{"id":21117,"date":"2024-01-04T07:01:11","date_gmt":"2024-01-04T07:01:11","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=21117"},"modified":"2024-03-18T10:56:50","modified_gmt":"2024-03-18T10:56:50","slug":"upsc-ncert-notes-indian-economy-indian-tax-system","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/","title":{"rendered":"UPSC NCERT Notes &#8211; Indian Economy &#8211; Indian Tax System"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-economy?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Blog+Economy\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1280\" height=\"300\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png\" alt=\"\" class=\"wp-image-42386\" srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/17-585x137.png 585w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/a><\/figure>\n\n\n\n<p>The tax system in India is designed with both the Central Government and State Governments imposing taxes. Local authorities, such as Municipalities and Local Governments, also impose minor taxes.<\/p>\n\n\n\n<p>To sustain the operations of the government and handle state affairs, finances are essential. Consequently, the government imposes various forms of taxes on the incomes of individuals and companies.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-69d769ddcc48c\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d769ddcc48c\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Tax\" title=\"Tax\">Tax<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Features_of_Tax\" title=\"Features of Tax\">Features of Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Objectives_of_Taxation\" title=\"Objectives of Taxation\">Objectives of Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Different_Types_of_Tax_Systems\" title=\"Different Types of Tax Systems\">Different Types of Tax Systems<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Terms_Related_to_Tax_System\" title=\"Terms Related to Tax System\">Terms Related to Tax System<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Laffer_Curve\" title=\"Laffer Curve\">Laffer Curve<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Types_of_Tax\" title=\"Types of Tax\">Types of Tax<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Classification_of_Direct_and_Indirect_Taxes\" title=\"Classification of Direct and Indirect Taxes\">Classification of Direct and Indirect Taxes<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Central_Government_Taxes\" title=\"Central Government Taxes\">Central Government Taxes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#State_Government_Taxes\" title=\"State Government Taxes\">State Government Taxes<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Direct_Tax\" title=\"Direct Tax\">Direct Tax<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Corporate_Tax\" title=\"Corporate Tax\">Corporate Tax<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Wealth_Tax\" title=\"Wealth Tax\">Wealth Tax<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Gift_Tax\" title=\"Gift Tax\">Gift Tax<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Interest_Tax\" title=\"Interest Tax\">Interest Tax<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Recent_Initiatives_for_Direct_Taxes\" title=\"Recent Initiatives for Direct Taxes\">Recent Initiatives for Direct Taxes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Equalisation_Levy\" title=\"Equalisation Levy\">Equalisation Levy<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Indirect_Tax\" title=\"Indirect Tax\">Indirect Tax<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Central_Excise_Duties\" title=\"Central Excise Duties:\">Central Excise Duties:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Value_Added_Tax_VAT\" title=\"Value Added Tax (VAT):\">Value Added Tax (VAT):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Central_Value_Added_Tax_CENVAT\" title=\"Central Value Added Tax (CENVAT):\">Central Value Added Tax (CENVAT):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Custom_Duties\" title=\"Custom Duties:\">Custom Duties:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Service_Tax\" title=\"Service Tax:\">Service Tax:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Surplus_Budget\" title=\"Surplus Budget:\">Surplus Budget:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Ways_and_Means_Advances_WMA\" title=\"Ways and Means Advances (WMA):\">Ways and Means Advances (WMA):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Goods_and_Services_Tax_GST\" title=\"Goods and Services Tax (GST)\">Goods and Services Tax (GST)<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Key_Features_of_GST\" title=\"Key Features of GST:\">Key Features of GST:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Taxes_Replaced_by_GST\" title=\"Taxes Replaced by GST:\">Taxes Replaced by GST:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Types_of_GST\" title=\"Types of GST:\">Types of GST:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Taxes_Excluded_from_GST\" title=\"Taxes Excluded from GST\">Taxes Excluded from GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Advantages_of_GST\" title=\"Advantages