What are the benefits of paying income tax
Income tax is often seen as a burden by taxpayers. But paying income tax not only benefits you on a personal level, but also aids the growth of our nation. Read this post to know some of the top benefits of paying income tax.
Regularly paying a certain portion of your hard-earned money to the Government might seem inappropriate. In reality, the income tax that you pay to the Government not only benefits you, but also boosts the overall development of our country. Before talking about the benefits of paying income tax, let us first have a quick look at what is income tax?
Understanding income tax
Income tax is a type of direct tax that you are required to pay on your income. Depending on the age and total taxable income in a financial year, every taxpayer is assigned a tax slab. The income tax rate for the taxpayer depends on the tax slab he/she falls under. Income tax is one of the biggest sources of revenue for the Government.
Just like income tax, there are other types of direct taxes like corporate tax, capital gains tax and more. Similarly, there are indirect taxes like Goods and Services Tax (GST) and other kinds of taxes, such as property tax, entertainment tax, professional tax, registration fees, stamp duty, etc.
Benefits of paying income tax
If you are searching for advantages of income tax, they can be divided into two categories, personal and public.
Personal benefits of paying income tax
- Visa applications
If you are planning to visit countries like USA, UK or Canada, it is mandatory to provide Income Tax Return (ITR) of at least 2-3 years to get your Visa approved. This is because the ITR helps other countries make sure that you are not leaving India for evading taxes.
- Loan approval
Most big-ticket loans like Home Loans also require you to submit copies of your ITR. As your income is one of the most important considerations for loan approval, lenders confirm the same with the help of your ITR.
- Income proof
For self-employed professionals, like consultants, firm partners, or freelancers, the ITR receipt also functions as their proof of income. For such professionals who are not on the payroll of any particular company; ITR comes in very handy in their business and financial transactions.
Public benefits of paying income tax
- Public infrastructure
Construction of transport infrastructure, Government institutes, public places, smart cities, etc. is currently in full swing in most parts of the country. It is with the help of the taxes paid by taxpayers that the Government can fund infrastructure projects.
- Welfare schemes
From health, education, housing, unemployment, to food programmes, the Government runs and regularly launches new public welfare schemes to benefit people from all the different sectors of the country. Income tax is one of the primary sources of fund collection for such schemes.
- Scientific research and defence
Every Indian is proud of Indian Space Research Organisation’s (ISRO’s) recent Chandrayaan 2 mission. But such space missions and scientific inventions require regular funding. Similarly, tax money also helps the Government allocate adequate funding to maintain and improve the defence capabilities of our country. Some other ways in which the Government uses the tax money are:
- Providing essential utilities like energy, water, waste management, etc.
- Government operation
- Salaries of Government and state employees
- Pension schemes
- Law enforcement
Paying income tax: A sacred duty
There are many different personal and public income tax benefits. Rather than considering it a burden, citizens should treat tax payment as a sacred duty which can help them improve the quality of their lives and that of other citizens in the country.
There are also several deductions and exemptions made available by the Government to help taxpayers reduce their tax liabilities. Make use of such deductions and exemptions to legally save taxes and be a responsible citizen of the country.
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