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2015

Pay Income Tax for the betterment of India

Income tax – For a better India

  • We have traditionally viewed income tax as an additional charge on our income that is paid to the government account. However we can also term income tax as simply a contribution paid by citizens of India to the government which in turn is utilized for the welfare of the people.
  • India being a great democracy has undertaken a lot of initiatives for the common man to be able to earn as well as pay taxes for the cumulative progress of people. Government organizations make use of the taxes paid as funds to develop and provide facilities almost at a negligible cost. Instances of such institutions are government medical care through hospitals, schools and colleges, the judicial system, civil services and national defense. All these institutions work on the money that comes in form of taxes and becomes a part of employment for the people and also an extension of service towards the public. The subsidy that we receive on cooking gas is yet another example of how our tax money is put to use for the larger benefit of people. The administrative cost is borne by the government which becomes possible only when responsible citizens of India diligently pay taxes. By doing this they indirectly participate in the growth of the economy as well as infrastructural development.
  • However the tax-culture in India shows a dismal record. Only 2 – 3% of the population pays their taxes diligently as compared to 45% citizens paying their taxes in developed nations. Primary reasons indicate that this is because majority of the population does not earn enough to qualify for paying their taxes. However a larger factor depends on the rural areas which have underground economies and present logistical issues for tax collection. Many times when the common man sees the corruption and money laundering that is happening around him he gets filled with anger and looks at ways to evade taxes. It is however, necessary to educate people about how tax evasion can become a reason for the financial collapse of nation. This has the potential to eventually push the country to a halt. A recent illustration is that of Greece whose economy collapsed under the pressure of a heavy debt and high percentage of population that draws pension from the government. The major reason was cited to be its trade deficit that ensues as a result of more resources being consumed than being produced. Several other European countries like Italy share the same threat from within.
  • Notwithstanding the fuss on payment of taxes by the common man, the government did take significant efforts towards helping people to narrow the margin of percentages of tax payment. Prior to the eighties the rate of Income tax paid was as high as 97.75% all inclusive. During this period more importance was given to minimizing the tax liability in order to save money. But the current scenario shows a vast change in the percentages of taxes to be paid i.e. 10% being the least and the maximum as 30%. This move, keeping in mind to improve the tax-culture, is still to be appreciated by the people and that can only be accomplished by taking an active participation in the process. The tax collectors must educate tax payers regarding the use of their money and the projects that need a financial contribution from the public in order to be successful. Such measures have been taken proactively by undertaking public awareness campaigns that showcase the use of tax payers money for developmental work.
  • In conclusion an economy is highly dependent on both its tax payers and tax collectors. The successful outcome and desired development come only when both these entities work hand in hand with each other discharging their obligations equally. We must realize that we buy civilization by paying taxes and a nation develops only when its people contribute to its development.
Financial Management