Difference Between Tax and Fee In Income Tax Act, 1961

Tax is levied compulsorily by the government on its citizens to defray the expenses of the government. A tax, by definition, is a payment in return for which no direct and specific quid pro quo is rendered to the taxpayer. From the definition of a tax, we can pinpoint some of the important charac­teristics of tax.

Firstly, a tax is a compulsory payment levied by the government on its citizens and various business firms. As payment of tax is compulsory, refusal to pay tax invites punishment.

Secondly, there is no direct quid pro quo relationship between the taxpayer and the tax-levying authority. That is to say, a taxpayer cannot demand any reciprocal benefits for paying taxes.

Thirdly, a tax is levied to incur public expenditure for the benefit of the country as a whole.

Fourthly, the basis of taxation cannot be the same for all periods. It is reviewed periodically by the taxing authority.

On the other hand, a fee is a voluntary payment to the government for the special services rendered by it in the public interest, but conferring a specific advantage on the person paying it.

Now, it is possible to mention some of the important differences between tax and fees:

In the first place, a tax is a compulsory contribution made by a taxpayer. A fee, by definition, is a voluntary payment.

Secondly, as far as tax is concerned, there is no direct give-and-take relationship between the taxpayer and the tax-levying authority.

A taxpayer cannot demand any special favour from the authority in return for taxes paid by him. A fee is a direct payment by those who receives some special advantages or the government guarantees the services who pays fees. Fees are, therefore, deemed to be the by-products of the administrative activities of the government.

Thirdly, fees are mostly imposed to regulate or control various types of activities. But the objectives of taxation are many. It has no separate objective. Taxes are levied in the greater interests of the country.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at secondinnings.hr@gmail.com

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Create a website or blog at WordPress.com

Up ↑

%d bloggers like this: