Question

What are the main differences between tax and other payments?

Answer 1

Tax:

1. It is a compulsory payment to the Government.
2. Taxpayers cannot expect direct benefits after paying taxes.
3. The taxpayer has to pay the tax once it is imposed. Otherwise, he/she will be penalized.
4. The purpose of levying tax is general. Money is used for the welfare of the people.
5. Eg: Income tax, gift box, wealth tax, etc.,

Payments:

1. It is voluntary payment for getting any service.
2. Once payment is done, the person can expertly directly benefit from it.
3. Payment need not be paid if the service is not necessary for a person.
4. The purpose of making payments is to enjoy certain special benefits.
5. Eg: Driving license, stamp fee, fee for Government Registration, etc.,