part iii ey series on price people pay for government anthony is in his early thirties and works as a senior manager in the sales division of an mnc his wife has taken a short sabbatical and is busy with their daughter tina who is in primary schoolanthony earns a gross salary of rs 25 lakh per annum with some bank interest and income from investments his gross total income is a little over rs 2550 lakh per year occupying a penthouse in the same housing apartment complex as akbar anthony has taken a housing loan and pays an emi of rs 40000 per month and obtains a tax deduction of rs 150 lakh per year on the interest outgoanthony has ensured that he can take full advantage of tax sops for investments under section 80ccf of the income tax act so he has invested an additional rs 20000 in infrastructure bonds as his own contribution of rs 129600 will fetch him a tax break under section 80c up to a limit of rs 100000 only additionally like akbar the premium he pays for mediclaim cover entitles him to an additional deduction for tax purpose but subject to maximum limit of rs 15000since anthony does not pay rent he isnt entitled to hra sops however after taking into consideration the deductions exemptions available for lta employers contribution to pf transport allowance reimbursement of his telephoneinternet and medical expenses all aggregating to rs 549700 his taxable income comes down to rs 2004300anthonys spending power is rs 1373351 but some investments made during the year plus an additional investment of rs 430000 in equities etc will bring him returns in the years to come more so if dividends continue to be tax exempt in the hands of shareholdersemi and maintenance of his penthouse cooking gas and electricity top anthonys expenses at rs 549341 it constitutes 40 of his total spend however the indirect tax outgo against this item of rs 10787 is a nominal 193 furniture and furnishing is the next big spend primarily owing to a dishwasher costing a little over rs 67000 and this segment with a tax outgo of rs 19 087 or 1985 against this head while food and beverages worth rs 175787 constitute 1280 of his spend the indirect tax against this head is 1087 the effective indirect tax against alcohol and cigarettes spend of rs 43947 continues to be a high of 497interesting to note is the recreation and entertainment spends of rs 107121 anthony spent rs 68668 in the backwaters of kerala but the tax amount of rs 3942 works out to just 57 fortunately it is not higher because lodging does not attract a huge tax levy apart from the cascading tax impact noncreditable share which is passed on to the consumer and a nominal luxury tax levy which varies from state to state and is ignored for our analysis at least holidays can continue to be happy