Explain the features of Indian Tax System.
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(1) Increasing importance of tax revenue:
The tax revenue collected both by the Central and state Governments have increased from Rs 460 crore In 1951-52 to Rs 10,17,107 crore in 2008-09 registering an average growth of 13.9 per cent (over the 59 years period). There has thus been a significant increase in tax revenue. However, looked at another way, the tax revenue, which formed 88.6 per cent of-the total revenue receipts in 1951-52 declined to 84.1 per cent in 2008-09.
Two possible inferences that can be drawn from these figures are:
(a) The Central and State governments have been relying less on tax revenue to finance their expenditure
(b) Revenue from non-tax sources has been increasing at a faster rate.
(2) Tax revenue as a percentage of national income:
The total tax revenue as a percentage of GDP has increased from 6.7 per cent in 1950-51 to 19.2 per cent in 2008-09. Although this is a good growth, this can be contrasted to the tax GDP ratio of developed countries, which ranges between 25 and 45 per cent.
Again, while it is likely to give the impression that our tax effort is relatively low, it should not be ignored that in a low-income country like India, a tax GDP ratio of about 20 per cent imposes quite a heavy burden on the majority of population.
(3) Structure of Taxes:
These are classified into two types, vis.
(i) direct taxes and
(ii) indirect taxes.
Direct taxes include taxes on income and property, whereas indirect taxes cover taxes on commodities and services. Important direct taxes are income tax, corporate tax and wealth tax. Important examples of indirect tax are VAT, service tax, excise duties, import duties, etc. Over the years, India’s tax structure had come to rely.
The tax revenue collected both by the Central and state Governments have increased from Rs 460 crore In 1951-52 to Rs 10,17,107 crore in 2008-09 registering an average growth of 13.9 per cent (over the 59 years period). There has thus been a significant increase in tax revenue. However, looked at another way, the tax revenue, which formed 88.6 per cent of-the total revenue receipts in 1951-52 declined to 84.1 per cent in 2008-09.
Two possible inferences that can be drawn from these figures are:
(a) The Central and State governments have been relying less on tax revenue to finance their expenditure
(b) Revenue from non-tax sources has been increasing at a faster rate.
(2) Tax revenue as a percentage of national income:
The total tax revenue as a percentage of GDP has increased from 6.7 per cent in 1950-51 to 19.2 per cent in 2008-09. Although this is a good growth, this can be contrasted to the tax GDP ratio of developed countries, which ranges between 25 and 45 per cent.
Again, while it is likely to give the impression that our tax effort is relatively low, it should not be ignored that in a low-income country like India, a tax GDP ratio of about 20 per cent imposes quite a heavy burden on the majority of population.
(3) Structure of Taxes:
These are classified into two types, vis.
(i) direct taxes and
(ii) indirect taxes.
Direct taxes include taxes on income and property, whereas indirect taxes cover taxes on commodities and services. Important direct taxes are income tax, corporate tax and wealth tax. Important examples of indirect tax are VAT, service tax, excise duties, import duties, etc. Over the years, India’s tax structure had come to rely.
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