An empirical study of financial and tax literacy of salaried individuals

Abstract

The Organization for Economic Co operation and Development OECD has defined financial literacy as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well being Financial literacy helps individuals to improve their level of understanding of financial matters which enables them to process financial information and make informed decisions about personal finance Financially literate individuals are able to participate in financial markets, thus helping financial markets to expand and operate efficiently newline newlineThe broad results of previous studies have indicated that levels of financial literacy were unacceptably low across the world It was observed that people are not confident while making financial decisions due to lack of financial knowledge They did not carry positive attitude towards financial matters and did not exhibit financially responsible behaviour Few studies have also attempted to measure the level of financial literacy in India Most of them report that the level of financial literacy in India is low People in our country do not have proper awareness regarding different financial products available in the market They do not file their tax returns on time or do not file their tax returns at all due to lack of personal taxation knowledge Most of the people are unable to understand the basic terminology of income tax leave aside the computation of their tax liability, because of this revenue of the government suffers in terms of poor collection of taxes newline newline