In funding the entire or majority of government operations, such as social welfare programs & infrastructure development, the Indian tax system plays a truly crucial role.

Now, whether the burden of tax on the common man is incongruent and extremely taxing, it has long been a subject of discussion for one and all.

Today, let’s research into the intricacies of the “Indian tax system” and its effect on the common man, debating both its strong points & limitations.

The debate is divided into three main sections:

1. The overall structure of the “Indian Tax System”,
2. The challenges encountered by “The Common Man”,
   &
3. Prospective resolutions for a “Rational” & more “Reasonable Tax Regime”.

The overall structure of the “Indian Tax System”

The Indian tax system includes numerous taxes charged by both the central and state governments as per their own tax legislations.

The prime constituents include:

a) Income Tax,

b) Goods &Services Tax (GST)

c) Corporate Tax

d) Excise Duty

e) Customs Duty

f) Various state-level taxes such as VAT (Value Added Tax)

g) Stamp Duty

a) Income Tax: Predominantly, it is one of the most important sources of the government #revenue. Though, the #tax #slabs have been constantly revised over the years, the burden/pressure on the common man remains a contentious problem, as always.

The majority of the population comes within the #lower #income bracket & often struggle to meet their basic requirements, making the tax #liability a major #financial challenge.

b) Goods & Services Tax (GST): Though, it was introduced to simply the tax #structure, but instead its implementation faced plenty of challenges and hence varying tax #rates for different goods & services.

Its impact on “The Common Man” literally depends on the items they consume, & essentials often attract #higher #GST rates, painfully, making daily necessities #costlier.

c) Corporate Tax & Tax Evasion: The key issue of #corporate #taxation has been a subject of debate. The argument is on, that higher “corporate taxes” may lead to increased #prices for goods & services, affecting the common man.

Moreover, #evasion of tax remains a pervasive concern, resulting in decreased government revenue & possibly higher taxes for honest #taxpayers.

The challenges encountered by “The Common Man”

1. Regressive Taxation System: It’s being considered regressive in nature by critics, unduly affecting #lowerincome people/individuals. Whereas, the Rich & wealthy have easy access to several tax-saving tools & a number of exemptions.

Ironically, the common man has partial avenues to reduce/decrease their tax obligations.

1. Rising Costs & Inflation: Particularly during times of #inflation & rising living costs the tax burden can really become intolerable for the common man.

With an increase in the taxes, the buying power of the common man lessens, resulting in reduced #savings and #disposable #income.

1. Absence of Social Security: Needless to say that, #India does not have a robust “social security system” unlike some #developed #nations, that can ease the #financial burden on the common man during emergencies or unforeseen circumstances.

This lack of Social Security/ Support places tremendous pressure on individuals & families during times of #crisis. Such a plight of a common man.

1. The Informal Economy System: A considerable portion of the Indian #economy operates in the informal #sector, where tax #compliance is often negligent.

This puts an extra liability on the formal economy #taxpayers as they bear a more extensive part of the tax burden on them.

Prospective resolutions for a “Rational” & more “Reasonable Tax Regime”

a) A Progressive Taxation System: Strictly Introducing/Implementing a more “progressive tax system” where higher-income individuals/people pay a higher percentage/part of their earnings as taxes can help lessen the liability on the common man.

This fair approach will ensure that those who can afford to contribute/pay more do so and actually providing respite to lower-income groups. This is indeed the dire need of the system.

b) Tax Exemption - Reforms: Rationalising the tax #exemptions & #deductions can surely lead to a much rational distribution of the tax liability/burden.

The key emphasis should be on aiming/targeting the right beneficiaries/recipients and avoiding unnecessary gaps that benefit only a few in the segment.

c) Simplification of the “GST”: Streamlining the GST is the need of the hour to make it more efficient and less arduous for the common man.

In lowering the overall #tax #rates and benefiting consumers, a wider tax base can definitely help.

d) Social-Security Net: Creating & establishing a strong “Social Security Net” that includes the following:

Unemployment benefits

Healthcare support, &

Pension schemes

can ease financial pressure/burden on the common man during challenging/tough times.

Though, some argue that “Indian tax system” puts an extra pressure/burden on the common man, but others put an emphasis on its necessity/need for #government revenue, the endless debate continues…!

To ensure that the “tax system” is rational, reasonable, and supportive of the “economic growth”, striking the right balance is absolutely essential and vital for the economy.

With progressive #taxation system, rationalized/simplified #exemptions, and suitable social security #reforms can definitely pave the way for a more inclusive & #sustainable tax regime.

Finally, a transparent & #accountable tax system is critical for building up the trust between the citizens & the #government, eventually encouraging #compliance, and promoting a truly flourishing, prosperous, thriving and booming economy for all.

Thank you!
@amitsharma

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