Why Should You Pay Taxes? Benefits of Paying Income Tax

The thought "Why should I pay income tax?" might have crossed your mind at least a few times, especially while going through your salary slip or filing tax returns. As taxes can eat up a considerable portion of your salary, it is prevalent for many people to believe that taxes are nothing but a burden.But is it truly the case? Not really. Let us have a look at the importance of income tax in India-

The cost of running an entire country, especially one that is as large and populated as ours, is humongous. It is through the taxes we pay that the government can perform civil operations. In other words, without taxes, it would be impossible for the government to run the country.Income tax is one of the biggest sources of income for the Indian government . If people start thinking that income tax is a burden and avoid paying the same, it will directly impact the growth of our nation and also result in social collapse.

There are currently more than 50 union government schemes in India. From employment programs, subsidy on home loans, concession on cooking gas, to pension schemes, the government has launched several schemes to help all the different sectors of the society.These schemes benefit millions of Indians and require crores of rupees to run successfully. By paying income tax , you play your role in the success of these schemes and also provide the government with the ability to work on more welfare schemes and programs .

A significant chunk of the collected taxes is spent on improving healthcare in the country. There are government hospitals that offer medical services without any cost or at minimum cost. Over the years, the quality of service provided by government hospitals has improved by leaps and bounds, and it has only happened because of taxpayers paying tax.Similarly, there are government schools with a negligible fee. Moreover, thousands of crores are also spent every year on defence and infrastructure developments. All of this ultimately helps in making the country more powerful and prosperous.Contribute to the Development of the Nation by Paying Income TaxRather than believing that income tax is a burden, try to understand the importance of income tax, and you will see the various roles your money plays in the development of the country.Be a responsible citizen and always pay your income tax on time as it is through tax payments that our country could keep up with other developed nations and grow further.

• To claim a refund on taxes taxpayers who pay more than their eligibility can claim a refund on it. Those who have got a dividend income or any term deposit interest can claim exemptions.
• To obtain a loan from a bank To obtain a loan for the purchase of a home or car or medical treatment, two-wheeler etc. The last 3 years of income tax returns need to be provided to the bank. Only after this, the bank decides if the loan can be sanctioned to you or not and how much the loan can be sanctioned.
• To obtain a VISA some embassies of foreign countries like the UK, Australia, Canada, US require the individual to submit last year's IT receipts to process VISA. This is required just to assure them that you are capable of taking care of yourself in a foreign country.
• ITR details are important these documents help in proving the salary of an individual. This document is more detailed than Form 16. It contains information about income from not only salary but also from other sources. Thus, it acts as proof of cumulative income earned by a person in a financial year.
• It is useful to make up for losses faced in a financial year unless and until the ITR is filed regularly, the losses for a particular year cannot be carried forward to the next financial year. So, if one wants to claim losses in the next financial year, one should file returns on time.
• Eligible for Government tenders Government tenders can be applied only if a person's ITR are up to date. The income tax returns for the last few years are quite crucial.
• Obtaining tax clearance certificate under Section 281 of the Income Tax Act,a tax clearance certificate is needed for foreign or high-value transactions. this is mainly used for sales and transfer of assets.

• It is mandatory for all liable citizens to pay tax on time. Failing to do so is considered a punishable offence. In case the income tax is filed after the due date, then a fine is imposed on the payable tax.
• Income tax is the most common tax in our country. It is of 4 types - direct tax, indirect tax, property and sales tax and business tax.
• It is levied on all individuals earning an income to meet the Government’sexpenditure for the betterment of its citizens.
• Tax has to be paid regularly and periodically according to the tax authorities.
• Tax does not have any direct favour between a taxpayer and public authority.

• Capital gains tax the profits earned by selling any sort of asset or investment. These may be in the form of shares, bonds, businesses, property, art, car or machinery. It is applicable to any individual taxpayer as well as any business. The type of heading it will be taxable depends upon the duration of holding these assets or investments. This will determine if STCG (Short Term Capital Gain ) tax has to be applied or LTCG(Long Term Capital Gain) tax is applicable.
• Wealth tax It was imposed on the richer sections of society with the purpose of promoting economic equality in the nation. The cost of collection of wealth tax was very high, so the Government decided to abolish it in 2015. The surcharge has replaced wealth tax to simplify the income tax structure. Income is taxed only if the taxable income crosses a certain threshold.
• Corporate tax according to the Income Tax 1961, domestic as well as multinational companies are supposed to pay corporate tax . Any foreign company earning an income from India has to pay corporate tax. Some of the inclusions in this tax are FBT (Fringe Benefits Tax), STT (Securities Transaction Tax) , MAT (Minimum Alternative Tax) etc.

• For salaried people If ITR is filed before December 31st of the appraisal year, then a penalty fee is up to Rs. 5,000. If it is submitted between 31st December and 31st March, then the fine will be Rs. 10,000. The maximum penalty of Rs. 1,000 will be fined if income does not exceed Rs. 5 lakhs.
• For companies fine of Rs. 10,000. If the company's income is less than Rs. 5 lakhs, then the fine to be paid is Rs. 1,000.
• For self-employed A penalty of Rs. 10,000 for late payment if filed between 31st December and 31st March. If ITR is filed after 31st August but before 31st December, then a fine of Rs. 5,000 has to be paid. The maximum penalty of Rs. 1,000 will be fined if income does not exceed Rs. 5 lakhs.
• For senior citizens a penalty of Rs. 10,000. Otherwise, a fine of Rs. 1,000 if the income doesn’t exceed Rs. 5 lakhs.

• Companies.
• Individuals, HUF (Hindu Undivided Family), BOI (Body of Individuals), Association of Persons).
• Firms.

1. What is the important tax in India? There are many taxes in our country. Among all the taxes, income tax is considered to be the most important tax in India. It is of four types: direct tax, property and sales tax, indirect tax and business tax. It is a tax charged on the annual income of an individual. The amount of tax to be paid will depend on the slab rate. To reduce taxable income, deductions and exemptions are provided by the Government upon making investments in some schemes. All taxpayers must fill in the relevant details before making a payment. The entire filing process of income tax has been simplified by the Government. It can easily be done online, including payment.The income tax collected from taxpayers, be it individual or business, acts like revenue for the Government. This revenue is used by the Government to provide subsidies to farmers, in healthcare, education, infrastructure and many more Government welfare schemes.
2. What are the benefits of taxes? There are many benefits for filing taxes -
3. What are the important features of income tax in India? The important features of income tax are
4. What are the 3 types of income tax? Types of income tax are
5. What if we don't pay income tax on time? If income tax is not paid on time, then the consequences are different for everyone. They are categorised as –
6. How many types of taxpayers are there in Income tax? There are three types of taxpayers. These are categorised as

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.