what is taxation in India
/ Taxation

what is Taxation in India

The tax system is the backbone of a country’s economy, maintaining a constant income, managing economic growth, and fueling its industrial activity. India’s three-tier federal structure consists of the Union government, the state governments and the local authorities that are empowered to collect various taxes and fees in the country. Local authorities include local councils and parishes.

What is the tax
The tax is therefore a compulsory contribution and not a voluntary payment or personal donation. This is a payment required by law.These can be direct or indirect growth taxes. Income taxes, which can be slightly faster than GDP (Gross Domestic Product), can be the result of revenue mobilization with an effective tax system and policies. The state uses this tax to perform functions such as: –

  • Social protection projects such as schools, hospitals, poor houses, etc.
  • Infrastructures such as roads, bridges, viaducts, railways, ports, etc.
  • National security infrastructure, such as the military.
  • Law Enforcement.
  • Pension and unemployment benefit systems for the elderly or those below the poverty line.

Characteristics of a good tax structure good tax system

  • A set must be fair and also lead to a fair distribution of wealth in the community.
  • It must be efficient and generate the necessary income for the state.
  • Collecting taxes is an important task and should be cheap.
  • The development of trade and industry must not be hindered by tax burdens.
  • Taxes levied should give the government a clear picture of your income.
  • The control system must be based on complete statistical information and UpToDate allows an accurate forecast.
  • The tax system must also be simple and flexible in order to meet the new needs of the state .
  • The efficiency of taxpayers must be taken into account when distributing the tax burden.

Tax systems in India
The Indian tax system is a three-tier federal structure consisting of:

  1. Union Schedule (Appendix 1 of the 7th Program of the Indian Constitution) contains subjects on which the central government has the legislative power 246 (1).
  2. The state list only contains matters for which the state government has the legislative power [Art. 246 para. 3].
  3. The competition list includes matters in which the Federation and the Lander have legislative power [Article 246, Paragraph 2].

The law enacted by the Government of the Union takes precedence in the event of a conflict between the Center and the State in relation to the entries on the contemporaneous list, but if a provision approved by Parliament that contradicts the previous law is part of the approved law If the law passed by the state government receives the approval of the President of India, the state takes precedence over it.

Types of Taxes in India
The two types of taxes in India are direct and indirect taxes. One of the largest and most successful tax reforms in India is the Goods and Services Tax (GST). This is a comprehensive indirect tax that helps to remove the sliding effect of the tax as a whole.

Direct Tax
This is a tax levied on business entities and individuals. It is a type of tax that cannot be postponed or accepted by anyone else. Examples of direct taxes are wealth tax, income tax, gift tax, etc.In the Ministry of Finance, the Central Commission for Direct Taxation (CBDT) is attached to the Directorate for Revenue. This council has a dual role in providing key ideas, meaningful planning input and guidelines for implementation regarding direct taxation in India. The direct taxes carried out by the income tax service are supported by the Central Directorate for Direct Taxes.

Indirect Taxes
Taxes that are raised indirectly from the public through goods and services are known as indirect taxes. Government agencies levy taxes on people who sell goods and services. When a good or product is sold in a state, a sales tax is levied, the amount of which is set by the government, called Value Added Tax (VAT).

  • The special tax and service are administered by the Central Authority for Special Taxes and Customs. (CEBC).
  • The Central Board of Indirect Taxes and Customs was renamed Central Board of Indirect Taxes and Customs    (CBIC) after the GST came into force.Its key role is to assist the government in formulating GST guidelines.

Customs Duties
Customs Duties are levied on all goods entering the country to ensure they are taxed and paid for. It applies to both the export and the import of goods and is important for the regulation of trade and as a source of income for the government.

Special tax
It is a goods tax in the narrower sense, as it involves the production of the goods and not their sale. It is charged by the central government, but alcohol / alcohol and narcotics. / Drugs. Unlike tariffs, this only applies to products made in India. It is also known as Central Value Added Tax (CENVAT).

Service tax
The taxed product is a service.In India, the service tax has initially covered telephone services, values ​​of values ​​and general insurance.The federal and state governments levy indirect taxes on the domestic supply of goods and services.
The roots of all Indian law are in the Constitution, so understanding the provisions of the Constitution is first and foremost a clear understanding of all laws. The constitutional provisions on taxation in India can be divided into the following categories:

  • Taxes can only be levied according to the rule of law. (Article 265).
  • Collection of the tax on the tax and its distribution between the center and the states (Article 268, Article 269 and Article 270).
  • Limitation of the powers of states to levy taxes (Article 286).
  • Sale / Purchase of goods that take place outside the respective state.
  • Sale / purchase of goods that take place during the import and export of goods.
  • Taxes that are levied by the state or the object of the state (Art. 276 and Art. 277 ).

Conclusion
India is a large country with people from different communities and with different wealth and income groups. Taxes cannot be the same for everyone. Because of this, the tax system in India has long been complicated. India has grappled with the problem of tax evasion which seems to be basically emptying our tax system. India has a high tax rate but a low direct tax refund.Hence, the government has tried to lower taxes over the years. For a nation to thrive, its tax collection system must be robust and efficient, even if tax rates are not high, or their coffers will be depleted and government development programs will make retrospective changes to tax laws.

After the introduction of the GST, a global indirect tax, the process was smoothed out and helped to prevent the previous cascading effect. Chapter 2 of Part 12 of the Constitution of India contains provisions on the distribution of financial resources, which are based on federal, state and simultaneous lists in the 7th program. In short, the rights of parliament are not bound and the Constitution of India gives parliament far-reaching powers and is neither rigid nor egalitarian. Depending on future needs, there are then provisions that the legal system can change.