What Are the Common Benefits of Paying Income Tax in India?

When you start earning a salary or receive some income from your profession or business, this income not only pays for your needs but also the taxes that help the Government and the tax* authorities run the country. As you already know, income tax* is necessary for the growth and development of our nation. Also, you can claim taxes on your investments and life insurance policies that have been bought from any life insurance company in India.

For many people, not only is the payment of tax* seen as a burden but also filing the returns is considered to be a cumbersome process. However, there are more benefits of paying taxes. But first, let’s look into what income tax* is.

What is Income Tax?

Income Tax* is a form of direct tax* that you pay on the income you earn and is the source of revenue for the Government of India. The individual’s age and their total taxable income during the financial year will determine a certain tax* slab which in turn will determine the rate of income tax they are required to pay on their earnings. You can also get tax* benefits by saving in various avenues such as a life insurance scheme and so on.

The other forms of direct taxes are capital gains tax*, corporate tax* and so on. Income tax* is paid by everyone, and the categories of taxpayers are known as individuals, Hindu Undivided Families, Body of Individuals (BOIs), Companies, Firms, LLP, Association of Persons (AOPs), local authorities and any other persons not covered under the above categories.

​​Most people may assume that their responsibility ends after they have paid their taxes. However, you are supposed to ensure that the tax* credits available in your tax* credit statement and the details of the income and the taxes paid are provided to the Income Tax* Department. This is done in the form of income tax* returns that need to be filed on the prescribed due dates in a financial year.

What are the Personal Benefits of Paying Income Tax?

• Income Tax Returns
  
  When you pay income tax* by the due dates, and as per the tax* slab under which your taxpayer category comes, you can avail of income tax* returns that can be filed online through the Income Tax* Department’s official website. The process is detailed but fairly simple to follow. You will have to keep all the relevant documents handy as mentioned on the official portal and follow the steps mentioned correctly so that you can complete the e-filing process in less than an hour.
  
  Once you file your returns, you can choose how to receive the refund. This is one of the many benefits of income tax returns. You will first receive an intimation of a refund, after which you will get the amount in your bank account registered for filing income tax returns.

• Visa Applications
  
  Many Indians travel abroad or aspire to work in a foreign country for better prospects or opportunities. While it is simple to get a travel visa, a work visa or any other type of visa for most countries, you will always be asked to provide proof of your tax* payments. This is done to ensure that you are not leaving the country after evading your tax payments.
  
  You can get the acknowledgement or the proof of your tax* payments or the income tax* returns online on the official website of the Income Tax* Department when you file your tax* returns online. By producing a copy of the tax* returns of the last 2-3 years, during your visa application, you are offering important proof that can help you get a visa without too much of a hassle.
  
  
• Proof of Income
  
  If you are a self-employed professional or freelancer, the ITR receipt is an important proof of income. Since you are not on any company’s payroll, it can be difficult to produce proof of income without the ITR statement when it comes to financial transactions and business deals.
  
  Also, if you are getting a personal or business loan or a new credit card, your bank will require proof of income, and since the tax* statement has all the details of your income and investments, this document becomes crucial for helping you get your loan on time and without any trouble. The ITR receipt is the most reliable and well-accepted document across all banks in India, and so, when applying for a loan or a credit card, this official document should be present.
   

What are the Public Benefits of Paying Income Tax^*?

To ease the burden of taxes, the government enables you to receive certain benefits of taxation under the various sections of the Income Tax* Act if you invest in different savings and investment schemes. These benefits, deductions and exemptions enable taxpayers to reduce their tax* liabilities. Apart from that, here are the public benefits of paying income tax*:
 

• Physical infrastructure
  
  The taxes we pay are utilised for constructing roads, highways, bridges, government institutions such as public schools and medical centres and many other types of infrastructure all over the country. Since a chunk of the Government’s revenue comes from income tax, it is necessary that one should pay their taxes on time so that the physical infrastructure in our country can be maintained and upgraded as needed.
  
  
• Welfare social schemes
  
  The Government of India has been introducing many welfare programmes and schemes for the betterment of the citizen, especially those who are below the poverty line or cannot afford basic necessities such as housing, health and education. There are also several employment schemes for Indian citizens to ensure that everyone has an equal opportunity to earn a livelihood. The funds for such welfare schemes come from income tax*.
  
  
• Scientific research and defence
  
  Be it advancement in technology or medical science, all these inventions and the research carried out by scientists and experts need to be funded on a regular basis. This is a huge expense since advanced equipment and the endless efforts of the experts must be compensated. The tax* money helps the Government fund these endeavours. The taxes are also utilised to benefit the Army so that the nation can be secured and protected without any obstacles.
  
  Apart from the benefits given above, here are some more benefits of paying income tax*:
  
  
  • Provision of infrastructure for waste, water and natural resource management.
  • Salaries of state authorities, employees and other government personnel.
  • Introducing and upholding pension schemes
  • For the betterment of law enforcement
     

Conclusion

As discussed earlier, tax* payments can feel like an unwanted obligation, especially during times when economic inflation is rising. However, the taxes we pay are utilised for the betterment of the economy and the provision of various facilities that make our lives easier.
 

Furthermore, tax* evasion is a grave and punishable offence in India. When one defaults on their tax* payments, there are penalties and fees that can be levied on such taxpayers, and the Income Tax Department can take legal action.
 

L&C/Advt/2022/Oct/2488