Author: Spine Tech

Tracking your employees is sure hell of a task but there are many benefits that come with it! This blog goes over the benefits of performance appraisal and why is it necessary.

 

• What is performance appraisal?

 

A performance appraisal is a regular review of an employee’s job performance and contribution to a company. Companies use performance appraisals to determine which employees have contributed the most to the company’s growth, review progress, and reward high-achieving workers.

 

• Why is performance appraisal necessary?

 

– Employee Motivation

 

A constant review of your employees’ performance (and appreciation of course) is sure to provide a boost to your employees’ performance. A good performance appraisal system would allow you to track your employees’ progress. Which would enable you to provide training to employees who might need it and appraisal to well performing employees. Motivating employees is also necessary as it directly affects the output by the employee, be it the quality, quantity or the dexterity of the product/ service as the output. Keeping things short, one can say that employee motivation is directly variable with the output of the employee and hence the organisation as a whole.

 

– Employee Retention

 

Employee retention is defined as an organisation’s ability to prevent employee turnover, or the number of people who leave their job in a certain period, either voluntarily or involuntarily. Having a good employee retention rate adds up to the goodwill and trustworthiness of an organisation. Having a good employee retention rate also implies that the company has agood relationship with its employees. Implementation of a performance appraisal system lets the employer know the exact progress of employees. This enables them to establish a one to one relation with the employee increasing transparency and creating a strong bond between them, ultimately increasing the retention rate.

 

– Employee Efficacy

 

Here, employee efficacy refers to the quantity and quality of output given by the employee in a particular time period / pace of production. Having a performance appraisal system implemented creates transparency between employer and employee. This also creates a sense of urgency among the employees as they know that the employer can see the progress whenever they want. Employers can also track the quality of output produced. This ensures that the employee optimises the resources in such a way that maximum quantity and best quality can be achieved with minimum resources.

 

– Employee Relationship

 

Constant motivation, increased transparency, higher performance efficiency and regular appraisal and appreciation; these factors ensure that the organisation has a great relationship with its employees. Having a good relationship with employees also helps in maintaining the aforementioned factors in the long run. An organisation with a good relationship with its employees is the one which thrives in the long run.

 

In conclusion, having a performance management system implemented will ensure a boost in the following 4 areas-

 

– Employee Motivation

– Employee Retention

– Employee Efficacy

– Employee Relationship

 

Performance appraisal system is usually a part of a human resource management system which also offers features like payroll management, leave and attendance management, etc. If you are in search of an HRMS, you might want to read 5 necessary elements that you must look for in an HRMS.

 

“Why do I need an HR Software when the old, traditional HR System is working alright?” We are sure you have thought about this at least once while thinking about an HRMS.

Yes, the old, traditional HR System is fine. But that’s all there is to it, it is just “fine”. And in this extremely competitive era, no one wants to be just “fine”, “average” or “mediocre”. An HRMS will help you gain an edge over your competitors. But then again there is the question of “How to choose an HRMS?” you can read “Essential Features that you should consider while choosing a FAMS”

 

Now, let us come to main topic, here are the factors that will help you gain an edge over your competitors if you implement an HRMS:

 

– Automated Performance Tracking

Performance Tracking is one of the most crucial duties of an HR (alongside the HOD/ Manager). It can get a bit arduous at times if not done properly. And more importantly, an organisation and the employer needs to know the growth and performance of an employee. This is to decide whether the employee is doing exceptional and might consider a promotion or some kind of promotionary motivation. Or to know if the employee is lacking in certain areas and needs more training. Performance tracking also aids in identifying employees who are constantly performing at an underwhelming rate and helps in deciding whether to look for a replacement for them. Okay but how does an HRMS help in performance tracking? Well, the simple answer to that is- An HRM Software makes the whole process automated and online! Which means you can track the data for “n” number of years and can get precisely detailed reports! You can also read 6 major features of a PMS that will help you enhance your organisation’s performance to know more about PMS.

 

– Easier and Quicker Recruitment

Remember the employee you felt like you needed to replace as their performance was constantly poor? But what if the employee is in a good position and has a skillset that might be very difficult to find in the pool of applicants? That is when HRMS kicks in! A Human Resource Management System allows you to filter down job applications based on skill set and automates the very first round of recruitment! Now that is some advanced tech! Alongside boosting recruitment efficiency, an HRM Software also makes the onboarding and documentation process a lot quicker. You might also want to read How HRMS increases recruitment and onboarding efficiency

 

 

– Accurate Salary & Arrear Calculations

Now that you have the track of your employees’ performance and have recruited the correctly skilled employee for your organisation, it is the time for their fair remuneration. A Human Resource Management System makes the calculation of the salaries and arrears very simple and straightforward. You can leave your payroll worries to your HR System and focus on more productive tasks! If you are considering investing in a payroll, you might want to read 9 Essential features a payroll must offer first.