of GST:\">Advantages of GST:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#GST_Council\" title=\"GST Council:\">GST Council:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Members\" title=\"Members:\">Members:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-34\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Functions\" title=\"Functions:\">Functions:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-35\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Tax_Reform_Committees\" title=\"Tax Reform Committees:\">Tax Reform Committees:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-36\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#1_Taxation_Enquiry_Commission_1953-54\" title=\"1. Taxation Enquiry Commission (1953-54):\">1. Taxation Enquiry Commission (1953-54):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-37\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#2_Tax_Reform_Committee_1956\" title=\"2. Tax Reform Committee (1956):\">2. Tax Reform Committee (1956):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-38\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#3_Mahavir_Tyagi_Committee_1968\" title=\"3. Mahavir Tyagi Committee (1968):\">3. Mahavir Tyagi Committee (1968):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-39\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#4_KN_Wanchoo_Committee_1970\" title=\"4. KN Wanchoo Committee (1970):\">4. KN Wanchoo Committee (1970):<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-40\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Committee_on_Taxation_of_Agricultural_Property_Income\" title=\"Committee on Taxation of Agricultural Property Income:\">Committee on Taxation of Agricultural Property Income:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-41\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Major_Recommendations\" title=\"Major Recommendations:\">Major Recommendations:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-42\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Parthasarathi_Shome_Committee_2014\" title=\"Parthasarathi Shome Committee (2014):\">Parthasarathi Shome Committee (2014):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-43\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#RV_Easwar_Committee_2015\" title=\"RV Easwar Committee (2015):\">RV Easwar Committee (2015):<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-44\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Main_Recommendations\" title=\"Main Recommendations:\">Main Recommendations:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-45\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Major_Recommendations-2\" title=\"Major Recommendations:\">Major Recommendations:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-46\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#MK_Gupta_Committee_2012\" title=\"MK Gupta Committee (2012):\">MK Gupta Committee (2012):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-47\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Important_Terms_Related_to_Taxation\" title=\"Important Terms Related to Taxation\">Important Terms Related to Taxation<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-48\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Tax-Related_Primary_Concepts\" title=\"Tax-Related Primary Concepts\">Tax-Related Primary Concepts<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-49\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Tax_Evasion\" title=\"Tax Evasion&nbsp;\">Tax Evasion&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-50\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Tax_Avoidance\" title=\"Tax Avoidance\">Tax Avoidance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-51\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Other_Concepts_Related_to_Tax\" title=\"Other Concepts Related to Tax\">Other Concepts Related to Tax<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-52\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Direct_Tax_Code_DTC\" title=\"Direct Tax Code (DTC)&nbsp;\">Direct Tax Code (DTC)&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-53\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#National_Anti-Profiteering_Authority\" title=\"National Anti-Profiteering Authority\">National Anti-Profiteering Authority<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-54\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#General_Anti-Avoidance_Rule_GAAR\" title=\"General Anti-Avoidance Rule (GAAR):\">General Anti-Avoidance Rule (GAAR):<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-55\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Non-Tax_Revenue\" title=\"Non-Tax Revenue:\">Non-Tax Revenue:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-56\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Sources_of_Revenue\" title=\"Sources of Revenue\">Sources of Revenue<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-57\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Revenue_from_Public_Enterprises\" title=\"Revenue from Public Enterprises:\">Revenue from Public