When we have to pay income tax in india: What is Income tax? In simple language, Income tax is the tax levied by the government on the income earned. It is simply the tax on the income. To explain why we have to pay income tax it more clearly, individuals earn income when they carry out business and other activities in the market and society. Depending upon their income, whether it is taxable or not, they pay tax to the government based on respective tax slabs decided by the government.
The constitution of India has given this permission to collect various types of taxes. They collect these taxes from taxable incomes of individuals, Hindu Undivided Families (HUF’s), corporate firms, limited liability partnership firms and other bodies. However, according to the constitution, government is not supposed to collect tax from the income earned through agricultural activities or agricultural income. Thus, it is clear that every individual is supposed to pay tax i.e. share for the income he earns.
When we have to pay income tax in india
The next question may arise that why we have to pay income tax. Why When we have to pay income tax in india government?
Any government in any country performs in very systematic manner.
Well, the functioning of the government is similar as that of the functioning of household affairs.
For example, to feed the family members and satisfy needs and wants of family members, someone has to earn in the family to meet the ends.
Thereafter monthly requirements are planned and expenses are anticipated based on that plans and a raw budget is prepared.
Other aspects like savings in the form of investments, fixed deposits and other requirements of liquidity like transaction and precautionary motives are also planned out accordingly.
Government functions in the similar manner, but at a higher tier than household level and it also differs in some aspects.
However, it is more or less similar. For well functioning of the economy in the country and for the all-round development of the country, the government needs to meet all requirements.
These requirements can be development of infrastructural facilities, promoting health, education, tours-travels and transportation services etc.
These requirements are for the development and welfare of public. Therefore public plays a significant role in contributing towards the development of the country by paying taxes, of which one is Income Tax.
When taxpayers pays regular income tax to the government, this finance is channelized in various fields and that fields yield progress for the country.
Therefore, it is the moral duty for every citizen to pay their fair share and help for the progress and development of country, being a citizen of the country
Following are some reasons that can be enumerated for When we have to pay income tax in india.
Safety & Defence
The reason that we are able to live safely in our homes and easily commute to work and other distant places is that Police Department functions well in the society and controls criminal, illegal and anti-social activities in the society.
They work for maintaining peace and social-stability day and night.
Not only the Police Department, but also the military at the borders and our Navy and Air Force protects us from all types of attacks and threats from all over the world.
It is because of their existence that we are able to exercise our freedom to move anywhere freely.
They undoubtedly fulfill their duties for our safety and security at the cost of their lives.
Hence, it is our civic duty to ensure their survival by helping them paying our taxes.
By paying taxes regularly, this finance will be used in production and purchase of arms, ammunition and equipment.
This ammunition will be used to immune our defense system.
They also require food, medical and other ailments to stand forth in tough situations.
Thus, taxes should regularly be paid in order to maintain law and order in the society.
Infrastructural & Auxiliary Services
Right from the moment we get up till the moment we sleep, we come across various facilities that make our lives so easy and comfortable.
Even at the time of sleeping, we use fans and AC’s that operate on electricity supplied by the Electricity Board.
We travel through our private vehicles or through public transport vehicles.
Both of them use roads and tracks constructed by the government or vehicles that are meant for public use.
The cost for the development of these services as well as their maintenance is very high.
The government cannot fulfil these costs alone.
Our payment of taxes can help to develop these means of transportation become more comfortable and they can be upgraded with latest changes and inventions in the modern era.
This would ultimately bring the cost down and quality of service becomes outstanding. Thus, taxes paid for such infrastructural services will prove worth paying in this manner.
Apart from defence services and infrastructural services provided by the government, it also introduces new schemes and keeps them in check by amending current policies that are for the welfare of the society.
For example, Awas yojnas, free child education, 24/7 hospitals and many more such schemes.
When any place faces natural calamities like flood or drought, the government stands ready to provide help to those affected victims of disasters.
They also send air force with rescuers to save people.
Various other help like Ambulance and Fire Fighters are ready for help 24/7 whenever such a situation arises.
These are services requiring resources.
For Financial Aid
Government provides certain financial support and extends help to various classes and sectors of the society.
For example, it provides subsidies for LPG cooking cylinders, subsidies for setting up an industry in rural area, it provides pension etc.
For why we have to pay income tax these schemes it is our duty to pay taxes.
Our paying of taxes would prove a prominent support for the government.
Now, after reading the above points, it may seem to common person that paying of taxes renders benefits to the government only.
- Is it for them, that we pay our taxes?
- Does not it have any other purpose?
- What benefit it accrues us on our paying of taxes?
Above questions often cross normal public’s minds when month of April approaches. Well, it is not so!
Why we have to pay income tax
It is not only for the development of public that we pay taxes. It also renders us various benefits.
- When income tax return is filed, it discloses our income of the mentioned period. pay income tax states that our income is verified and earned by true means. In short, our income is legal, we are a respected citizen and taxpayer of the country is proved by this. This helps for the procurement of funds, loan and other financial aids in the future easily and at a reasonable cost.
- On the opposite side, non-filing of tax return also brings penalty for such tasks. Hence, regular filing of returns saves us from penalties to Income Tax Department.
- When our Permanent Account Number (PAN) is registered with the Income Tax Department and if the filing is regularly done, we avoid the chances of scrutiny and investigation from the side of income tax. Thus, it is very essential from an individual’s point of view to file regular returns and pay taxes to maintain a good reputation.
- Income Tax returns acts as one of the important documents for obtaining VISA, which in turn is a necessary for commuting to the countries abroad. Therefore, if one wishes to visit foreign countries for travelling or any other business purpose, Income Tax returns acts as a useful tool.
- Generally, people purchase Life Insurance Policies. Income tax filing helps in this matter too.
- In the business viewpoint too, Income tax return filing proves helpful. When any firm or corporate organisation wants to invest in a particular company. It goes through financial records and can know its performance in financial market. Anticipate the future progress of the respective company.
Who has to pay the tax
The next question that would come across a layman’s mind is Who has to pay the tax.
Well, as mentioned above, all individuals working in/for corporate companies. And business organizations except that in the field of agriculture has to pay income tax.
So obviously income earned by them is also not same.
How much amount of tax has to be paid?
Hence, Income Tax Department fixes different slabs for different income earning groups. Following are the different slab rates:-
- An individual whose age is below 60 years and his income is less than 250,000/-. exempted from paying tax. The same applies for senior citizens whose age is above 60 years. However individuals whose age is between 60-80 years possess a limit of 300,000/. Whereas senior citizens above 80 years of age has a limit of 500,000/-.
- For a normal citizen below 60 years of age. He/she is subject to 10% tax payment if his annual income ranges from 250,000-500,000/-. Whereas, senior citizens from 60-80 years of age have to pay 10% tax if their income lies between 300,000-500,000/-.
- For normal citizen earning income between 500,000-10, 00,000/-, they are subject to 20% tax. Similar is the case for both other categories.
- For the income slab of 10, 00,000-20, 00,000/-. 30% tax is levied and this rate is equal for all three categories.
- On observing the above tax slabs, it obviously appears that as individual’s income. Goes on increasing similarly tax rates also increases.
It is in the benefit of one’s own-self to pay tax regularly. As it is going to render more outcome in the long run. Every citizen should understand their moral & civic duty to pay the taxes regularly and contribute efficiently for the development of their country.