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Indian Tax System (an understanding)


•WHAT IS TAX
Taxes represent the amount of money we pay to the Government
at predefined rates and periodicity.
Taxes are the basic source of revenue to the Government using which it provides various kinds of services to the tax payers
•DIRECT TAXES: ------------------Central Board of Direct Taxes (CBDT)
1-Income tax
2-Wealth tax
3-Capital Gain tax
4-Gift Tax/
Inheritance or Estate Tax
5-Corporate Tax
•INDIRECT TAXES:-------------- Central Board of Excise and Customs (CBEC).
1-Service Tax
2-Custom Duty
3-Excise Duty
4-Sales Tax and VAT
5-Security Transaction Tax

•HISTORY OF TAXATION:
•Taxation in India is rooted from the period of ManuSmriti and Arthshastra.
•Present Indian Taxation is based on this ancient Tax system which was based on the theory of Maximum  Social Welfare.
•ACCORDING TO MANU SMRITI :
•The king should arrange the collection of Taxes in such a manner that the tax payer did not feel the pinch of paying Taxes.
•He laid down that Traders & Artisans should pay 1/5th of their profits in Silver & Gold.
•While the Agriculturists were to pay 1/6th  , 1/8th , 1/10th , of their produce depending upon their circumstances.
•ACCORDING TO ARTHA SHASTRA :
•“Kautilya” has also describe in great detail, the system of Tax administration in the Mauryan Empire.
•It is remarkable that the present day Tax system is in many ways  similar to the system of Taxation vogue about 2300 yrs ago.
•Artha shastra  mentioned that each Tax was specific and there was no scope for arbitrariness.
•Tax collector determined the schedule of each payment, and its time manner and quantity being all the predetermined .
•The land revenue was fixed at 1/6th share of the produce and import & export duties were determined on ad-value basis.
•The import duties on foreign goods were roughly 20% of their value.
•Similarly Tolls, Road Cess, Ferry charges and other levis were all fixed.
•Kautilya also laid down that during war or emergencies like famine or floods etc, the Tax system should be made more stringent & the King could also raise war loans.
•The land revenue could be raised from 1/4th to 1/6th during the emergencies.
•The people engaged in commerce were to pay big donations during the war time.
•WHAT IS TAX ?
•Tax is fee charged by a govt. on product, income or activity.
 •WHY ARE TAXES LEVID ?
•Tax are levid because tax is the basic source of revenue to the govt.  Revenue so raise is utilized for meeting the expenses of govt. like Defence, provision for Education, Health Care, Infrastructure facilities, like roads, dam etc.
•WHY WE SHOULD PAY TAXES?OR WHAT IF WE DON’T PAY TAXES ??
•Whatever money is received by the govt. in terms of taxes is spend by it for the welfare of the citizen of the country.
•Some of the services provide by the govt. are:
•Health Care
•Electricity
•Road
•Education system
•Free houses for poor
•Water supply
•Police
•Judiciary system
•Disaster relief taking care of bridge & other things for public welfare
•Taxes keep our street safe, provide our children with education, provide our families with health care, ensure our food and water are safe, create legal safeguard for business and employees , provide parks . . .
•In other word, provide us benefits every hour of the day, everyday of the year.
•
•Taxes are what we pay for a civilized society.  . . .
•Taxes are Paid,, Nations are Made.
•HOW THE GOVT. HAS POWER TO LEVY TAXES ?
•Power to levy and collect the taxes emerges from the constitution of India
•The Article, 246, 248, & 265of Constitution Of India  give power to the govt. to levy Taxes.
•
•Acc. To the Article 265, no Taxes should be levied or collected except by Authority of Law.
•Article 246, 248, divide into three List;
•List no.1: UNION LIST:
•It contain the matters on which the parliament (central govt.)has the exclusive right to make laws, Like, Income Tax, Central excise duty, central sales Tax, custom etc.
•
•List no.2: STATE LIST:
•It contains the matters on which state govt. has the exclusive right to make laws. Like state level VAT ,State exclusive duty etc.
•
•List no.3: CONCURRENT LIST:
• it contains the matters on which both central govt. and state govt. has the exclusive right to make laws. No taxation till date in this head

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