 

– Organised Workflow

Many organisations unknowingly suffer with a condition called “miscommunication and disorganised workflow”. You surely would not like to be on that list. One way of ensuring that you do not end up like such is implementing an HRM System. Not only does the HRMS helps you communicate with your employees better but it also lets you create levels of approval and a proper workflow chart for smoother flow of operations.

 

– Reduced Dependency on HR

And finally, a Human Resource Management System reduces the employees’ dependency on HR! Not that the role of HR would be completely eliminated but an HRMS makes the employees self sufficient on the major part. Many everyday processes can be done directly through the Employee Self Service Portal. And because of this, the HR can focus more on productive tasks and maintaining a work-friendly environment in the organisation.

 

To conclude, an HRM Software covers all the basic elements of an HRs duties while assisting the HR in carrying out their responsibilities as well. If you are on the hunt for the perfect HR Solution- A one stop software, Spine HR Suite is what you have been hunting for! You can learn more about Spine HR Suite here.

What exactly does an “End-to-end” Fixed Asset Management Solution mean?

An end-to-end FAMS is the one which records the activity of the asset from budgeting and acquisition to disposal of the asset. Fixed assets are crucial for an organisation and so is its proper management and you should not take any risks where there are chances of miscalculation, etc.

 

Here are the four elements that make an FAMS “End-to-end”-

 

• Asset Budgeting & Acquisition

There is usually a difference between the budgeted/estimated cost of the asset that is to be acquired and the actual cost at which the asset is acquired. This difference is very important to be realised and tracked as it might affect the organisation’s balance sheet at the end of the year. A good fixed asset management system will track the estimated cost for you and then realise the difference automatically once you have entered the acquisition details.

 

• Asset Allocation

Asset allocation, with respect to internal organisational fixed asset management refers to assignment of a particular asset to an employee or a group of employees. This enables you to know the exact details and whereabouts of the particular asset and the employee who has it at that moment. Barcode labelling, QR Code Labelling and RFID Tagging can be implemented during allocation of assets to make it easier to track the asset. With an FAMS, you can create custom barcodes and assign them to the assets which would then greatly help you in tracking the assigned asset.

 

• Asset Tracking

Talking about tracking of fixed assets, people often limit tracking till “what asset is with what employee?”. Tracking is much more than that. Tracking of assets include tracking of the asset itself, tracking of warranties, expiries, renewals and services due (physical as well as IT assets). A good fixed asset management solution provides you with automatic emails and notifications when any services or renewals are due. It also gives you a detailed report of the lifecycle of the asset. Asset tracking is a major part of a fixed asset solution. You can learn more about the essentials of a fixed asset management system here.

 

• Asset Disposal

Asset disposal is the elimination of an asset from a company’s records, typically by selling or scrapping it. These are often long-term assets that contributed to generating profits, such as machinery, technology or company vehicles. Asset disposal can be mistaken very easily by not recording the correct value or by miscalculating the scrap value. FAMS helps you in recording depreciation on a regular basis, being automated, an FAMS provides accurate calculation regardless of the method of calculation (unless you switch in the course of the lifetime of the asset of course). Having access to the lifecycle of an asset also helps one in proper calculation of the disposal value and the authentication of the depreciation applied over the life time.

 

In conclusion, an end-to-end fixed asset management solution boosts the efficacy of these four important areas:

 

• Asset Budgeting & Acquisition
• Asset Allocation
• Asset Tracking
• Asset Disposal

 

Wondering why you should invest in a fixed asset management solution? Read 4 advantages of an Asset Management Software & How to choose a FAMS?

 

 

What is an “End to End” HR Solution you might ask.

An End to End HR Solution refers to an HR System which records and tracks the data of employees since the very beginning or onboarding or since they were hired. It keeps recording the data of the particular employee till the day of his/her exit.

 

Now that we  have a basic idea of what an “end to end” solution refers to, let us learn why is it necessary?

