Importance and Objectives of Income Tax
The tax imposed on a person or entity under the orbit of income tax law is called income tax. It is one of the most significant sources of public income. It helps to accomplish some economic and social objectives. It is the tax levied directly on personal income. The resulting revenue is usually one of the chief sources of cash for a government entity.
Some major objectives and importance of income tax are as follows –
Revenue Collection: Government collects nearly 18% of revenue from this source of tax. Therefore the most and significant source of revenue is income tax.
Redistribution of Income: An efficient and fair tax system can reduce the inequality of wealth and income. This is possible by imposing tax rich people heavily and to confer a benefit to poorer through progressive income tax.
Increase in Savings: An effective and efficient tax system encourages people to save through providing tax credit facilities on investment allowances.
Increasing Capital Investment: This income tax revenue can be used by the government to ensure the economic development of the country. It can be used to build up the infrastructure to invest in some social security programs in various poverty alleviation programs, like, Social Justice, Economical Control. Increase Public Awareness.