Enterprises:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-58\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Finance_Commission\" title=\"Finance Commission:\">Finance Commission:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-59\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Objectives_of_the_Finance_Commission\" title=\"Objectives of the Finance Commission\">Objectives of the Finance Commission<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-60\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#15th_Finance_Commission\" title=\"15th Finance Commission:\">15th Finance Commission:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-61\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Recommendations_of_the_15th_Finance_Commission\" title=\"Recommendations of the 15th Finance Commission:\">Recommendations of the 15th Finance Commission:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-62\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#14th_Finance_Commission\" title=\"14th Finance Commission:\">14th Finance Commission:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-63\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Recommendations_of_the_14th_Finance_Commission\" title=\"Recommendations of the 14th Finance Commission:\">Recommendations of the 14th Finance Commission:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-64\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Committees_About_Finance\" title=\"Committees About Finance:\">Committees About Finance:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-65\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Rangarajan_Committee_2011\" title=\"Rangarajan Committee 2011:\">Rangarajan Committee 2011:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-66\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Kelkar_Committee\" title=\"Kelkar Committee:\">Kelkar Committee:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-67\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Prelims_Facts\" title=\"Prelims Facts\">Prelims Facts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-68\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#UPSC_NCERT_Practice_Questions\" title=\"UPSC NCERT Practice Questions\">UPSC NCERT Practice Questions<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-69\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#1_Which_of_the_following_statements_are_true_for_the_income_tax_in_India\" title=\"1. Which of the following statements are true for the income tax in India?\">1. Which of the following statements are true for the income tax in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-70\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#2_Corporation_tax\" title=\"2. Corporation tax\">2. Corporation tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-71\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#3_Which_of_the_following_is_not_a_direct_tax_in_India_UKPSC_Pre_2021\" title=\"3. Which of the following is not a direct tax in India? UKPSC (Pre) 2021\">3. Which of the following is not a direct tax in India? UKPSC (Pre) 2021<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-72\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#4_CENVAT_is_related_with\" title=\"4. CENVAT is related with\">4. CENVAT is related with<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-73\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#5_Which_of_the_following_Union_Government_taxes_is_not_levied_by_the_Union_Government\" title=\"5. Which of the following Union Government? taxes is not levied by the Union Government?\">5. Which of the following Union Government? taxes is not levied by the Union Government?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-74\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#6_Consider_the_following_important_sources_of_tax_revenue_for_the_Central_Government_in_India_RASRTS_Pre_2016\" title=\"6. Consider the following important sources of tax revenue for the Central Government in India. RAS\/RTS (Pre) 2016\">6. Consider the following important sources of tax revenue for the Central Government in India. RAS\/RTS (Pre) 2016<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-75\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#7_Which_one_of_the_following_is_not_related_with_income_from_corporate_sector_in_India\" title=\"7. Which one of the following is not related with income from corporate sector in India?\">7. Which one of the following is not related with income from corporate sector in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-76\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#8_Which_one_of_the_following_taxes_is_the_largest_source_of_revenue_in_India\" title=\"8. Which one of the following taxes is the largest source of revenue in India?\">8. Which one of the following taxes is the largest source of revenue in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-77\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#9_Which_one_of_the_following_is_not_related_to_the_income_of_the_corporate_sector_in_India\" title=\"9. Which one of the following is not related to the income of the corporate sector in India?