“Does petrol cost us what its price is?” – one more reason to be an entrepreneur..

What was the cost of petrol when you bought last time? 53.5? or 45 ? or 39? Okay whatever be the price; is it possible that the person buying next to you is buying cheaper than you? Or may be dearer than you? Is it possible? YES. It is. How? Read on...
There is difference between the price of petrol bought by an entrepreneur and petrol bought by a person working as an employee. It is the rate of tax and calculation method, that create the whole difference.
For the sake of building the model we assume that tax rate for everyone in the country is 30%. We also take market price of petrol as Rs 50/litre. If the income of an employee is Rs 100, after tax he is getting only 70 and hence for him the petrol is costing around Rs 71.42 (50/70*100) effectively because he is paying 50 Rs out of his income of Rs 70. On the other hand, for an entrepreneur the same kind of an expenditure gives a tax shield to the effect of 30% (how ethical, showing personal expenditure in business, is a different issue)which makes his income of 100 as 130 effectively. So for him, effective price of petrol is Rs 38.46 (50/130*100) only. The same logic goes on when we buy laptop or a software or electricity and so on and so far.
So what’s the lesson – there is one more reason to become an entrepreneur – effective use of tax slabs.

People leave their highly rewarding jobs to realize a distant dream of their own and become an entrepreneur. So if a good idea strikes me, will I go on to become an entrepreneur? The thought of starting something of my own is becoming more and more prominent in me for quite some time. But sometimes I think I am not ready yet. I don’t have any experience in the way things move in corporate world. May be I would like to have a firsthand experience with corporate and then 5 or 7 years down the line I may think of becoming one. Let’s see how things turn out.