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Advantages Of Paying Taxes – For You And The Nation

Taxes are a source of national wealth. A country needs taxes to finance its government.

As per an official statement issued by the finance ministry on 17th December 2021, "The Net Direct Tax collection of Rs. 9,45,276.6 crores (as on 16.12.2021) include Corporation Tax (CIT) at Rs. 5,15,870.5 crores (net of refund) and Personal Income Tax (PIT) including Security Transaction Tax (STT) at Rs. 4,29,406.1 crores (net of refund). The gross collection of Direct Taxes (before adjusting for refunds) for the F.Y. 2021-22 (as of 16.12.2021) stands at Rs. 10,80,370.2 crore compared to Rs. 7,33,715.2 crores in the corresponding period of the preceding financial year. The gross collection for the F.Y. 2019-20 was Rs. 8,34,398 crores and that for F.Y. 2018-19 was Rs. 7,96,342 crores in the corresponding period."

Governments need taxes to provide public services and infrastructure. Tax revenue helps provide benefits, such as schools and roads; healthcare for the poor and elderly; police and fire protection; and to finance the defense forces. Taxes keep the nation running and provide for its people. It also helps the government to plan and manage its resources.

But what are the benefits to the citizens who pay those taxes?

This is a question that many citizens have. Every taxpayer is benefitted in some way or the other by the tax they pay. If the citizens perceive the taxes as a benefit for their country, then the government has an incentive to keep taxes low.

There are also a few personal benefits that taxpayers enjoy for paying tax and filing their income tax returns diligently:

Loan approvals - Many of these loans are approved only if the taxpayers have filed their tax returns on time and have paid the taxes on time. You are required to submit your ITR forms for the past 2 or 3 years along with your loan application. Without that, your loan could be rejected by the lender.

Visa applications - Without a clear and complete payment record of your personal income, the Visa Officer will not approve your application. This is to ensure that you are not leaving the country to evade tax.

Serves as income proof for self-employed individuals - An individual who is a self-employed contractor or a freelance worker, is required to file his ITR forms and show the government his earnings. This serves as proof of his earnings. This in turn helps you get loans and credit cards.

To claim tax refunds - The government requires taxpayers to fill their tax return forms to be eligible for tax refunds. There are a number of deductions and rebates available to claim tax refunds. You can rightfully claim these refunds only when you file your returns. This is applicable for both personal income tax and all other kinds of taxes.

Contribute to the growth of the country - The government encourages taxpayers to pay their taxes on time, as it ensures the growth of the country. The growth of the country will lead to better jobs and a better life for all. Every time you file your income tax returns, you are contributing to the growth of the country. Every time you pay taxes, the government contributes to the growth of the country by increasing the government’s income.

Paying taxes is a basic duty of every Indian citizen

There has been an increasing clamour against various taxes and the prevailing tax rates in the country. Citizens claim: “I have to pay for my food, my housing, my travel, my medical treatment, and having a vehicle, which includes not only the cost of the vehicle but also vehicle tax and other expenses. Even on many roads, tolls must be paid!” They further argue that, in comparison to countries such as the United States and the United Kingdom, where citizens receive social security and medical care at no cost, India doesn’t provide such services to all citizens.

True, India does not give social security or free medical care in the same way that some affluent countries do. However, we must consider the matter on a bigger scale. We must recognize that the government has a lot of responsibilities, including health care through government hospitals (which normally provide free services), education, and so on (In Municipal and Government schools the fee is negligible).

The government uses taxes to fund a variety of welfare programs, including job-training programs, free electricity to farmers, free cooking gas to rural women, and so on. The government must bear the administrative costs of lakhs of staff in various departments. Despite the fact that the legal procedure is time-consuming, the salaries and benefits of Judges, Magistrates, and judicial personnel must be paid by the government. Thus, when we analyze the many responsibilities of the government, we must recognize that we must pay taxes in accordance with the law. We must behave responsibly as citizens and pay taxes on time.

India is growing, it is imperative to pay your taxes. Without the tax that you pay, the government will not be able to fund the necessary programs (health, education, infrastructure).

FAQs

1. What are the kinds of taxes paid in India?

The Indian tax system has 2 primary kinds of taxes – Direct Taxes and Indirect Taxes. These include income tax, capital gains tax, corporate tax, GST, VAT, customs duty, and so on.

2. What is the bare minimum income for me to pay income tax?

You do not have to pay any tax on income up to Rs.2.5 lakh. Income in excess of this level is subject to taxation in accordance with the income tax department's tax slabs.

3. What exactly is TDS?

TDS is tax deducted at source. This is typically done for salaried employees, where the employer assesses the employee's cumulative tax liability for a given fiscal year and deducts it from his paycheck before paying him. This tax is subsequently remitted directly to the income tax department by the employer in the employee's name.

4. How does the New Tax Regime work?

The New Tax regime was introduced in the Finance Bill of 2020 allowing lower income groups to follow a different tax slab rate where they don’t claim any rebate or deductions on their income.

5. What is the difference between assessment year and financial year?

The financial year is the year in which you generate income. The assessment year is the year after the financial year in which you file your income tax returns.

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