Wednesday, March 13, 2019

Taxation system that has no rationality.

1. One one hand, you take loans to construct a house for your family residence plus few additional flats for rental purpose.  There is no tax waiver during construction and income tax is immediately levied from the first rent collected even though you could end up later surrendering the house to the bank in lieu of unsettled loan amount.

2. On the other hand, you construct a hotel. During construction and furnishing, the government waives off tax on materials. And after construction, government waives off income tax for 5 to 15 years depending on the location.  The income to government is only from sales tax that is paid by the customers who use the hotel rooms and eat and drink in the hotels.

The most expensive investment of a hotel is in furnishing from kitchens to rooms and toilets. And all these are tax free. In fact some smart hotel owners do not incur any cost in hotel furnishing. They import double the amount tax free, sell 50% in the black market at double the purchased cost and thus are able to furnish their hotels free of any monetary cost. Maybe a nominal fine if caught.

Hotels are therefore accorded double tax relief incentives. Matetials/ furnishings are not taxed during constructions and income tax is waived off for several years. All sales tax on rooms, food and drinks are happily paid by the customers. Whereas the rental building owners on the other hand are trebly oppressed. Mercilessly taxed by the government,  heavily cursed by tenants and finally for few unfortunate ones the building is auctioned by the bank. But life goes on. Some sail on, few fly and most trudge along. Survivsl instinct is amazing!

1 comment:

  1. Even PIT tax returns are not rational. The education expenses deduction were given uniform flats 5000 perchild upon producing the results. But here it is not a fair enough, the student who were avail the facilities of center school and those who doesn't avail such facilities were given same deduction of education expenses.