\">9. Which one of the following is not related to the income of the corporate sector in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-78\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#10_Which_among_the_following_taxes_is_not_shared_by_the_Central_Government_with_Uttar_Pradesh_Government_under_the_Finance_Commission_Award\" title=\"10. Which among the following taxes is not shared by the Central Government with Uttar Pradesh Government under the Finance Commission Award?\">10. Which among the following taxes is not shared by the Central Government with Uttar Pradesh Government under the Finance Commission Award?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-79\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#11_Consider_the_following_taxes\" title=\"11. Consider the following taxes.\">11. Consider the following taxes.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-80\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#12_Which_of_the_following_tax_is_not_included_in_the_Goods_and_Services_Tax_GST_CGPSC_Pre_2020\" title=\"12. Which of the following tax is not included in the Goods and Services Tax (GST)? CGPSC (Pre) 2020\">12. Which of the following tax is not included in the Goods and Services Tax (GST)? CGPSC (Pre) 2020<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-81\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#13_Which_of_the_following_statements_given_below_isare_correct\" title=\"13. Which of the following statement(s) given below is\/are correct?\">13. Which of the following statement(s) given below is\/are correct?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-82\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#14_The_non-plan_grants_to_the_states_by_the_Central_Government_are_made_on_the_recommendations_of_UPPSC_Mains_2017\" title=\"14. The non-plan grants to the states by the Central Government are made on the recommendations of UPPSC (Mains) 2017\">14. The non-plan grants to the states by the Central Government are made on the recommendations of UPPSC (Mains) 2017<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-83\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#15_Who_among_the_following_was_the_Chairman_of_the_First_Finance_Commission_of_India_UPPSC_Pre_2021\" title=\"15. Who among the following was the Chairman of the First Finance Commission of India? UPPSC (Pre) 2021\">15. Who among the following was the Chairman of the First Finance Commission of India? UPPSC (Pre) 2021<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-84\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#16_Consider_the_following_statements_IAS_Pre_2023\" title=\"16. Consider the following statements IAS (Pre) 2023\">16. Consider the following statements IAS (Pre) 2023<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-85\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#17_Consider_the_following\" title=\"17. Consider the following:\">17. Consider the following:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-86\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#18_With_reference_to_Union_Finance_Commission_which_of_the_following_statements_isare_correct\" title=\"18. With reference to Union Finance Commission, which of the following statement(s) is\/are correct?\">18. With reference to Union Finance Commission, which of the following statement(s) is\/are correct?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-87\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Know_Right_Answer\" title=\"Know Right Answer\">Know Right Answer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-88\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Frequently_Asked_Questions_FAQs\" title=\"Frequently Asked Questions (FAQs)\">Frequently Asked Questions (FAQs)<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-89\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Q1_What_is_the_role_of_taxation_in_the_Indian_economy\" title=\"Q1: What is the role of taxation in the Indian economy?\">Q1: What is the role of taxation in the Indian economy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-90\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Q2_How_does_the_Goods_and_Services_Tax_GST_impact_the_Indian_economy\" title=\"Q2: How does the Goods and Services Tax (GST) impact the Indian economy?\">Q2: How does the Goods and Services Tax (GST) impact the Indian economy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-91\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Q3_What_is_the_significance_of_fiscal_policy_in_the_context_of_the_Indian_tax_system\" title=\"Q3: What is the significance of fiscal policy in the context of the Indian tax system?\">Q3: What is the significance of fiscal policy in the context of the Indian tax system?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-92\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-93\" href=\"https:\/\/edukemy.com\/blog\/upsc-ncert-notes-indian-economy-indian-tax-system\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;\u00a0here\">Visit our YouTube Channel &#8211;\u00a0here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax\"><\/span>Tax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Tax is a mandatory contribution to state revenue levied by the Indian Government on workers&#8217; income, and corporate gains, and added to the cost of specific transactions, commodities, and services.