our debt, is someone going to do something about this - no one! We as an economy take pride in our strong fiscal policies but this is only limited to policies where extracting taxes from the common man is concerned, when huge unthinkable amounts are literally smuggled out of the country, we just seem to watch helplessly. Someone recently called us a 'power' democracy & I couldn't think of a better epithet for the mockery of democracy our representatives subject us to so unabashedly!

(Reply to Venkatkrishna Pisipaty)- Sam Pedro says:

May 10,2010 at 08:03 AM IST

We shd not be throwing stones at other houses when we live in a glass house. Think what you have done first before commenting on others.

Reema says:

February 18,2010 at 12:32 PM IST

Everytime I pay my monthly installment for the insurance policy I feel like I am getting robbed, but they say pay for your present to secure your future..So be it!!

Hope the budget changes my smirk into smile :) :)