4 Things Every Student Needs to Know About Taxation

05 Dec 2020 3348

Students seem to have a lot of confusion when it comes to taxes. Some aren’t clear whether they should pay it or not, some consider it as an obligation, and some just try to elude it. Well, it’s difficult to decide what to do! Isn’t it?

If you relate to this and experience difficulty in understanding even the most elementary concepts of taxation, then don’t worry fellas as this blog is here to answer every question of yours regarding the same.
Lets’ begin!

What is tax?

Tax is a specific share of income levied by the financial authorities that are utilized to run various beneficial schemes for the payers themselves.

Why do you need to pay tax?

Tax plays a key role in boosting the economy and other aspects concerning national importance, hence it is necessary to pay the taxes. A few more reasons are listed below:

  • The primary utilization of money collected through taxes include coping with the challenges of poverty, looking after public health, and improving the education system.
  • As mentioned, it boosts the financial stability of a nation and also helps in clearing monetary debt.
  • Basic amenities such as rail roads, electricity, water supply, and retail commodities are provided to the people through taxes.
  • Every country needs a strong defense system and a great pool of levied money is used in strengthening it.
  • In case of emergencies or calamities, a reserved fund of money is utilized which is nothing but a share of accumulated tax.

What are the different types of taxes?

Taxation is a complex operation that concerns different economic strata, so a distinguished scheme of the levy is needed. Following are some specific types of taxes that are related to specific sectors of the economy.

Income Tax: It is the simplest form of tax that is collected on a fixed income. These concerns employees, small business owners, etc.

Corporate Tax: It is imposed on business firms that have massive annual turnovers and high market value.

Property Tax: As the name suggests, it is collected on real estate transactions. It is controlled by different state authorities.

Goods and Services Tax: It is an indirect tax collected by dealers and distributors who provide sales and services regarding a particular commodity.

Sales and Excise: These refer to the tax amounts levied during either production or inter-national transfer of any product.

Environment Tax: It is imposed by local authorities on the exploitation of natural resources.

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Do students need to pay taxes?

Well, a lot of students face this dilemma. Students who have a stipend income can pay taxes but only if they are earning enough. In simple words, if the annual income of a student falls under the category of exempted beneficiaries, then he/she is not qualified to pay taxes but if the annual income is above the set limit then you are supposed to file a income tax return. And, it is extremely simple to pay your tax as you have to just contact the legal authorities and follow their instructions.

Hope you got an understanding of the whole operation of taxes by reading this blog.

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