Before we dig into Why part of the article, lets understand What it is. A percentage of your income which you pay to the government is called Income tax. It is a mandatory payment that you have to give back to the government. However, paying tax on your income is not the only way you pay back to the government. You pay tax in various other forms such as,
- A part of goods manufacture value is paid in the form of ‘excise duty’
- A part of value of goods imported in the country is paid as ‘custom duty’
- A part of goods’ value entering in a city is paid as ‘octroi’
- A portion of sold goods value is paid to the government in the form of ‘GST’
- A part of rendered service value is paid as ‘service tax’
Why Do You Pay Income Tax in India?
Unlike some of the developed countries in the world, government of India does not provide social security and medical facilities at no cost. Therefore, the question arises, why to pay income tax to the government when it does not offer any social security and you have to rely on your own to meet all your needs and save for your future as well? Well, the answer would be the portion of your income you contribute as income tax to the government is utilized for the development and maintenance of the country. The reasons for paying income tax in India are:
- The portion of income received by the Indian government in the form of tax is employed for providing basic services and amenities to the people such as road, light, water, etc. You cannot obtain these facilities on your own.
- The taxes collected from the citizens are returned to them in the form of various facilities like railway, postal services, police, and public transportation.
- Besides, government has other responsibilities too. It may not provide free medical facilities and free basic education like some of the developed countries but it does provide healthcare facilities at public hospitals at negligible cost, elementary education at minimal expense, free vaccination for children, food articles at minimal price for people below poverty line.
- Apart from all these responsibilities, government of India also utilizes public money in building up strong national defense system for the country and for the development of infrastructure. A major share of tax collected goes into developing and maintaining national defense.
- These accumulated taxes are used in running various welfare programs and employment schemes.
- Moreover, government has to pay salary to the government employees, administrative service holders, run judicial system, etc.
- The part of money contributed in the form of tax is actually contributed as the cost of civilization.
- All common facilities, such as public park, streets, libraries, fire fighters, street lights, etc., which are used by every citizen of India are maintained by the government with the funds accumulated in the form of taxes.
Why Income Tax Payment is treated as a Burden?
No wonder, nobody wants to give away a percentage of hard earned money in the form of tax. While avoiding paying income tax people often forget the facilities they avail every day at the expense of tax paid to the government. In a country with a population above 132crores, only about 82.7 million people pay income tax to the government. This constitutes only 6.25 percent of the total population that actually contributes income tax every year. Following are the reasons why people treat tax payment as a burden:
- One of the major facts behind the little number of tax payers in India is low income. A considerable part of population does not earn enough to be eligible to pay income tax. Wide spread poverty is one of the greatest reasons.
- People still have not developed a tax culture in India. Due to lack of awareness they do not feel the moral obligation of paying tax to the government being a citizen of India. As a result they treat tax payment as a burden.
- Another big reason for avoiding tax is that the tax payers feel the income tax payment process complicated.
- Besides, the harassment faced by the tax payers in the hands of tax collectors also contributes to avoiding income tax.
How to Develop Tax Culture in India?
- The initial step would be to simplify the tax filing process for laymen. A healthy tax culture can be developed by ensuring a hassle-free tax-paying experience and minimizing the harassment faced by the tax payers.
- Tax professionals have positively significant role to play in creating awareness among common people. Professionals can advise their clients about the much relaxed tax scenario of the present times. Unlike seventies, tax payers no more need to bear high rates of income tax. People with income up to ?2.5lakhs do not need to pay tax at all, which constitutes a big part of the Indian population. While individuals with income between ?2.5-5lakhs pay 5 percent tax, ?5-10lakhs pay 20 percent and above ?10lakhs pay 30 percent income tax in a financial year.
- Besides, there are provisions to avail various tax deductions on expenses that you are liable to bear, such as for health, travel, savings, etc, under the norms of Income Tax Act of India.
Hi there! I’m Sethu, your go-to guy for all things tech, travel, internet, movies, and business tips. I love sharing insights and stories that make life more interesting. Let’s explore the world together, one article at a time!
