The citizens of India are required to pay Income tax as well as other taxes as per law.

 1.  Some people raise the question ‘Why should I pay tax? They argue: I have to pay for my food, for my house, for my travel, for my medical treatment, for owning a vehicle not only cost of vehicle but also vehicle tax and what not. Even on many roads, one has to pay toll tax! They also say that if we compare with countries like USA and UK, the people get social security as also medical facilities virtually without any cost. But India does not offer such facilities.

 2.  What does the Government do for citizens :

It is true that India does not offer social security and free medical facilities as being provided in some developed countries. But we need to ponder over the issue with a larger canvass. We need to appreciate that the Government has to discharge a number of responsibilities, which include Health care through Government hospitals (usually they offer service without any cost), Education (In Municipal and Government schools the fee is negligible). The Government also provides cooking gas at concessional rate or gives subsidy. Of course the major expenditure of Government has to be incurred on National Defence, Infrastructure Developments etc. Taxes are used by the government for carrying out various welfare schemes including employment programmes. There are Lakhs of employees in various departments and the administrative cost has to be borne by the Government. Though the judicial process involves delay, yet the Salaries, perks of Judges, Magistrates and judicial staff has also to be paid by the Government. Thus on considering these various duties of the Government, we need to appreciate that we must pay tax as per law. We have to act like a responsible citizen.

 3.  Why tax considered as burden and not a price we pay for civilisation :

A tax payer in general feels that taxes are a burden and it is human tendency to avoid payment of tax or at least minimising the tax liability. In earlier years the tax rates were also exorbitant. Prior to Eighties, the rate of Income-tax was as much as 97.75 per cent inclusive of surcharge. But now the scenario is fast changing. Though the tax rates have been lowered, but still our country lacks desired tax culture like developed nations. It has been said by Justice Homes of the US Supreme Court that “Taxes are the price for civilisation”. It is time tax is no longer considered as burden but a price for civilization.

4. Let us join hands to develop tax culture:

 a)  It is an admitted fact that in India, we are lacking tax culture. Despite considerable efforts for widening the tax base, still the number of taxpayers in our country, is about 51.6 million people which is 4.1 per cent of the over 125 crore population, which is too small for our country. In contrast, in the U.S., about 45 per cent of the population pays taxes. There are many reasons for this. Part of it has to do with the fact that many Indians do not earn enough annual income to even qualify to pay income tax, but a larger factor has to do with lack of tax culture, as also India’s huge rural and underground economies.

 b)  A taxpayer feels that the tax system in our country is ludicrously complicated, confounding, contradictory, wracked by inefficiency, incompetence and to some extent corruption. However, in contrast with the highest rate of 97.75 per cent income tax (including surcharge) in seventies, now Indians earning upto Rs. 2.5 Lakhs annually (which cover the overwhelming majority of the country) are exempt for paying any income tax. Those earning between Rs. 2.5 Lakhs and 5 Lakhs are subject to 5 per cent tax; those earning between 5 Lakhs and 1 million rupees, 20 percent tax; and those above 1 million, a 30 percent rate.

 c)  For sure, potential for tax collection is much higher than what we achieve at present but that is possible if we take adequate and sustained efforts for developing tax culture and also take sincere steps for minimizing harassment of tax-payers as well as develop sense of accountability to ensure hassle –free service, just and fair dealing with the taxpayers. The government plans to collect over Rs 8.47 lakh crore in direct taxes during the current fiscal 2016-17, (up from Rs 7.97 lakh crore in the previous fiscal).

 d)  The department has already started to focus on non-filers and stop-filers in order to enhance the tax base. We should aim at achieving a tax regulation regimen in India which can match the best in the world. According to the Credit Suisse Global Wealth Report, India now has some 2080 ultra high net worth individuals with wealth of at least $50 million and 940 who have more than $100 million of assets. The Wall Street Journal reported that India currently has about 1,85,000 millionaires. On the other side of the wealth spectrum, it reflects India’s immense income inequality, 95 percent of the Indians have assets below $10,000.

 5.  The reasons for apathy of the government and the taxpayers towards the tax payment and development of tax culture are:-

 a)  Most people feel that tax is a burden and should be avoided.

 b)  Taxpayers feel that they are being treated harshly and the punitive provisions in the tax laws are applied ruthlessly against them. Hence, it is better to be away from the tax department and the number of non-filers of tax returns is increasing.

 c)  A proper tax culture can develop only when taxpayers and tax collectors discharge their obligations equally well.

 d)  Many taxpayers become defiant, demotivated and disillusioned because of wrong notions held by tax collectors about their powers, the desire to pass on their part of work to taxpayers, indifference towards them and an attitude that assessees are out to manipulate figures and evade taxes. Such notions strike at the roots of a healthy tax culture.