– Employee Life Cycle

 

“Onboarding to exit”, “Hire to retire” whatever you want to call it. Employee Life Cycle is the period for which an employee works at a particular organisation. It also includes the onboarding and exit processes. From the moment of onboarding till the full and final settlement is done and the money is received/paid by the employee, the Employee Life Cycle goes on.  From onboarding to exit, an end-to-end HRMS ensures the employee has no obstacles in communication with the employer. It also provides the required reports to the employer whenever required. For more information on ELC you can read What does Employee Life Cycle mean and how does an HRMS affect it?

 

– Grows With You

 

A Human Resource Management System, Being modular and flexible, grows as you do! Needless to say, having modularity makes an HRM system segment agnostic and boosts the compatibility of the system. You can add modules and make the system even more comprehensive as you grow as an organisation. If you would like to know more about scalability in HRMS, you can read How is a scalable HRMS better for your organisation?

 

– No Migration Required

 

Say you have to switch to a new solution provider just because you now have a huge force of employees and the solution provider does not have the adequate tech to manage so many employees. The amount of work and expenses incurred in the migration process would be overwhelming. What if you just had to update the system once? With Spine HR Suite, you can upgrade the system instead of migrating to a whole new system which cuts down your migration costs and boosts the data retention efficiency.

 

– Tied-in Analytics & Reports

 

An end-to-end/ Hire to Retire/ Onboarding to Exit or whatever you want to call it solution, stores the data of your organisation since the deployment of the system. The amount of reports you can generate when required, the depth of reports and the accuracy is unimaginable. When you have an End to End HR Management system deployed, you could care less about reports and analytics it provides.

 

To sum it up, End to End Human Resource Solutions are the way to go! You get numerous benefits which include cutting down migration and upgradation costs, bulk purchasing costs, report extraction costs and on the other hand you get the whole life cycle of your employee at a glance, extremely detailed and accurate reports (filtered, sorted and created according to your requirements) and much much more!

If you are looking for one such HRMS which would counter all your hR requirements, Spine HR Suite is the way to go! Click here to learn more about Spine HR Suite.

“Why is employee training important? It is such a time consuming process and my other employees are way too busy for that!”

Employee training is crucial as it sets the foundation for the employee’s skills with regards to the organisation’s product/service. It might be time consuming if you are not using the correct tools and methods though. One of the simplest way of boosting the training efficiency as well the overall efficiency of HR Processes is the implementation of an HRMS.

 

• Why is Employee Training necessary?

 

In order to have skilled employees, an organisation must provide efficient training at a regular basis to not only new joinees but also older employees as they need to keep their skillset updated and learn about the changes in the market. Regular training ensures that the employees’ skills are always honed, they are ready to face any road block in the near future and improve the organisation’s performance as a whole.

 

• How does HRMS enhance employee training efficiency?

 

• Training Allocation

Effective training can be planned only if one knows what employee in what departments needs what kind of training. A Human Resource Management system can help you allocate proper training at the proper time to the proper employee by tracking and notifying you about the training sessions planned or requested by the employee.

 

• Resource Allocation

A huge obstacle or challenge one faces while planning a training session is the lack or unavailability of resources. Be it the human resource i.e. senior staff to provide the required training, I.T resources like laptops/ desktops, mic and speaker system, etc. Or a conference room or cabin big enough to contain the trainees. An HR Management System lets you plan, schedule and book such resources so you have access to them whenever required.

 

• Training Schedule

Having a Human Resource Management System also enables you to schedule training sessions in advance. This is necessary as the knowledgeable staff might be busy in other important work and might not be available to provide training at that very moment. It is feasible to plan and schedule such training sessions in advance and an HRMS lets you do that in just a few clicks! It also notified the employee and the concerned authority when the training is due.

 

• Training Reports

Various training reports such as training history, training attendance, cost and count analytic, employee wise training Cost and Count & score analytic can be generated. These reports ensure that the quality of the training provided is up to the mark and the employee is getting his/ her skillset upgraded in the best and most efficient way possible.

 

In Conclusion, Training in general is very important but as an organisation with possibly hundreds of employees, it is necessary to carry out such training in the most optimum way. Implementation of a Human Resource Management System makes sure that the training is provided with maximum efficacy!

 

If you are considering investing in an HR System you would like to read 5 necessary elements that you must look for in an HRMS.

“What is a good HRMS?”

