The Importance of Income Tax: Contributions to Society and National Development

The Importance of Income Tax: Contributions to Society and National Development

Income tax is one of the many taxes of a country imposed by the government on individuals based on their income or profits from businesses or other sources. Income tax is calculated as a percentage of the taxable income of an individual or business houses run by different entrepreneurs. Income tax is a direct tax that a government levies on the income of its respective citizens. The Income Tax Act, 1961, puts before us that the central government has the power to collect this tax. The government at any time can change the income slabs and tax rates in its yearly budget.

 Income does mean money earned in the form of salary or remunerations. It also includes income from various sources like house hold property, profits from businesses of any kind, gains from professions and ‘income from other sources if any. The government also often provides certain exemptions so that various deductions are made from an individual’s income before the tax is levied. It is done after many equations and calculations from the part of he government.

Why should we pay income tax?

The government earnestly needs funds to run the country. The main aim is to focus on developing infrastructure, operating public institutions, and initiating various schemes for the benefit of different segments of the society. There may be  many ways of the government to accumulate funds but the income taxes are one of the biggest contributors to be used for the devilment of a country.

Around the world, different countries have different taxation systems that help the government run the country in an efficient manner. In this blog, we shall try to discuss on the importance of taxation in India and why every citizen must be dutiful to pay tax, especially income tax, on time.

Income tax revenue funds public services like education, healthcare, various ways of public safety, and all kinds of infrastructural development .Income tax helps in the redistribution of wealth, reducing income inequality and at the same time it provides a stable source of revenue for governments to manage the economy quite effectively.

But a genuine disparity is noticed in terms of paying income tax. People who earn below a certain threshold have not to pay income tax. Organizations that operate for charitable purposes are exempted from paying income tax.

People of specific income groups are there too, to qualify for exemptions or deductions. But there are several tax-laws to aid the process. Based on certain age, disability status or some other criteria defined by tax regulations income can be exempted.

People dodging income tax fail to flourish

The idea is nothing but an oversimplification and it is not necessarily true to have trust on it. Growth, may it be personal or financial, solely depends on various factors. The moment the question of income tax payment comes to the forefront, the subject is part to be a responsible citizen and contribute to public services and infrastructures. It can never be the sole determinant of growth. To carry on the debate we can throw light on some points to consider.

  • Legality and ethics:

Paying income tax is truly a legal obligation. Failing to pay it can lead to various legal consequences, which can easily thwart personal and financial growth by all means.

  • Public Services:

Taxes have key roles to fund essential services such as education, healthcare, and above all infrastructures that indirectly boost personal and professional growth by providing a stable and supportive environment to dwell in.

  • Financial Integrity:

Regularly paying of taxes can boost financial stability and integrity. These are by all means beneficial the moment going for loans, investments, or business partnerships come to the forefront.

  • Economic Contribution:

Contributing to the tax system helps the economy to create a more favorable environment for all businesses houses and individuals to thrive.

However, growth is always influenced by various other factors, including education, skills, opportunities, investments, and above all personal efforts

Income tax in various scriptures

Income tax, though a modern concept may not have a direct reference in ancient scriptures, but principles of fair taxation, stretching helping hand to the  the community, and redistribution of wealth can be found in various ancient scriptures.

  • Bible: In Bible we find that individuals were expected to contribute a certain portion of their income for religious and communal purposes.
    • Quran: There is the reference of zakat, a form of almsgiving, regarded to be one of the Five Pillars of Islam.
    • Hindu Scriptures: Concepts like “daan” (charity) and “rajadanda” (collection of taxes) stress on the importance of contributing to societal welfare.

All these principles align with the modern justification behind income tax,  to support communal and societal development and to make a mighty nation by all means.

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