The tax structure in India as far i can oversimplify is as follows: Say you receive X amount as income during a year, you will pay between 10-40% of X to the government as income tax. In this scenario, all of X has been treated as your taxable income. There are however ways to reduce your taxable income and consequently the amount of tax you pay. These are referred to as exemptions and are deducted from your total income. Common deductions include HRA/house rent, deductions for disabilities, education loans  and investments. The most commonly availed deductions (at least around me!) being HRA and an investment of some sort; either you drop your money into some fixed deposit or the public provident fund or the like. This structure is incentivizing people to lock their money up somewhere rather than spend it/put it into the economy. There’s only two things that happen when you give your money to a large financial institution of any sort, they either lend your money to other institutions/businesses or like in the case of mutual funds, they bet with your money hoping that the bets pay off. You’re unknowingly financing loans of people/businesses you don’t know or care about. Also, if you didn’t realize the government has quietly disincentivized you from doing good with your money for yourself or for the things around you. Want to learn ballet, or join a class that teaches you speak more confidently in public or learn some stock trading so you can get back at those traders or may be just take a trip to somewhere breathtaking. Sorry, the government doesn’t like that . Not incentivized.

Would your community like to maybe plant some trees in your area, or pool in some money to set up a local day care center or get creative and sponsor an artist to do make funky art for part of town or hell even fund an entrepreneur on Kickstarter or Indiegogo. Sounds like useful fun? Not incentivized. The current structure moves you away from what i’d say is a financial democracy. But incentivizing you to lock your money up and give it away to banks, the current structure killing your ability to be the source of your own happiness. I’m sure with my modicum of economics/finance knowledge, i’m missing a lot of facts and alternate perspectives, so i invite you to drop an enlightening comment about the same. Don’t be afraid to call me an idiot :P This post also appears as a note on my facebook timleline just so that you can make comments, GO-> http://on.fb.me/1bp9Mio