What are the implications of income tax imposition in India?
The most profound implication of income tax in India is that something must help to offset the massive spending by the Indian government. While there is a great deal of modernization in India and a greater generation of wealth in India than in the past, there are some haunting reminders that government intervention and action is critical in remedying some of the intense wealth disparities in India:
Last year, the government increased its social spending to $47bn, taking the fiscal deficit to a 16-year high. The landmark rural jobs scheme - which promises every rural family 100 days of employment - costs 1 per cent of GDP. The food security bill - which promises to put food on every table - costs $2bn.
On some level, there has to be some type of income that the government can generate from its citizens to help offset these costs. This is where income tax imposition becomes critical. In a nation of over a billion people, ensuring that there is a tax code that is followed and whose impositions can help the government provide social services for its people is essential. It is here where the implications of income tax imposition become the most relevant. At the same time, the evasion of income tax imposition becomes one of the most important elements for India to address in the future. Consider the implications of income tax evasion on India:
But many analysts argue that the crackdown on economic offenders must begin at home. Only 3 per cent of India's 1.21 billion people pay income tax. In the past, India has tried to combat tax evasion by requiring the use of a permanent account number (Pan) for all major financial deals. Pan is a 10-digit taxpayer identifier. But in India, many transactions, especially those related to property, are conducted in cash and are unlikely to be reported.
In this light, one sees the profound implications of income tax imposition and income tax evasion on India. When considering the problems that economies like Greece face right now, one sees how the implications of tax imposition and tax evasion can have on a nation struggling to be competitive in the global economy. Greece's current economic challenges can be linked to an evasion of tax imposition, representing implications that are not desirable. This is the situation that India wishes to escape, and in doing so, one sees the massive implications behind income tax imposition.
Income tax is imposed in almost ever country. The reason why income tax is imposed is because the government needs money. The money is used for improvement for the country. This amount of money is needed for building of public facilities such as roads and for investment. This would lead to more investors investing in the country and hence more jobs are created. This in turns benefits the people. The government has to tax income earner so that they have this money for construction and investment. In India, the percentage of charageable income increases with the amount earned. This is because it would not be fair to ask a low-wage earner to give 30% of his income when he is having diffculity supporting his family even wih all his income. Hence, the richer are taxed more.
Income taxes are issued to help the government or to take action for building of roads etc