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  • Category: Miscellaneous

    Should Government be allowed to charge interest on tax it collects from citizens.

    Tax is one of the income sources of Government and it forms a major part of its Income. We the citizens of India pay taxes to Government under the laws and rules framed by the Government only. We pay taxes out of our income, we pay taxes out of our expenses, we pay taxes whenever we spend even a single rupee.

    Now, how much is this valid that Government should charge interest on the tax which is to be paid by the citizens. Even using the term interest on tax seems like the other is charging me for the income earned by me and the other has right over it not only to take a share out of it in form of tax as well as charge interest if there is a single day of delay.

    If Government charges penalty, then that can be understood to an extent as there is a possibility that one defaulted deliberately but charging interest seems unjustified. The term itself seems very demeaning. Its like you are taking interest on income which you never earned, it is yours just by means of right.

    Replacing the word interest at all places under all the existing laws with penalty will be more justified.

    Do you feel the same or have a different understanding?
  • #713635
    The central and state governments are looking for ways and means to collect squeeze maximum from the citizens and interest on the taxes is bonus income for them. For example most of the property tax defaulters in Hyderabad are now offered interest free one time settlement of their property tax and the GHMC is making huge collections. This clearly means that people are averse to the word interest and any amount collected through that means would bother them very much. In fact the tax rates itself a huge burden on the citizen as in some cases the GST charged in some products are whooping 28 percent which is too much burden on the customers and over the above for some products even the cess is added to be collected and that is too much asking. There cannot be alternate word to interest and then only people would pay immediately and sincerely.
    K Mohan @ Moga
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #713667
    I think interest is not the correct word coined for it as it is actually a late payment penalty though it could be calculated through the interest route only for the convenience of calculations. One interesting thing that I noted is that everyone is supposed to pay taxes in the quarter when they had that income. If someone forgets to do that then some late payment is collected. Many people forget this and just miss this quarterly thing. Of course it is substantial amount mainly for them who have a good income. The tax department is earning a lot of revenue through this. I have seen people in higher income group paying it year after year.
    Knowledge is power.

  • #713671
    I am of the opinion that our government is right in collecting interest for the tax not paid in time. It is a calculated penalty. Instead of "interest for tax", we can use the term 'Calculated penalty" to the failed taxpayer.
    No life without Sun

  • #713672
    I think the extra amount we are paying as interest on tax due to late payment is nothing penalty for late payment. Whether it is called penalty or interest, whatever it is, we have to pay some extra money as we have not paid the tax in time. If this is not there the payment will be delayed further and further and pay ultimately when there is a threat that the government is going to take some action in us. So Keeping a deadline for payment and if not paid by that date collecting extra money is justifiable only. Instead of calling it interest, they may call it as late payment charges. So we need not feel guilty that we are paying penalty also.
    If we pay excess money as tax and the government is returning that excess money they are paying the interest on that extra amount. They can call it an incentive for paying a higher tax than required.
    If the taxes are not paid on time the government can't manage its works in the projected time frame and the project costs will exceed the projections and we may be deprived of developments. So always paying tax on time is better.

    always confident

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