Rs 30 Lakh Income, But Salaried Pay Rs 4 Lakh, Businessmen Just 1 Lakh In Tax — Why 4X Gap? CA Explains

A recent LinkedIn post by entrepreneur and HR leader Vanya Goel has reignited a long-standing debate: Do salaried professionals pay more tax than business owners for the same income?

The post, which has gone viral, compares a Rs 30 lakh income earned through salary vs. through professional services or business, showing a tax gap that many are calling unfair.

What Sparked the Debate?

In her post, Vanya Goel wrote, “A salaried person earning Rs 30L may pay up to Rs 8L in tax. A business owner? Sometimes just Rs 1.5L… No surprise many chase entrepreneurship—not just for passion, but for tax efficiency.”

She added that this growing tax gap is pushing more people towards business, not necessarily to create jobs or innovate, but simply to save more money on taxes.

The Actual Numbers: Explained by a CA

To clarify the math, CA Gaurav Makhijani (Head of Tax – North India and Gujarat, Roedl & Partner) broke down the figures based on current rules (FY 2025–26).

For a salaried person earning Rs 30 lakh, after a standard deduction of Rs 75,000, the taxable income becomes Rs 29.25 lakh. Based on slab rates and basic assumptions (no other deductions), the final tax comes to around Rs 4.75 lakh, not Rs 8 lakh as originally claimed.

On the other hand, for someone making Rs 30 lakh as gross receipts from professional services (like a consultant or freelancer), Section 44ADA allows them to assume 50% as net income (Rs 15 lakh) as they will have certain expenditure too. Tax on that comes to about Rs 1.09 lakh.

So yes, the salaried person could be paying over 4 times more tax than a professional with the same gross earnings.

“If you are earning Rs 30L in salary or Rs 30L in business receipts, your tax outcome will be very different. This is because a businessman will have certain expenses. Rs. 30L and Rs. 30L of ‘net profit’ may not have such a difference on tax cost”, CA Gaurav explained.

“It’s not always 5x, but the difference is very real depending on how your income is classified.”

Why Does This Happen?

The main reason for this gap lies in how income is taxed.

Salaried individuals are taxed on their full income (minus limited deductions like HRA, standard deduction, and PF). But business owners or professionals can claim expenses — like rent, travel, equipment, and even a portion of phone and electricity bills — to reduce taxable income.

Plus, under presumptive taxation (Section 44ADA), professionals with income up to Rs 75 lakh can simply assume 50% profit without needing to show actual expenses.

“Different rules for different kinds of income — that’s why this gap exists. But the system needs to evolve to stay fair,” said CA Sangita Biswas, reacting to the viral post.

“Tax fairness isn’t just policy — it’s how we retain talent and build a balanced economy.”

Also Read: Are You Eligible for ITR Form 1 (Sahaj) in AY 2025–26?

What Are People Saying?

The post has triggered a wide debate online. Many professionals feel discouraged by the higher tax burden despite stable jobs and lower risk. Ashish Mahajan commented:

“Seriously — that is one of the reasons businessmen are always on the upper hand. Not fair for people who earn salaries.”

To which Vanya responded, “The goal shouldn’t be to penalise risk, but to create a system where reward, responsibility, and respect are balanced across the board.”

Some suggested more radical reforms. A user, Parvathy Ramakrishnan, said, “Just abolish income tax and bring in expense tax according to the tiers of luxury and necessity. Everything will become fair.”

Vanya replied that taxing spending over income is an “interesting perspective,” but also warned of practical challenges like defining “necessity vs. luxury” and avoiding misuse.