An unavoidable sum given by a citizen or association to the government is called as Tax.
Taxes in India are charged by the Central Government and the State Governments.
Types of Tax
Direct Taxes: A tax which is paid by a person as shown it is legally imposed and the burden of which cannot be shifted to any other persons is called a direct tax. eg: Income tax, Wealth tax, Property tax, Estate duties, Gift Tax etc
Indirect Taxes: An indirect tax is levied and collected from a person who manages to pass it to some other persons to whom the real burden of the tax falls. Hence in the case of indirect taxes, the tax payer is not the tax bearer.eg: Commodity taxes or Sales tax, Excise duties, Custom’s duties etc.
Taxes imposed by the Central Government: Income Tax, Corporate Tax, Property Tax, Succession Tax, Wealth Tax, Gift Tax, Custom Duty, Tax on agricultural wealth, Service Tax etc
Taxes imposed by the State Government: Land Revenue Tax, Agricultural Income Tax, Agricultural Land Revenue, State Excise Duty, Entertainment Tax, Stamp Duty, Road Tax, Motor Vehicle Tax etc.
Goods and Services Tax (GST)
Government's intent of merging all taxes including Service Tax, Excise and VAT into a common tax called Goods and Service Tax (GST). GST is a complete Value Added Tax (VAT) charged on goods and services.
France was the first country to levy the GST and it was in 1954.
By a tax credit system, GST is charged on value added goods and services at consecutive steps of sale or buy in the supply chain.
Important Taxes imposed in India
Tax on Income and Wealth: The Central government imposes different types of tax on income and wealth, viz. corporate tax, gift tax, income tax, and wealth tax.
Personal Income Tax: Personal Income Tax is generally imposed on an individual combined hindu families and total income of people of other communities.
Corporate Tax: Corporate Tax is compulsorily charged on Registered Companies and Corporations.
Custom Duties: As per the constitutional provisions, the central government imposes both import duty and export duty.
Excise duties: Excise duties are service tax as it is charged on production of an product and it has no importance with its sale. It is the major source of income for the Central Government.
Cess is one of the tax charged by central government and it is mainly to found fund for education curriculum for the poor.
Service Tax: It is a type of tax charged for services conducted in India, except the union territories of Ladakh and Kashmir. The duty of collecting the tax was done by the Central Board of Excise and Customs (CBEC).
Value Added Tax (VAT)
VAT is launched in India in 2005.
The first state to implement VAT is Haryana.
The first country to implement VAT is France and it is introduced in 1954.
As of 2nd June 2014, Value Added Tax has been executed in the entire states and union territories of country.
It was introduced as an indirect tax into the Indian taxation system.
The existing General Sales Tax rules were changed with new Value Added Tax Acts.
Value-added tax (VAT) otherwise called as Goods and Services Tax (GST) is a type of Consumption tax.
VAT is a multi-point objective system of taxation.
Tax is being levied on value addition at each stage of transaction in the production/ distribution chain.
The expression ‘value addition' indicates the boost in the value of goods and services at every steps of production or transport of goods and services.
VAT is a tax on the ultimate use of goods or services and is finally bear by the consumer.
The standard rate of VAT is 12.5 percent
MODVAT
It stands for Modified Value Added Tax.
It is a modified form of VAT which has been in operation in many countries since long.
India introduced VAT in the modified form in 1986.
The modification consists of the following. The inputs remain taxed. But the tax is reimbursed to the producer of the final product who uses these taxed inputs.
CENVAT: Central Value Added Tax
It is the rechristened MODVAT. The government introduced CENTVAT in lieu of central excise taxes in 2000-01 budget.
It plans to extend the CENVAT to the customs duties in due course.
Initially the CENVAT was introduced as an experiment on a limited basis, but later it was extended to all sectors of the economy.
Direct Tax Code (DTC)
Direct Taxes Code Bill was presented in Parliament in the month of August in 2010. The new legislation replace the Income-Tax Act, 1961. It came into force only from April 2012.
DTC proposes to levy 30% corporation tax on companies, including cess and surcharge, instead of the present combined levy of 33.2%.
The tax rate for foreign companies would be same as the domestic companies.
Facts about Taxes in History
Taxes were the main income source for Government.
It was in Egypt, the tax system was first introduced in the world.
‘No Taxation without Representation’ is the slogan raised during American Independence Struggle.
It was according to 265th section, constitution mentions about Taxes.
Manusmriti and Arthasastra were the ancient Indian works which mentions about Taxes.
Salt Law is one of the main income sources for Maurya Dynasty in Ancient India.
Yatravedana is the tax introduced to pilgrimators in ancient india.
Jizya is the religion tax during the administration of Sultans.
Firoz Shah Tuglaq is the ruler who introduced Jizya for first time in India.
Akbar is the mughal ruler who withdrew Jizya.
Jizya was once again introduced during the period of Aurangzeb in 1679.
Chauth and Sardeshmukhi were the main taxes of Marata Empire.
Chauth Tax was introduced during the period of Shivaji.
It was in 1954, the commission was appointed for first time in Independent India for the study of Taxes. The Malayalee, Dr. John Matai was the leader of commission.
It was in 1962 April 1, the income tax act came into existence.
The Dr.Vijay Kelkar committee studied about the modification of direct and indirect taxes in 2003.
Central Government, State Government and Regional Institutions has the power to introduce the taxes.
The main taxes of central government were income, customs duties, central excise and service tax.
The famous taxes of state government were Sales Tax, Vehicle Tax and Land Tax.
The main taxes of regional institutions including Panchayat, Municipality and Corporation were Land Tax, Labour Tax and Entertainment Tax.
The tax introduced for film theatres is Entertainment Tax.
Excise tax is the tax, which is the major income source of central government.
Sales Tax is the main income source for State Government.
Normally Taxes can be split into two as Direct Tax and Indirect Tax.
Income Tax, Wealth Tax and Agriculture Income Tax were the examples of Direct Tax.
The tax partially or completely fixed on one person, which was given by another person is called as Indirect Tax.
The examples for Direct Tax were sales tax, excise tax and customs tax.
Value Added Tax (VAT) is the system for self estimating the tax which wants to pay the tax payer.
It was in France in 1954, the VAT was first introduced in the world. Brazil is the second country which introduced the VAT.
It was financial commission, who prepare recommendations for sharing the taxes between the central and state governments.
It was in 2005 April 1, the Value Added Tax came into existence in India.
Toll is the tax which wanted to give for vehicle transport through the travel in Bridge and Road. Toll is normally collected from the Bridges and Roads built with the help of Private Sector.
Fat Tax is the tax fixed on food items in the western countries for facing problems from Big Fats.
Carbon Tax is the tax fixed on Factories causing Pollution. New Zealand is the first country where this tax is introduced (2005).