 

What makes an HRMS good depends of what functions it performs, and keeping things simple, here are the 5 basic and most crucial functions that are necessary for smooth running of an organisation which an “Good” HRM System must perform:

 

– Payroll Processing

In simple terms, payroll can be defined as the process of paying a company’s employees. It includes collecting the list of employees to be paid, tracking the hours worked, calculating the employee’s pay, distributing the salary on time, and recording the payroll expenses.

Payroll Processing is one of the most important, if not the most important function of a Human Resource Management System. In some cases Payroll Software and HRM Software are used synonymously as well (which is of course incorrect but you get the idea of how important it is for an HRMS to perform payroll processing). Most of the time, in modular HRM Systems, Payroll is the base module and then you can add modules according to your requirement.

 

– Attendance and Leave

 

Recording and tracking employees’ leaves and attendance is another crucial function of an HRM Software. Depending on your service provider, these can be two different modules as well. What matters the most is the efficiency and accuracy of the attendance. Spine HR Suite uses selfie based location marking attendance tech but is also compatible with any biometric devices if you have one! Alongside that, Geo Tagging and Geo Fencing are two more techniques to ensure attendance authenticity and eliminate proxy marking of attendance.

 

– Performance Management

 

We all know the pros of tracking the performance and progress of your employees. But on the other hand, the biggest con is that it is difficult for the HR or the manager or the Head of the Department to observe and track the performances of individual employees. That’s when automation comes as a blessing! With an HRMS you can automate the performance tracking of an employee and can get reports, set goals, create milestones and check progress at your convenience!

 

– Workflow Setup & Approval

 

Everyone is aware of the drawbacks of the traditional hierarchical method of communication within the organisation. Sometimes the messages get lost in the process or it changes course in the middle. This makes it really difficult for the upper management to communicate their minds to the actual workforce and vice versa. HRMS solves this problem by allowing the admin to create a workflow chart wherein the upper management can directly track the progress while the workforce can put up requests, suggestions and questions for the upper management directly. Admin can create/set up the workflow and create/give authority to approve as well.

 

– Employee Life Cycle

 

Employee Life Cycle is the period for which an employee works at a particular organisation. It also includes the onboarding and exit processes. From the moment of onboarding till the full and final settlement is done and the money is received/paid by the employee, the Employee Life Cycle goes on. An HRMS lends the process automation which makes the entire process quicker, more accurate and efficient. From onboarding to exit, an HRMS ensures the employee has no obstacles in communication with the employer. It also provides the required reports to the employer whenever required. You can learn more about employee life cycle here.

 

In Conclusion, the 5 functions that an HRMS must perform are:

 

1. Payroll Processing
2. Attendance and Leave
3. Performance Management
4. Workflow Setup & Approval
5. Employee Life Cycle

 

Spine HR Suite is a One Stop HR Solution where these 5 basic features are offered (of course!) but alongside these, there are 13 more modules with great utility are offered. You can learn more about Spine HR Suite here.

“HRMS is beneficial of course, but isn’t it costly?”

 

Well, today we are about to bust this myth! You must’ve heard a lot about how HRMS is beneficial for your organisation’s performance but along with that, an HRM system is also more cost-effective if you look past the surface, at the whole spectrum. Here’s how the implementation of an HRMS will help you minimise your costs:

 

• Direct cost-cutting

 

An HR System helps you directly cut costs as it automates the HR processes that would be done manually otherwise. This saves time as well as money. Here are the ways in which an HRMS cuts the costs of the HR process directly:

 

• Less Staffing

With HR Software, many essential HR Services are automated which as a result, reduces the need for excessive staffing. Of course, an organisation still needs HR Staff to manage the workforce and carry out processes that require strategizing. However, the implementation of HRMS does ensure a reduction in excessive staffing, hence decreasing the staffing costs.

 

• Reduced requirement for office supplies

Since HRM Software operates digitally the requirement of office supplies like registers, pens, filing cabinets and other such petty office supplies is greatly reduced. Not to mention, the industry is going paperless and getting HR Software could be your step towards digitization and cost reduction in the process as well.

 

• Indirect cost-cutting

 

Alongside the direct ways, An HRMS is indirectly economical as well. These benefits can be seen when you see under the surface level cost reduction. These are the ways in which an HRMS indirectly benefits your organisation:

 

• Streamlining workflow

 

An HR System is proven to streamline workflow by helping the employees and managers avoid any obstructions. This ensures increased productivity and decreased distractions, ultimately leading to a better overall organisational performance.

