Financial advisor Akshat Shrivastava has sparked a debate about the cost of living in India, particularly for the affluent. He challenges the common belief that India is an inexpensive country, arguing that high taxes and the desire for a “global standard lifestyle” make it surprisingly costly.
The Real Cost of Luxury
Shrivastava illustrates his point with a personal example: a Toyota RAV4. He bought the car in the UAE for about 25.6 lakh INR, a price that included insurance and a three-year maintenance plan. He estimates the same car would cost 40 lakh INR in India.
The significant difference, he says, is due to taxes. While the UAE has no personal income tax, India’s high tax rates mean he would have needed to earn a pre-tax income of around 57.14 lakh INR to afford the car. This makes the total cost in India more than double the price in the UAE.
Beyond the Car
Shrivastava states this “luxury premium” isn’t limited to vehicles. He argues that things like a good house, quality education, and safety also come at a high price. He believes that Purchasing Power Parity (PPP) data, often used to show India is cheap, fails to capture this reality for those who aspire to a high-quality lifestyle. According to him, the low cost of living narrative only holds true for a specific segment of the population.
High Taxes and Emigration
The post highlights that India’s personal income tax rates are among the highest in Asia, with the top effective rate for the wealthiest reaching nearly 42.7%. This contrasts sharply with countries like the UAE and Singapore, which have very low or zero personal income tax, making luxury goods and services far more affordable. This tax disparity is cited as a key reason why a growing number of wealthy individuals are leaving India.