Balancing Act of Government
Paying taxes is a legal requirement for anyone earning an income. Most governments use progressive taxation, where people who earn more, pay more. To ensure taxes are collected, governments make individuals and businesses responsible for deducting taxes when paying for goods and services and remitting them on time. This way, citizens help with the tax collection process. Both direct and indirect taxes work like this, and Chartered Accountants play an important role in this system.
To help low-income individuals, the tax system offers relief like the rebate under Section 87A of the Income Tax Act. This rebate applies to Resident Individuals whose total income is less than ?7,00,000 for the Assessment Year 2024-25, and it is limited to ?25,000 or the actual tax, whichever is lower. This way, the government ensures tax collection while also giving relief to lower-income groups.
By CA L.Muralidharan and CPA L.Mukundan
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