<\/li><li>The government collects taxes to generate revenue for initiatives that enhance the country&#8217;s economy and elevate citizens&#8217; living standards.<\/li><li>In India, the authority to levy taxes is derived from the<strong> Indian Constitution<\/strong>, granting equal jurisdiction to the State and Central Governments for imposing taxes.<\/li><li>Every tax imposed in the country must be accompanied by an accompanying law passed by the State Legislature or the Parliament.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Features_of_Tax\"><\/span>Features of Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Tax is a compulsory payment imposed on citizens, and failure to pay it is a punishable offense.<\/li><li>There is no direct<strong> quid-pro-quo <\/strong>between taxpayers and public authorities.<\/li><li>Taxes are levied to meet public expenditure incurred by the government for the general interest of the nation.<\/li><li>A tax is a recurring and periodic payment established by the taxing authority.<\/li><li>A tax is a legally mandated collection.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Objectives_of_Taxation\"><\/span>Objectives of Taxation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The objectives and significance of taxation are outlined as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Economic Development:<\/strong> Taxation serves as a resource mobilization tool for economic development. Governments use tax revenues to boost both public and private investment, contributing to increased savings in the national income.<\/li><li><strong>Income Redistribution:<\/strong> Taxation aims to reduce inequalities in income and wealth distribution.<\/li><li><strong>Employment Boost:<\/strong> Effective demand for employment depends on the country&#8217;s ability to achieve full employment, which may be facilitated by reducing tax rates. Lower taxes result in increased disposable income, leading to a rise in demand for goods and services. This heightened demand stimulates investment, thereby fostering income and employment growth through the multiplier effect.<\/li><li><strong>Price Stability: <\/strong>Taxes serve as an effective tool for controlling inflation. By increasing direct taxes, private spending can be regulated, reducing pressure on the commodity market. However, indirect taxes on commodities can fuel inflationary tendencies, with high commodity prices discouraging consumption and encouraging saving. Conversely, lowering taxes during deflation can have the opposite effect.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table><tbody><tr><td><strong>Difference between Cess and Surcharge<\/strong><\/td><td><strong>Cess<\/strong><\/td><td><strong>Surcharge<\/strong><\/td><\/tr><tr><td>Definition<\/td><td>An additional tax is levied on the tax base.<\/td><td>Other tax levied on the rate of tax is tax surcharge.<\/td><\/tr><tr><td>Purpose<\/td><td>Imposed for a particular purpose.<\/td><td>Particular purpose is not necessary for this tax.<\/td><\/tr><tr><td>Applicability<\/td><td>Levied on both direct tax and indirect tax.<\/td><td>Levied on income tax and some other taxes.<\/td><\/tr><tr><td>Link to Amount<\/td><td>The amount is linked to a certain item.<\/td><td>N\/A<\/td><\/tr><tr><td>Destination of Revenue<\/td><td>The revenue from the cess is allocated to a specific fund for the designated purpose.<\/td><td>The revenue from the surcharge goes to the Consolidated Fund of India.<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Different_Types_of_Tax_Systems\"><\/span>Different Types of Tax Systems<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Progressive Taxation <\/strong>Progressive tax is the authem taxing mechanism in which the taxing a charges more taxes as the income of the tax increases.&nbsp;<\/li><li>A higher tax is collected from the taxpayers w earn more and lower taxes from taxpayers eas less. The government uses a mechanism<\/li><li><strong>Regressive Taxation <\/strong>Under this system of taxation, the tax rate diminishes as the taxable amount increases. In other words, there is an inverse relationship between the tax rate and taxable income.<\/li><li>The rate of taxation decreases as the income ur taxpayers increases. This system of taxation gerterally benefits the higher sections of the society having higher incomes as they need to pe tax at lesser rates.<\/li><li>On the other hand, people with lesser incomes are burdened with higher rate of taxation.<\/li><li><strong>Proportional Taxation <\/strong>Proportional tax is the taxing mechanism in which the taxing authori charges the same rate of tax from each taxpaye irrespective of income.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Terms_Related_to_Tax_System\"><\/span>Terms Related to Tax System<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Tax Impact <\/strong>: The impact of a tax is the initial point where the tax is imposed. For example, when a tax is levied on production (excise duty) of a commodity, the manufacturer bears the impact, but the tax burden is later shifted to the ultimate consumer through the commodity&#8217;s price. Here, the impact is on the manufacturer, while the incidence is on the consumer.