When you think of ‘tax culture’, what is the first thing that comes to your mind? Most people would probably say that it has to do with how citizens and businesses view their responsibility towards paying taxes. And while this is certainly a part of it, tax culture is much more than that.
Often mistaken as a last minute, year-end activity, tax planning proactively has much to offer beyond just saving taxes. Rather than making haphazard decisions and putting money in instruments classified for tax deductions, proper tax planning from the beginning of the year is a good money habit that needs to be inculcated before you acquire the very popular bad tax habits. If you carefully look at the various instruments mentioned under the sections 80C/D (do not bother about the section numbers), you will understand that this incentive (tax deduction) is to promote long-term savings and retirement planning. Thus, from your side if you spend some time in understanding and planning your taxes, it offers a double benefit—minimizing current taxes and securing financial future.
In its broadest sense, tax culture is the total of the attitudes and behaviors that people display when it comes to taxes. This includes their morals and values reflected toward paying taxes, filing taxes, avoiding taxes, and more. The fact that there is a grave lack of awareness around tax planning and the ‘tax burden’ taboo associated with it has contributed in adding fear and weariness amongst people towards paying their dues.
Creating a positive tax culture is essential for a functioning society. Not only does it ensure that everyone pays their fair share, but it also encourages compliance and builds trust between taxpayers and the government. In this article, we’ll give you some tips on how to cultivate a positive tax culture in your community.
Key Steps in Tax Planning
Understanding your tax liability—this is calculated based on your taxable income and Finance Ministry’s tax provisions for the year, as mentioned in the central budget.
Knowing the various tax saving instruments—National Saving Certificates, EPF (Employee Provident Fund)—deducted and paid by the employer, PPF—with post offices/banks, Life Insurance, ULIP or Unit-Linked Insurance, Equity-Linked Saving Schemes (a type of mutual fund), Home Loans, Infrastructure Bonds.
Understanding the terms of each of the instruments—minimum amount that needs to be invested, fees, lock-in period, estimated risks and returns, convenience of investment and withdrawals.
Investing in the instrument/s that suit your profile—rather than ‘putting’ your money where every tax payer puts it just to save the taxes, ‘investing’ it as per your risk appetite and investment goals offers all the advantages of tax planning.
Filing taxes on time—else any delay calls for a penalty and a continuous pressure.
Types of Taxes
There are a few different types of taxes that businesses and citizens are subjected to. The most common are income tax, corporate tax, and sales tax. Each one has its own set of rules and regulations.
Income tax is levied on the income of individuals and businesses. Corporate tax is levied on the profits of corporations. And sales tax is a tax on the purchase of goods and services.
It’s important to be familiar with all of the different forms of taxes so that you can stay in compliance with the law. And it’s also important to develop a positive culture within your company. This means creating a climate where taxes are seen as a necessary part of doing business, and where everyone is aware of their responsibilities when it comes to paying taxes.
Benefits of Paying Taxes
When it comes to tax culture, there are a lot of benefits to be had—benefits that affect not just individuals, but also businesses and the economy as a whole.
For one, businesses that pay their taxes on time and in full are seen as more reputable by their peers. They’re also more likely to be awarded government contracts since the government wants to do business with entities that play by the rules.
On the individual level, paying your taxes on time shows that you’re responsible and patriotic. It means you’re contributing to the common good and helping to build a better future for everyone. And when everyone pitches in, it only makes our country stronger.
Creating an Engaging Tax Environment
Creating an engaging tax environment can help build a positive tax culture. Create an environment where tax law is discussed thoughtfully, respectfully, and professionally. Make sure to explain the importance of taxes and how they provide vital services to society.
Showcase the work of tax professionals by organizing events that recognize their contributions and highlight the value of their work. This can help create a sense of pride in the profession and encourage more people to pursue a career in tax law.
It’s also important to keep employees engaged by providing ongoing tax education. Host seminars about new developments in legislation, introduce new technology for filing taxes or give employees access to resources such as webinars, white papers, and journals about taxation.
These activities can help bring everyone up to speed with the latest updates in taxation laws so they can make more informed decisions when it comes to managing their own finances.
Calculate & Save Taxes with Ease
Gone are the days of manual calculations and paperwork. When it comes to taxes, there’s a plethora of digital tools you can use that make it easier for your employees to accurately calculate their taxes and save more money.
These tools provide step-by-step guidance on preparing tax returns, and filing taxes, and help track any changes in tax laws that could impact your business. Plus, they often come with helpful features such as automatic tax estimators, online filing options, and even the ability to securely store important documents digitally.
Using these tools not only saves you time and hassle but also enables your employees to make informed decisions when it comes to their taxes. Encouraging your employees to use these tools will help them be more aware of their financial obligations when it comes to taxes and cultivate a better understanding of the tax system overall.
So, how can you cultivate a positive tax culture in your business? Here are the key takeaways…
- Don’t be afraid to ask for help.
- Make tax compliance a team effort.
- Educate your employees about tax compliance.
- Promote a culture of compliance.
- Reward employees for compliance.
- Stay up to date on tax laws.
- Use technology to help you stay compliant