What is Tax and Why Do We Pay It?

What is Tax?

The money we give to the government is known as taxes. It comes from the money we make, spend, or purchase. This money is used by the government to fund defense, schools, hospitals, roads, and other projects.

In simple words: Taxes are a kind of contribution that each and every one of us makes to support the operation of the nation.

What Makes Us Pay Taxes?

Consider a nation without clean water, roads, police, or medical professionals. These services are all expensive. The government receives its revenue from the taxes we pay, not from businesses.

Therefore, by paying taxes, we contribute to the construction and upkeep of our schools, metro systems, and highways as well as the salaries of public servants like teachers, police officers, and soldiers.

Types of Taxes (in Simple Terms)

• Income Tax: When you receive a salary or turn a profit, you must pay income tax.
• GST (Goods and Services Tax): When you purchase goods like clothing, food, electronics, etc., you must pay GST.
• Property Tax: If you own a home or piece of land, you must pay property tax.
• Excise Duty & Customs: Customs and Excise Duty: On items produced or brought into the nation.

You still pay taxes when you make purchases because they are part of the cost, even if you don’t have a job.

What Happens to the Tax Money?

A few uses for tax revenue include the following:

• Constructing bridges and roads
• Managing government schools and hospitals
• Paying teachers, police, doctors, and soldiers
• Offering free public transportation, rations, and vaccinations in numerous locations

What Takes Place If Individuals Don’t Pay Their Taxes?

The government wouldn’t have any funds to provide for the people if no one paid taxes. Public services would cease, hospitals would close, and roads would collapse. Taxes are crucial for everyone because of this.

In Simple Words

Taxes are a tiny portion of your income that you contribute to the nation’s development. Although they might seem like a burden, they are essential to the construction of the world around you, including the trains and street lights.

What Can You Do?

• If you have a source of income, make sure to file your taxes on time..
• When you shop, ask for a bill to make sure GST is paid correctly.
• Know where your taxes are going and keep yourself updated.

Share Your Thoughts

Do you think taxes are fair? Should rich people pay more?
Leave your thoughts in the comments below — we’d love to hear from you.

Also read: What is Inflation?

Want official info? Visit Income Tax Department of India.