What is Tax?
Tax is a financial charge or other levy imposed on an individual or entity by a state or the functional equivalent of a state. It is usually imposed as a percentage of the value of a transaction, such as sales or income tax, or as a fixed amount per unit of measure, such as taxes paid on gasoline or cigarettes. Tax is typically based on an individual's ability to pay and may take into account different types of income (such as wages, dividends, capital gains) and assets (such as property).
Types of Taxation
Taxation can be broadly divided into two categories: direct and indirect taxes. Direct taxes are imposed directly on individuals and corporations in the form of personal income tax, corporate income tax, property tax, inheritance tax etc. Indirect taxes are generally levied on goods and services purchased by consumers; these include value-added tax (VAT), excise duty, customs duties etc.
Purpose of Taxation
The primary purpose of taxation is to raise revenue for governments in order to finance their activities; however taxation also has other economic effects such as shifting incentives to work and invest in certain areas. Depending on the country and its fiscal policies, citizens are subject to different levels of taxation depending upon their incomes. In addition to levying taxes directly from individuals or businesses, governments may also seek extra funding through borrowing money from international markets or issuing bonds and securities which are later repaid with interest through taxation.
How to pay income tax online?
paying income tax online is quite easy. All you need is an internet connection, bank account details, or an e-wallet account, along with some basic documentation like an Aadhaar card/ PAN card/ passport number, etc. Here are some steps that you can follow while paying income tax online: