Rakshash Taxes on my Provident fund

Updating my earlier piece where I had asserted that Indian legal system is designed to break the backbone of the salaried and subsidize the rich.

Hail Modi ! Now The Rakshash Modi has come up with an innovative solution to all retirement planning woes, FREE CYANIDE PILLS on your day of retirement. Because if you refuse to take it, he is going to extort 21.1% of your EPFO balance. Already the high inflation would mean that any amount that we save cannot buy anything once we retire. So it better all senior citizens better roll over and die rather than clogging the overpopulated system.

Interest rate 8.80%
Year 1 2 3 39 40
Opening Balance              –                    104,400    217,987    28,062,962    30,636,902
Employer contribution      50,000                      50,000      50,000            50,000            50,000
Employee contribution      50,000                      50,000      50,000            50,000            50,000
Interest        4,400                      13,587      23,583      2,473,941      2,700,447
Closing balance    104,400                    217,987    341,570    30,636,902    33,437,350
Total over 40 yrs % of total
Employee contribution              2,000,000 6.0%  4,650 per month
Employer contribution              2,000,000 6.0%
Total Interest            29,437,350 88.0%
Tax            (7,064,964) -21.1%
Total balance            26,372,386 78.9%

Here is a brief calculation that I did. Assuming that you diligently save 50,000/- (4,165/-) every year for the 40 years of service till you retire. Your total savings with interest will amount to 3.3 Cr INR at current EPFO interest rate of 8.8%. If the Rakshash eats 40% (30% + a zillion surcharges + swach Bharat tax etc.) then you will end up 70 Lakh or 21.1% less money than what you had anticipated. So my fellow hard working salaried mules, either work 21% harder or buy cyanide pills.

 

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