Taxation

Taxation is the mechanism through which governments raise revenue from people and organizations.

These compulsory payments fund a wide range of public functions—such as transportation networks, healthcare systems, education, security services, and social welfare initiatives. Taxes serve several key roles: they provide the financial resources needed for government operations, help stabilize the economy by influencing spending and investment patterns, support redistribution policies aimed at reducing inequality, and guide behavior through incentives or disincentives—for example, higher taxes on products considered harmful.

Example: If someone earns ₹8,00,000 in a year, they pay income tax based on the applicable slab rates. The government then uses a portion of this revenue to maintain public facilities such as hospitals, schools, water systems, and national infrastructure.