‘The system penalizes growth’: Bengaluru entrepreneur vows to leave India after paying ₹4 cr in taxes

A Bangalore-based entrepreneur’s decision to leave India over what he calls a “flawed” tax and compliance system has reignited a broader debate over ease of doing business, tax oversight and whether the country rewards its most compliant taxpayers.

Rohit Shroff, founder and partner of Aflog Group, said he plans to leave India in 2026, citing relentless scrutiny by tax authorities despite full compliance. In a detailed LinkedIn post that has since gone viral, Shroff claimed that over the past 12-18 months, his companies have paid over $500,000 (around ₹4 crore) in GST and income tax, while continuing to face repeated notices, clarifications and audits.

“In India, barely 4-5% of the population pays income taxes. And yet when notices are sent, controls intensify, the same small group continues to be targeted: those who comply,” Shroff wrote. He argued that law-abiding businesses are subject to scrutiny at multiple levels, from local GST authorities to state income tax authorities, without any recognition or tangible benefits in return.

According to Shroff, compliance itself has become a cost center. Businesses are required to file GST monthly, TDS quarterly and income tax annually, often hiring entire teams just to keep up. “Fighting the system costs more than submitting to it, so most don’t resist. They pay, react and move on,” he said, questioning the long-term incentive to continue operating in India under such conditions.

He also suggested that the system is structurally unfavorable to formal tax-paying businesses. “The system is designed to gain the trust of the majority, not to enable the minority who build formally and pay consistently,” Shroff wrote, adding that these contributors are politically insignificant and therefore easy to “ignore or extract.”

Contrasting with Indian entrepreneurs abroad, Shroff noted that Indians were successfully running large businesses in the UAE, the US and other global markets. “When they leave, it’s not because they hate the country. It’s because the system doesn’t reward growth. It penalizes it,” he said, concluding that self-preservation now trumps patriotic slogans.

The post sparked a flood of responses from citizens, many of whom echoed his frustration. One user shared how a friend in Trivandrum was subjected to an income tax audit every year simply because there were “so few people paying high taxes” locally, making them easy targets to achieve the department’s goals. “They are crushing those who already pay a lot,” the user wrote.

Another speaker, who recently returned to India from the United States for family and health reasons, said tax audits followed him across borders. “They were furious to see that my tax obligations had declined in India, even though I was earning a salary in the United States,” he wrote, adding that beyond taxes, deteriorating air quality, pollution, food adulteration and rising inflation left him wondering “what are we paying for.”

However, not all reactions have been positive. A third user strongly objected, arguing that GST is collected on behalf of customers and not a direct contribution from businesses. The speaker pointed out that the weighted average GST rate in India is close to 10% and corporate tax stands at around 25% on profits, calling them “nothing exorbitant”. Highlighting India’s rapid economic growth, poverty alleviation and the emergence of hundreds of unicorns, the user said, “If you want to save taxes and have a better quality of life, of course you can move, but don’t blame the country unnecessarily.” »

Shroff’s remarks come at a time when the government has repeatedly highlighted improvements in India’s ease of doing business indicators, digitalization of tax systems and reduction in corporate tax rates to attract investments. Yet the strong reactions to his message suggest that for many entrepreneurs and professionals, on-the-ground experiences with compliance and oversight continue to shape perceptions – and, in some cases, decisions about whether to build their future in India.