<\/li><li><strong>Tax Shifting<\/strong> : Tax shifting refers to the process of transferring the burden (payment) of a tax from one entity to another. For instance, in the case of GST, the tax burden is ultimately shifted from the producer to the consumer. The manufacturer shifts the tax burden to the ultimate consumer.<\/li><li><strong>Tax Incidence:<\/strong> Incidence is the ultimate point where the burden of a tax settles. It indicates who ultimately bears the tax burden. In the case of direct taxes like personal income tax, the impact and incidence are on the income earner. Nobody else bears the burden of the tax on their behalf. In contrast, with indirect taxes, some business firms may bear a portion of the tax to enhance sales by providing concessions to consumers. This results in a backward shifting of tax, which is not possible with personal income tax.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Laffer_Curve\"><\/span>Laffer Curve<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The Laffer curve illustrates the relationship between tax rates and government revenue levels. Introduced by economist Arthur Laffer in 1979, the curve suggests that tax revenue increases with higher tax rates, up to a certain point. It is based on the principle that lowering tax rates stimulates economic growth, leading to increased spending, business activity, and employment opportunities, ultimately offsetting revenue losses caused by tax cuts.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Tax\"><\/span>Types of Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Taxes<\/strong> can be categorized as<strong> Direct<\/strong> or <strong>Indirect<\/strong>. Examples of direct taxes include income tax, wealth tax, gift tax, etc., while sales taxes, excise duty, customs duty, etc., are examples of indirect taxes.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Classification_of_Direct_and_Indirect_Taxes\"><\/span>Classification of Direct and Indirect Taxes<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Central_Government_Taxes\"><\/span>Central Government Taxes<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Direct Tax:<\/strong> Income tax, Corporate tax, Expenditure tax, Wealth tax, Capital Gains tax, Dividend Distribution tax, Interest tax, Gift tax, Estate tax duty, FBT, Banking cash transaction tax, Securities transaction tax, Commodity transaction tax, etc.<\/li><li><strong>Indirect Tax:<\/strong> Custom duty, Central Excise duty, Goods and Services tax, Union Sales tax, etc.<\/li><\/ul>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"State_Government_Taxes\"><\/span>State Government Taxes<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Direct Tax:<\/strong> Business tax\/sales tax, stamp and registration fee, state excise duty, Sales tax on Diesel\/Petrol, tax on the vehicle, tax on transport, entry tax, advertising tax, taxes and duties on electricity, education cess, tax on betting.<\/li><li><strong>Indirect Tax:<\/strong> Land revenue tax, tax on agricultural income, tax on hotel receipts, business tax, tax on fixed assets, tax on employment, toll tax, etc.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Direct_Tax\"><\/span>Direct Tax<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>A direct tax is one that is borne by the person on whom it is levied and cannot be shifted to another person.<\/li><li>The impact and incidence of a direct tax are on the same person, resulting in a direct financial burden.<\/li><li>Direct taxes have accounted for over half of total tax revenue since 2007 to 2008, with examples including <strong>Income Tax<\/strong>, levied directly on the income of individuals by the Central Government, where income sources are considered for taxation.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Corporate_Tax\"><\/span>Corporate Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Levied on the profit of companies or corporations, with a rate of 25% for turnover up to 250 crores and 30% for turnover above 250 crores as of June 2021.<\/li><li>To prevent tax avoidance, Minimum Alternate Tax (MAT) at 15% of book profit is imposed.<\/li><li>A significant revenue source for the Central Government, contributing approximately 18% of the total revenue.<\/li><li>The Budget 2022-2023 proposes a 15% Corporate tax rate available until March 2024 for newly incorporated manufacturing units.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Wealth_Tax\"><\/span>Wealth Tax<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Primarily imposed to reduce wealth concentration in society, wealth tax was levied on the net wealth of individuals, Hindu Undivided Family, and joint-stock companies.<\/li><li>Calculated based on net wealth, where liabilities are deducted from the market value.<\/li><li>Abolished by former Finance Minister Arun Jaitley in Budget 2015.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gift_Tax\"><\/span>Gift Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Imposed by the Central Government on donations and gifts exceeding prescribed limits to family members.