 6.  Changing behavior of taxpayers :

The present realities of taxpayers’ behavior are increasing tendency for payment of lawful tax. Particularly the young businessmen’s trend is to pay proper tax, which is a welcome sign. Analytical study of grievance about work culture and sense of fair play on part of the IT authorities will further help.

 7.  Tax payers’ education :

If one learns the basic rules, he feels comfortable in making compliance, and fear about income tax department may remain no longer. In fact many a times it is a fear of unknown. It is necessary to frequently organize meaningful and well designed taxpayers’ education and assistance programmes coupled with making available to the taxpayers departmental publication in Hindi, English as well as local language of that State/ region.

 8.  Role of professionals :

What is really needed on the part of the tax professionals also is to advice their clients on the present tax scenario which is much liberal than earlier decades. They may play a vital role in educating the taxpayers as to why they should pay right amount of tax.

 9.  Students are the future of the nation:

We should even inculcate among students as to how important it is to pay right amount of tax for the development of nation. They are the future of the nation.

10.  Those having taxable income :

Those having taxable income should certainly declare the income, pay income tax and furnish the Income tax return within prescribed time. The default or delay in fulfilling one’s obligation may result in levy of interest and penalty. Even in some cases of tax evasion and other serious lapses the authorities may launch prosecution against erring people. The department may carry out Survey. It has also an Investigation wing, which is empowered to carry out search and seizure operations. Therefore one needs to be very careful.

11.  Conclusion :

Let us take a pledge to help in developing tax culture and help to create a positive public opinion. We need to shun the apathy of some taxpayers who are averse to payment of the taxes.

(Republished with amendments)

Source- Income Tax India

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12 responses to “Why should I pay tax?”

  1. Vijay Kumar says:

    Why I should pay taxes? a million dollar question from those do not want to pay taxes. For others, paying taxes is sometimes DUTY, sometimes compulsion on account of Deduction by employers. Often people ask, why I should pay when others are not.
    The CAs have often been telling that Government earns less Income Tax from Individuals than it spends in maintaining the Income Tax system. Is this true?
    A commoner earns for well being of his family. Government spends more. Laws are very complicated, and are becoming more complicated day by day.
    Why should I pay taxes remains.
    Suggestion for consideration: Raise Income Tax o 40%.Withdraw deductions under various sections. Repay to Individual tax payer tax paid amount back to the tax payer or nominees in 5 equal yearly installments starting after 5 years of deposition. This will work. contact 9412070828

  2. sasi says:

    In a country where discriminatory tax laws are in place, it is only natural for a common man to ask this question “why should I pay tax?”. The millionaire farmers enjoy tax holiday throughout their life in addition to the subsidy for fertilizer, seeds, water, electricity, interest on loans added with the loan waiver schemes generously awarded by governments whenever the elections are around the corner. Billionaire business tycoons (tie-goons) like Mallya are blessed with thousands of crores of tax payer’s money by the banks and later written off as NPAs. Lakhs of crores are spent on so-called welfare schemes with no welfare seen anywhere. Useless crorepati politicians are blessed with tax-free emoluments and pension for life for getting elected just once by hook or crook. Unscrupulous political parties (every party) can amass wealth from their patrons for favours with no accountability / transparency. Chartered accountants/tax experts can advise clients as to how to evade tax rather than how to comply with tax rules. Witch-hunting attitude of tax enforcement authorities. You cough up your hard-earned money and go through the complicated procedures and explanations to satisfy the taxman…! A common man, who earns for his family by working 12 to 18 hours a day, 6 days a week, is asked to pay tax upto 33% of his earnings and forced to manage his family, provide for education of his children, medical expenses, old age, etc. No social security, no medical facility. Even some of the retiral benefits are taxed…!! How do you expect honest tax compliance in such a scenario?

  3. Nagaraj T V says:

    13-06-2016 Bangalore

    For all tax issues I have copyrighted artcle ; Payment of income tax – duty to pay
    but right of disposal? This copyrighted article solves all the issues raised
    in the forum. Final result: Zero. Because everyone is good at talking but doing
    nothing. Your form is a waste. Because your forum is very ineffective
    and fails to implement and get the result. Good at talking.

    What is required is concrete result from pro-active people or forum.

    Respond and be proactive. Prove yourself that you aim at result and impact.

    – Reply in writing. -Nagaraj T V ABTPN.5713D Bangalore

  4. Nagaraj T V says:

    13-06-2016 Bangalore
    Payment of tax – A burden or duty ?

    The answer is : Both. Solution: Yes, I have a solution.

    How?: All direct taxes shall be one and only one.

    You people are good at discussion. But you are ineffective to implement.
    Final result: Zero.

