Why do you have to pay tax? Where does your tax money go? From roads to army, know how the entire system works. Why Do We Pay Tax And Where Does Tax Money Go Tax Kyu Dena Padta Hai Photoshow

What is tax?

Tax is the money that the people and companies of the country pay to the government under the law. The government spends this money to run the country and provide necessary facilities to the people. Tax is the biggest source of income of the government. Every year the central government presents the Union Budget, in which it is told where the money will come from and where it will be spent.

Why does the government take taxes?

It costs a lot to run any country. The government has to build roads, run schools and hospitals, spend on army and police, also needs money for railways, electricity, water and many government schemes. If the government does not have money, it will be difficult to run these services. That’s why the government takes taxes.

Why is tax necessary? understand with example

Suppose there is a small village of 200 families. The villagers decide that every family will give some money every month. With this money, a road will be built in the village, a water tank will be built, a school will run and security arrangements will be made. Almost the same system exists in the country also. The only difference is that instead of a village, here it is the whole country and the money reaches the government in the form of tax.

How many types of taxes are there?

There are two types of taxes in India.

1. Direct Tax

This is the tax that a person or company pays directly to the government on their salary or income. Like income tax, corporate tax

2. Indirect Tax

This is the tax that is paid while purchasing goods or services. The biggest example is GST (Goods and Services Tax). When you buy mobiles, clothes, hotels, restaurants or other things, GST may be included in their price.

Does every person have to pay tax?

No. In India it is not necessary for every person to give income. Tax depends on your annual income and which tax regime you fall under. However, almost everyone pays some form of indirect tax like GST as it applies to many everyday goods and services.

Where is your tax money spent?

• road and highway construction
• Government hospitals and health services
• Government schools and education
• Army and Border Security
• Police and law and order
• Railways, Metro and other transport
• Welfare schemes for farmers, poor and elderly
• Disaster relief and development projects

Content Source: Income Tax Department, Central Board of Indirect Taxes and Customs, Ministry of Finance, Reserve Bank of India.