Why salaried professionals pay higher tax than wealthy? Expert explains
Certified financial analyst lists multiple options to lower effective tax rates under Income Tax rules
 "Why salaried professionals pay higher tax than wealthy? Expert explains")
Why do some salaried professionals find themselves in the 30 per cent tax bracket but wealthy families are in lower effective tax rates? It is because of how income is structured under the Income Tax Act provisions, says Sanjay Kathuria, a certified financial analyst.
“Same country. Same tax laws. Different understanding,” Kathuria wrote on X, calling the issue a matter of awareness rather than evasion.
Gifts to family
Kathuria cited the Act’s Section 56(2) (x), which exempts gifts received from specified relatives from tax without any upper limit. That includes high-value assets.
He cited how actress Aishwarya Rai Bachchan had reportedly gifted luxury assets to her minor daughter. “Gifts from parents to children are tax-free. No limit. Even luxury assets allowed. Not a loophole. It’s written in law.”
Under the Act, such transfers within the defined category of relatives do not attract tax.
Income splitting
Kathuria explained how public figures Virat Kohli and Anushka Sharma use limited liability partnerships (LLPs) to save on taxes. According to him, LLPs allow:
Income to be split between partners
Profits to be taxed at the firm level
Deduction of business expenses such as equipment, staff salaries, travel and investments
“That’s tax efficiency at scale,” said Kathuria, contrasting this with salaried individuals who cannot deduct personal purchases from taxable income.
Tax filings
Kathuria also highlighted the Hindu Undivided Family (HUF) structure, describing it as a separate tax entity with its own exemption limit and deductions under Section 80C, along with separate capital gains computation.
Referring to business families such as the promoters of the Adani Group, he noted that an HUF enables a family to legally operate “multiple tax files”, thereby lowering overall liability.
Agricultural income exemption
Under Section 10(1), agricultural income is fully exempt from income tax, subject to conditions. Kathuria referred to former India captain M S Dhoni and his agricultural land holdings, stating that qualifying farm income is not subject to central income tax.
Business expenses versus salary
He argued that creators and entrepreneurs can deduct legitimate business expenses — including studio rent, software subscriptions, equipment and team salaries — from taxable profits. A salaried employee, by contrast, receives no deduction for comparable personal spending.
“The tax system doesn’t discriminate. Information does,” Kathuria wrote.
What taxpayers can consider
In his post, Kathuria suggested that individuals:
- Form an HUF, if eligible
- Use family gifting provisions appropriately
- Consider an LLP structure for freelance or consulting work
- Claim deductions under Sections 80C, 80D and HRA
- Engage a chartered accountant for structured planning
He maintained that all the strategies mentioned are fully compliant with the Income Tax Act, adding that the key differentiator is knowledge of how existing provisions can be lawfully applied.