Economic goals

Know the benefits of tax exemption.

The main objective of a national tax system is to raise money to cover all of the government's expenses. Taxes, the primary source of government funding, should provide revenues that increase in line with public expenditures, which typically rise at least as quickly as the national output.

Property taxes and taxes on non-essential items of mass consumption like alcohol and cigarettes do not typically fit this condition. Instead, income, sales, and value-added taxes do.

Tax policy may be used to support economic stability in addition to generating income. Cyclical swings in prices, employment, and output are masked by changes in tax burdens that are not matched by changes in spending. Built-in flexibility results from the fact that some tax responsibilities, most notably income taxes, react significantly to shifts in the state of the economy. A more proactive strategy advocates for adjustments to tax rates or other rules to boost the anticyclical impact of tax revenue.

One can claim the benefits of tax exemption from the donation made to an NGO under section 80g of income tax act of 1961.

Some economists suggest enacting tax laws to encourage economic expansion. In order to encourage saving, labour mobility, research and development, and other factors, this strategy may entail a qualitative reorganisation of the tax system (such as the replacement of taxes on income with taxes on consumption). However, tax incentives have their limitations, particularly when it comes to fostering the economic growth of particular sectors or geographical areas. With a focus on economic expansion, it follows that there should be no excessively high marginal tax rates or resource allocations to relatively unproductive activities that are caused by taxes.

For every country, rich or developing, economic growth continues to be a macroeconomic goal. When contrasted from one period of time to another, economic growth is an increase in an economy's capacity to generate products and services. Governments are tasked with the duty of supplying the people with certain fundamental infrastructure. A government owes its citizens a number of key duties, including economic stabilisation, income redistribution, and the provision of services.

The amount of income the government generates from the many sources (internal and external) at its disposal determines in large part whether it will be able to fulfil these obligations. Taxation is one of these sources. One of the earliest methods of paying for the costs of government is taxation. It is also one of the tools for increasing the potential of the public sector's performance and repaying public debt. Any country that wants to be self-sufficient and satisfy its demands for economic regulation must give taxation a high priority.

The matter is related to 80g registration.