    Are you proactive? Or are you only conveyor of messages/suggestions.?

    Let a responsible person or organization respond to me.

    There is a saying: Government is a vast desert. Whatever be the volume of
    suggestions or crticisms, it will get drained soon.

    So your forum is a mere waste. Our effort does not rewcognition and goes waste.

    • Sandeep Kanoi says:

      Sir,

      Our aim is merely to share knowledge in General and we do not cater to Individuals queries as we do not have enough resources to answer Individual queries as ours is a free website and consultancy comes at a cost.

  5. SrinivasanK says:

    An individual is paying direct Tax on his earning and Indirect taxes on his spending. Thus, both earning and spending are taxed in the hands of an individual. Is it fair ? Let the individuals be allowed to take credit of taxes they pay on their spending. Further, to arrive at the tax amount payable on earnings, let the individual be allowed to reduce the average balances of his bank accounts along with other allowable deductions, from the his revenue of the year and the tax rate be applied on the balance amount. Paying tax is our duty and an individual need to fulfill it, at the same time, the tax paying individuals shall not be exploited. When the developments are visible and reaches every individual, there would exist no dispute on this duty.

  6. Sandeep says:

    most of the above comments are true. Govt collects most of the money in the form of tax that we earn and will not make use of all the amount for development. 90% of the amount goes to the politicians who will store it in swiss bank. They are the original robbers. Indian politicians are the bloody bastards who r responsible for the burden on the people. We should kill those politicians who r having thousands of crores as black money.

  7. Nagaraj T V says:

    21-10-2014 Bangalore
    Sir,
    I have a relevant copyrighted article called –
    “Income Tax – Duty to pay but right of disposal? “
    It is a very relevant article. Can I send it?

  8. CA. Sushil K says:

    In my opinion the govt is collecting more than required amount of tax and more than 50% of tax collection is actually going to corruption. The money collected from people is diverted to bogus schemes for the benefit of the corrupt officials from top to bottom. However following the current trend this will definitely be reduced to a large extent as now India Inc is gradually going online and the policymakers are also being accountable and responsible. Thanks to RTI, Social media also. Further young generation has also identified the need of the hour. Leaders like modi ji have further contributed to a great extent.

  9. madan mohan gupta says:

    U are asking that only 2.9% pay income taxes. Distribution of income is the main reason if our PM says we are not fit for even Rs 32 daily wages then should we pay the taxes. Let us realise this responsibility by govt first then ask for anything to masses. ICAI Can do a little in framing govt policies in this regard.

  10. A. Ranganathan says:

    An excellent, educative article.

    I have no qualms on paying Income Tax, Property Tax, Municipal Taxes, Sales Tax, VAT, and all. I cannot however reconcile myself to Service Tax levied by the Government. I have mentioned this earlier but it was not published, I think.

    The Service Provider puts in the Capital, hires workers and pay their wages, buys the required raw materials paying all the taxes on the purchases, pays rent on premises, manufactures his Products, packs, transports and sells them, pays Income Tax and other Commercial Taxes. At the point of sale the cost of his products takes into account all this outgoings and impacts on the ultimate buyer. What does the Government do in all this process to levy a Service Tax which again falls on the shoulder of the Buyer.

    I would appreciate it if Tax Guru can explain the rationale like they have done for the Income Tax.

  11. genuine says:

    hello,in my opinion government should also provide details of every single paisa paid by the taxers and they should show with proofs and also they should allow people to investigate if they found anything wrong
    why means

    no people really bothers when part of his income is used for useful purpose
    but it wont it goes to politicians and other bribers

    the real fraudsters are one who earns money by robbing peoples money and one who earn money by his hard work and if suppose he not pay tax,he is not a criminal because he has not done anything crime(but if you think that he not paid tax and its crime means its foolish as he earned hard money)

    say me difference between

    a robber robbed money from people and this is illegal

    governemnt robs from people in intelligent way of taxes-in my opinion both are same

    but governemnt is robbing my naming it as legal

    its better to avoid use of words legal and illegal

    even though if we ask to provide proof of our tax money where you spend,its waste because they show dirty proofs which we cannot verify

    finally what i say governemnt does illegal things and what are laws they frame are legal?

    just think in real point

    in my opinion better government takes no tax and do no work?

    because the governments will spend only 5 to 10% of money we paid in taxes and they rob remaining 90-100%?

    and this is a legal robbing

    better no tax,no schemes,no rules

    when government cant do anything

    only government employ in india benefits from health

    and all developing countries may charge more tax but that tax is clearly visible in providing welfare for all i.e for rich and poor

    but here in india,an eyewash schemes are provided before elections and after won nothing done and taht too only for limited category of people

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