This Republic Day, understand what are your taxes being used for

Paying taxes can be a pain, unless you take a minute to understand where they are being used.


You may think of paying taxes as a burden, but that may be because you do not understand the need for such payments. Is it being used to improve your standard of life and ensure your children’s safety, or is it being squandered away? Let’s find out.

Your tax payments form a part of government revenue. The government uses this to sustain and improve the country. Here is a brief overview on how the tax you pay funds different government heads.

First, there are two major heads of government expenditure:

  1. Plan expenditure is for improving the country
  2. Non-plan expenditure is for sustaining the country

These heads are further sub-divided into other expenditures.

Plan expenditure

  • Agriculture and other income-earning activities
  • Expenditure on rural development
  • Irrigation and flood control
  • Energy—expenditure for the generation and distribution of energy
  • Transport, including all means of road, rail, water, and air transport
  • Communications—including wireless and radio communications, the internet, and so on
  • Science, technology, and environment—grants allowed for the development of science and technology, and improvement of the environment
  • General economic services
  • Social services
  • General services

RelatedComponents of your salary and their tax benefits [Infographic]

Non-plan expenditure

  • Interest payments and debt servicing—the government borrows money from the public and from corporate organisations by issuing bonds. This is government debt. The debt accrues interest to be paid. The interest payment for servicing government debt comes under this category
  • Defence expenditure—this forms a major chunk of the government’s expenditure. The expenditure is for the Indian Army, Indian Navy, and the Indian Air Force.
  • Grants to state and foreign governments
  • Pensions payable to government employees
  • Subsidy—including all heads of subsidies paid on food, petroleum, or agriculture
  • Police expenditure—expenses incurred on maintaining and running a police force in the country
  • Transport—including air, water, road, and rail transport


Indeed, both plan and non-plan expenditures are important. But the biggest part of the government’s tax revenue goes into non-plan expenditure. Here is a look at the most important of the expenditures:

  • Defence—so that Indian borders are protected
  • Infrastructure- which includes building and repair of roads, railways, inter-city transport, hospitals, schools, living premises, etc.
  • Rural development for social welfare and allowing the rural population a good quality of life
  • Consumer affairs, food, and public distribution
  • Agricultural growth

The tax you pay goes towards paying for these essential expenses. The government incurs these costs so that the country can function properly. Good allocation of the tax revenue can also fuel growth. So, if you want India to be a strong economy, then paying taxes correctly and on time is essential. On the eve of India’s 68th Republic Day, think of your tax payments as your contribution to your country.


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