It's a question every citizen asks. Here is the perspective beyond just "following the law".
"I pay for my food, my house, my travel, my medical treatment, and my vehicle. I even pay toll tax on roads! Why should I pay Income Tax when I don't get social security or free medical facilities like in the USA or UK?"
While India may not offer full social security yet, the government discharges massive responsibilities that often go unnoticed but are funded by your tax:
Protecting borders requires massive expenditure on army and equipment.
Highways, railways, bridges, and digital infrastructure developments.
Employment programs, cooking gas subsidies, and rural development.
Salaries of Judges, Police, and administrative staff to maintain law and order.
Insight: Even government hospitals and municipal schools offer services at negligible cost to millions, funded by taxpayers.
In earlier years, tax rates were exorbitant (up to 97.75% in the 70s!). Today, they are far lower. As Justice Holmes of the US Supreme Court famously said:
It is time tax is no longer considered a burden, but a contribution to the society we live in.
India's Taxpayers
5.64%
of the 145 Crore population (approx 8.18 Crore people)
USA Comparison
> 50%
of households pay income tax
The New Reality: The government has lowered rates significantly.
The potential for tax collection is much higher. A wider tax base allows the government to lower rates further for everyone.
Most people feel tax is a pure loss and should be avoided at all costs.
Fear that tax laws are punitive and officers are ruthless. (Note: Faceless assessment is changing this).
A proper tax culture can only develop when both taxpayers discharge their obligations and tax collectors treat assesses with fairness, not suspicion.
Young businessmen are increasingly paying proper tax to build "White Capital" for loans and expansion. This is a welcome sign.
Professionals must advise clients on the liberalized scenario. Students, the future of the nation, must be inculcated with the pride of contribution.