<\/li><li>Exempts donations from charitable institutions and companies.<\/li><li>Aims to prevent evasion of estate duty and wealth tax.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Interest_Tax\"><\/span>Interest Tax<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Imposed on the interest income of commercial banks on their gross loans and advances.<\/li><li>Currently not in force in India.<\/li><\/ul>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recent_Initiatives_for_Direct_Taxes\"><\/span>Recent Initiatives for Direct Taxes<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Minimum Alternate Tax (MAT)<\/strong> extended to non-company assets to broaden the tax base.<\/li><li>Introduction of the Advance Pricing Agreement (APA) scheme to enhance certainty and reduce litigation in transfer pricing and international taxation matters.<\/li><\/ul>\n\n\n\n<h5 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Equalisation_Levy\"><\/span>Equalisation Levy<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<ul class=\"wp-block-list\"><li>A direct tax targeting digital transactions and income accruing to foreign e-commerce companies from India.<\/li><li>Covers online advertisements and provisions for digital advertising space or facilities. Introduced in India in 2016.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Indirect_Tax\"><\/span>Indirect Tax<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Taxes with their primary impact on one person but with the ability to shift the burden to others.<\/li><li>Indirect taxes, also known as consumption taxes, are those where the impact is on one person, but the incidence is borne by a third party. In India, examples of indirect taxes include sales tax, excise duty, and custom duty.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Central_Excise_Duties\"><\/span>Central Excise Duties:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Imposed by the Central Government on goods produced within the country, excluding certain items under State Government jurisdiction like<strong> liquor and drugs.<\/strong><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Value_Added_Tax_VAT\"><\/span>Value Added Tax (VAT):<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>A multi-point sales tax with set-off for tax paid on input purchases, eliminating the cascading effect.<\/li><li>Levied on the value of the product and consumption, with the total burden borne by the consumer.<\/li><li>VAT replaces the sales tax in states, merging several indirect taxes.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Central_Value_Added_Tax_CENVAT\"><\/span>Central Value Added Tax (CENVAT):<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Aims to eliminate cascading effects through a Tax Credit System.<\/li><li>Allows manufacturers and service providers to take credit for excise duty and service tax paid on inputs.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Custom_Duties\"><\/span>Custom Duties:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Imposed on commodities imported or exported from India, contributing significantly to government revenue.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Service_Tax\"><\/span>Service Tax:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Introduced in India in 1994-1995, levied on individuals availing specified services.<\/li><li>An increasingly important revenue source, with the service tax net expanding over the years.<\/li><li>Reforms in Budget 2014-2015 expanded the scope of services covered under the service tax.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Surplus_Budget\"><\/span>Surplus Budget:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Occurs when the revenue for the financial year exceeds anticipated expenditures.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ways_and_Means_Advances_WMA\"><\/span>Ways and Means Advances (WMA):<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Provided by the Reserve Bank of India (RBI) to states banking with it to address temporary mismatches in their cash flow.<\/li><li>Governed by the RBI Act, 1934, with repayments due within three months.<\/li><\/ul>\n\n\n\n<p>Includes normal and special types of WMA.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table><tbody><tr><td><strong>Applicable Year<\/strong><\/td><td><strong>Specific Facts<\/strong><\/td><\/tr><tr><td>1953<\/td><td>Property Taxes<\/td><\/tr><tr><td>1957<\/td><td>Income Tax<\/td><\/tr><tr><td>1960<\/td><td>Corporation Tax<\/td><\/tr><tr><td>1960-61<\/td><td>Custom Duty<\/td><\/tr><tr><td>1962<\/td><td>Agriculture Income Tax<\/td><\/tr><tr><td>1972<\/td><td>Expense Tax<\/td><\/tr><tr><td>1957<\/td><td>Service Tax<\/td><\/tr><tr><td>1994-95<\/td><td>Securities Trading Tax<\/td><\/tr><tr><td>1985<\/td><td>Abolished (Year not specified)<\/td><\/tr><tr><td>2004-05<\/td><td>Re-implemented<\/td><\/tr><tr><td>2004-05<\/td><td>Implemented on the recommendation of N Nichols<\/td><\/tr><tr><td>Not specified<\/td><td>Recommendation of KR Raj Committee (Not yet implemented)<\/td><\/tr><tr><td>Not specified<\/td><td>\u0644\u0644\u0647<\/td><\/tr><tr><td>Not specified<\/td><td>Implemented on the recommendation of N Nichols<\/td><\/tr><tr><td>Not specified<\/td><td>Implemented on the recommendation of Chelliah Committee<\/td><\/tr><tr><td>2004-05<\/td><td>Implemented by P Chidambaram in 2004-05<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Goods_and_Services_Tax_GST\"><\/span>Goods and Services Tax (GST)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Goods and Services Tax (GST) is an indirect tax applicable in India on the supply of goods and services.