 

• Optimum Utilisation of resources

 

An HRMS allows the manager to focus on strategizing by automating various other processes. This enables them to plan out the workflow and ensure optimum utilisation of resources. This not only reduces resource costs but also minimises wastage of time and resources.

 

• Other labour cost savings

 

Implementation of Human Resource Software also helps in cutting other labour costs like petty cash manager and other such roles. These tasks could be automated by HRMS and the need for these ‘other labour costs’ can be eliminated.

 

• Better Human Capital Management

 

Besides mere cost-cutting, a business also benefited by a positive work environment which in return would help in increasing productivity and maintaining a better relationship with the employees. A happy and satisfied employee will give more effort and turn out to be a better asset than a dissatisfied employee. Here’s  how an HRMS will help in better management of your Human Capital:

 

• Improved engagement with the workforce

 

One way of improving the relations with employees is to be in conversation with them and let them express themselves. HRMS allows employees to put forth their views on the discussion forum and get a sense of satisfaction. Improved engagement with the workforce also enables you to track progress more accurately.

 

• Improved Employee Retention

 

A good employee retention rate shows how well you treat your employees and how satisfied they are working in your organisation. It is very important to maintain a good employee retention rate as it adds to the goodwill of your organisation.

 

 

In conclusion, the implementation of HR Software boosts organisational performance of course, but is more economical at the same time. There are various ways in which HR Software helps you cut down your costs and improve organisational performance.

 

Spine HR Suite is a great HR Partner that will help you automate your HR Processes without making a huge hole in your pocket. If you still aren’t sure about HRMS you should read how HRMS benefits your organisation’s performance.

What is an “End to End” HR Solution you might ask.

An End to End HR Solution refers to an HR System which records and tracks the data of employees since the very beginning or onboarding or since they were hired. It keeps recording the data of the particular employee till the day of his/her exit.

 

Now that we  have a basic idea of what an “end to end” solution refers to, let us learn why is it necessary?

 

– Employee Life Cycle

 

“Onboarding to exit”, “Hire to retire” whatever you want to call it. Employee Life Cycle is the period for which an employee works at a particular organisation. It also includes the onboarding and exit processes. From the moment of onboarding till the full and final settlement is done and the money is received/paid by the employee, the Employee Life Cycle goes on.  From onboarding to exit, an end-to-end HRMS ensures the employee has no obstacles in communication with the employer. It also provides the required reports to the employer whenever required. For more information on ELC you can read What does Employee Life Cycle mean and how does an HRMS affect it?

 

– Grows With You

 

A Human Resource Management System, Being modular and flexible, grows as you do! Needless to say, having modularity makes an HRM system segment agnostic and boosts the compatibility of the system. You can add modules and make the system even more comprehensive as you grow as an organisation. If you would like to know more about scalability in HRMS, you can read How is a scalable HRMS better for your organisation?

 

– No Migration Required

 

Say you have to switch to a new solution provider just because you now have a huge force of employees and the solution provider does not have the adequate tech to manage so many employees. The amount of work and expenses incurred in the migration process would be overwhelming. What if you just had to update the system once? With Spine HR Suite, you can upgrade the system instead of migrating to a whole new system which cuts down your migration costs and boosts the data retention efficiency.

 

– Tied-in Analytics & Reports

 

An end-to-end/ Hire to Retire/ Onboarding to Exit or whatever you want to call it solution, stores the data of your organisation since the deployment of the system. The amount of reports you can generate when required, the depth of reports and the accuracy is unimaginable. When you have an End to End HR Management system deployed, you could care less about reports and analytics it provides.

 

To sum it up, End to End Human Resource Solutions are the way to go! You get numerous benefits which include cutting down migration and upgradation costs, bulk purchasing costs, report extraction costs and on the other hand you get the whole life cycle of your employee at a glance, extremely detailed and accurate reports (filtered, sorted and created according to your requirements) and much much more!

If you are looking for one such HRMS which would counter all your hR requirements, Spine HR Suite is the way to go! Click here to learn more about Spine HR Suite.

“Hire to Retire, Onboarding to Exit” you might have heard these phrases and thought what exactly do they mean and how do they affect your organisation and employees?

 

Employee Life Cycle is the period for which an employee works at a particular organisation. It also includes the onboarding and exit processes. From the moment of onboarding till the full and final settlement is done and the money is received/paid by the employee, the Employee Life Cycle goes on.

