Essay – Do we have a fair tax system?

Essay – Do we have a fair tax system?

Do we have a fair tax system essay writingDo we have a fair tax system? Essay: Tax or income tax is a type of tax that is levied on taxpayers and gathered from them by the Central Board for Direct Taxes (CBDT) under the Central Government of India. The tax system in India follows the tax slab system which means different tax rates are applied to different income groups and types of taxpayers during the financial year of April 1 to March 31. The tax system of the country is not constant across years, income groups and rates of income.

Discussion

The tax slab system established by the Ministry of Finance is dependent upon the parameters of age and income.  Although an income tax rate rebate is available as stated by the income tax rebate under Section 87A, the slab rates have not been modified since 2018.  India has two tax-paying schemes according to the financial year 2020-2021, the new and the old scheme which has significant differences between them. Numerous modifications and upgradations have been made through the Finance act of 2020. The most significant change has been made by implementing the new tax regime. The new tax scheme has an additional 115 BAC. The new tax regime offers schemes of various tax slabs for individuals for persons below 60 years, members of Hindu Undivided Family (HUF), Non-Residential Indians and Residential Indians under the age of  60. Individuals earning Rs.2,50,000 or less annually are exempted from paying taxes according to both old and new tax regimes while individuals earning more than that for instance the tax slab of  Rs.2,50,000- 5,00,000 are required to pay 10%  now instead of the old tax scheme of 20%. Individuals belonging to tax slabs less than Rs.15 Lakh have all been exempted from 5% of tax in the new tax regime while individuals falling under the tax slab of Rs,15 Lakh or higher have to pay 30% of their income as a tax according to both old and new tax regimes.

Tax policies also differ in the case of senior citizens and Non-Resident Indians and resident Indians. The Income Tax Act of 1961 considers individuals above the age of sixty years as senior citizens and above the years of eighty as super senior citizens of the nation. Senior citizens belonging to the tax slab of  Rs.2,50,000 or below are exempted from any form of taxes whereas those earning more than Rs.5,00,000 is levied 5%. The following tax slabs increase by Rs.25,000 and the rate of tax increases by 5% congruently. For instance, individuals of Rs.2,50,000-7,50,000 are levied a tax of 15% according to the new tax regimes. A reduction of a tax rate of 5% is observed in the new tax regime as compared to the old one. Non-Residential Indians (NRI) have to pay taxes on the basis of their earnings in India.

Conclusion

To conclude, it can be stated that the Indian Tax system is fair, as it is levied on the principles of equity rather than equality. Tax is levied following the parameters of age and earning, seniority in citizenship and residential status of individuals. While filing for taxes one should consider changing from the new or the old regimes of taxes and that the chosen regime cannot be changed in the middle of the financial year.

FAQs related to Do we have a fair tax system? essay

Q1. Which department regulates tax in India?

Tax or income tax is a type of tax that is levied on taxpayers and gathered from them by the Central Board for Direct Taxes (CBDT) under the Central Government of India.

Q2. Which kind of tax system is prevalent in India?

Ans:  The tax system in India follows the tax slab system which means different tax rates are applied on different income groups and types of taxpayers during the financial year of April 1 to March 31. The tax system of the country is not constant across years, income groups and rates of income.

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Updated: December 17, 2022 — 12:19 pm

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