What is Tax?
Tax is a mandatory payment made by individuals and businesses to the government. This money is used to fund public services like roads, schools, hospitals, and the military. In India, taxes are collected by both the central and state governments.
Why Do We Pay Taxes?
Taxes help the government:
- Build and maintain infrastructure (roads, bridges, etc.)
- Provide public services (education, healthcare, etc.)
- Ensure national security
- Support welfare programs
Types of Taxes in India
Taxes in India are broadly classified into two categories:
1. Direct Taxes
These are taxes paid directly to the government by individuals or organizations.
- Income Tax: Levied on individual earnings.
- Corporate Tax: Charged on company profits.
- Capital Gains Tax: Applied to profits from the sale of assets.
2. Indirect Taxes
These are taxes collected by intermediaries (like retailers) from the consumer, then paid to the government.
- Goods and Services Tax (GST): A comprehensive tax on the manufacture, sale, and consumption of goods and services.
- Customs Duty: Tax on imports and exports.
- Excise Duty: Previously levied on the production of goods; now mostly subsumed under GST.
Recent Updates
As per the 2025 Union Budget, individuals with an annual income up to ₹12 lakh are exempt from paying income tax under the new regime.
Conclusion
Understanding taxes is essential for every citizen. It not only helps in compliance but also in financial planning. Always stay informed about the latest tax laws and consult a tax professional if needed.