 

Okay but how does having a Human resource Management System affect the life cycle of your employees? Well Here’s how an HRMS affects your employees’ life cycle:

 

– Employee Onboarding

“Onboarding” refers to the processes in which new hires are integrated into the organisation. It includes activities that allow new employees to complete an initial new-hire orientation process, as well as learn about the organisation and its structure, culture, vision, mission and values. A Human Resource Management  System boosts the onboarding efficiency by automating the whole process. Besides that, an HRMS also liberates the HR, who can now focus on more productive tasks.

 

– Documentation

Once the new employee is onboard, various documents are collected. Identity card, Address proof, Bank Details and many more such documents are needed to be submitted for numerous purposes. The traditional way was to get a copy of each and every document and hand them over to the HR who would then update the employee master and call the onboarding process complete. But with an HRMS, just scanned copies are needed to be uploaded to complete the onboarding process. HR can collect physical copies whenever convenient.

 

– Surveys & Reports

The employer needs to ensure that the employee recruited is actually making progress and there is nothing hindering the growth of the employee. For this purpose, surveys are conducted and progress reports are made. Traditionally, Surveys were in the form of a face to face questionnaire which could make the employee nervous or even afraid of speaking the truth as a low level of confidentiality is maintained. With a HRM System, these surveys can be done online with a high level of confidentiality. On the other hand, there is no need for an HR or Manager to go out of their way to track and review the progress of the employee with an HRMS. The system auto generates progress reports and can view them as per the user’s liking and convenience.

 

– Exit

Exit, here refers to the exit of the employee from the organisation. Be it resignation, retirement or any other means. Exit of an employee might not sound like much at first glance but there is a lot more to it. Calculation of arrears, gratuity, loans and advances and other full and final settlement requirements. Having an HR System allows you to automate the calculation. Also, the employee can submit their resignation offline with the actual letter as an attachment and this can then be reviewed by the hierarchy set by the user. The HR can review or revoke the separation activity at any point of time and anywhere. Entire full and final settlement process can be managed to relieve the employees and the analytical reports can be generated for separation.

 

In conclusion, an HRMS lends the process automation which makes the entire process quicker, more accurate and efficient. From onboarding to exit, an HRMS ensures the employee has no obstacles in communication with the employer. It also provides the required reports to the employer whenever required.

If you want to manage your employees’ life cycle in an efficient and more advanced manner, Spine HR Suite is the way to go! For more information you can click here and visit Spine Technologies.

It is the “Tax Season” as people call it! And as a responsible citizen and taxpayer, you need to know a bit about taxes and their importance. So that is exactly what we are going to  discuss in this blog!

 

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To understand the types of taxes, first we need to know the incidence and impact of taxes. Incidence of tax. The final burden of tax is known as tax incidence and the initial burden of tax is known as tax impact. Simply put, the person who actually pays the tax is said to be impacted by the tax and the person who first passed on the tax liability is said to be incidental.

 

Now that we know about incidence and impact of taxes, let us take a look at types of taxes-

 

1. Indirect Taxes

The type of taxes where the incidence is on one person and the impact is on another. Indirect taxes can be passed on to others and usually make a lesser percentage of revenue. Examples of indirect taxes are excise tax, VAT, and service tax.

 

1. Direct Taxes

In case of direct taxes, the incident and impact is usually on the same person. This is because the taxes are deducted at the very source. These taxes make up the majority of tax revenue of the government. TDS, Professional Tax, Income Tax, Property Tax, etc are all examples of direct taxes.

 

 

• Why are taxes required?

 

– To Keep The Economy running

Running the country requires a huge capital. This calls for a huge revenue and with a working population as enormous as India, the rate of taxes can be much less. And needless to be said, Taxes are a huge part of the government’s revenue and revenue is an essential element in keeping the economy running.

 

– To Reduce Income Gaps

Taxes are designed with the canon of equity in mind which says that a tax should be made in such a way that it should be equitable to the payers, i.e. less rate of tax for payers in the lower income group and higher rate for high income groups. This directly helps in creating equity among people and reducing income gaps in the population.

 

– For Social Welfare

The primary goal of the Government of India is social welfare. And to take up projects of social welfare, the government needs huge amounts of funds. Tax revenue makes up the majority of these funds.

 

In conclusion, Taxes in India are classified into two types- Direct and Indirect. Taxes are necessary as it is the major source of income for the government. The government uses these funds for the welfare of people which leads to economic growth and development. Now that you know why taxes are important, you might also want to know what your taxes as an employee, i.e TDS is, you can read What is TDS and things you need to know about it!