<\/li><li>It serves as a comprehensive, multistage, destination-based tax, encompassing almost all indirect taxes, with a few exceptions for state and local taxes.&nbsp;<\/li><li>Implemented by the Government of India from July 1, 2017, GST aims to create a unified market by replacing multiple indirect taxes with a single tax, applicable to both goods and services. The tax rates for GST were categorized into four brackets: 5%, 12%, 18%, and 28%.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Features_of_GST\"><\/span>Key Features of GST:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Dual Components:<\/strong> It comprises Central GST (CGST) and State GST (SGST) levied by the Centre and States, respectively.<\/li><li><strong>Applicability:<\/strong> GST is applicable to all transactions involving goods and services, excluding exempted items and those of basic importance.<\/li><li><strong>Rates: <\/strong>Different rates are prescribed, including a standard rate for most goods and services, a special rate for precious metals, and a list of exempted items.<\/li><li><strong>Import:<\/strong> GST is levied on the import of goods and services into the country.<\/li><li><strong>Administration:<\/strong> Central GST is administered by the Centre, and State GST is administered by the States.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxes_Replaced_by_GST\"><\/span>Taxes Replaced by GST:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Central Taxes:<\/strong> Central Excise Duty, Additional Duties of Excise and Customs, Special Additional Duty of Customs (SAD), Service Tax, and various Cesses and Surcharges.<\/li><li><strong>State Taxes:<\/strong> VAT, Central Sales Tax, Purchase Tax, Luxury Tax, Entry Tax, Entertainment Tax, Taxes on advertisements, lotteries, betting, gambling, and State Cesses and Surcharges.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_GST\"><\/span>Types of GST:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Central GST (CGST): <\/strong>Imposed by the Central Government on the supply of goods and services.<\/li><li><strong>State GST (SGST):<\/strong> SGST refers to the taxes imposed and collected by the State Government on goods and services. Previously, State Governments levied taxes such as VAT, purchase tax, entry tax, entertainment tax, advertisement tax, State excise, and related surcharges. All these taxes are now subsumed under SGST.<\/li><li><strong>Integrated GST (IGST): <\/strong>The proposed Goods and Services Tax includes an Integrated GST (IGST), levied on international commodities and services. IGST is imposed and collected by the Central Government. The taxes collected under IGST are distributed to the states to compensate for the revenue loss incurred.<\/li><li><strong>Union Territory GST (UTGST): <\/strong>UTGST is applicable in Union Territories without Legislative Assemblies, such as Andaman and Nicobar Islands, Dadra and Nagar Haveli and Daman and Diu (DNHDD), and Ladakh. In these Union Territories, the Central Government has the authority to levy and collect taxes.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxes_Excluded_from_GST\"><\/span>Taxes Excluded from GST<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Certain items, such as alcohol, real estate, crude oil, petrol, natural gas, and turbine fuel, are not included in the provisions of GST. These items continue to be governed by the existing taxation system.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_GST\"><\/span>Advantages of GST:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Easy Compliance: <\/strong>GST introduces a robust IT system, making taxpayer services, such as registrations and returns, available online for easy and transparent compliance.<\/li><li><strong>Uniformity of Tax Rates: <\/strong>GST ensures common indirect tax rates and structures across the country, promoting certainty and ease of doing business.<\/li><li><strong>Removal of Cascading: <\/strong>The seamless transfer of input tax credits minimizes cascading of taxes, reducing hidden business costs.<\/li><li><strong>Improved Competitiveness: <\/strong>Lower transaction costs enhance competitiveness, and the dismantling of inter-state check-posts is a crucial reform for India&#8217;s manufacturing sector.<\/li><li><strong>Gain to Manufacturers and Exporters: <\/strong>Subsuming major Central and State taxes in GST, comprehensive set-off of input goods and services, and phasing out of Central Sales Tax (CST) reduce the cost of locally manufactured goods and services.<\/li><li><strong>Simple and Easy to Administer:<\/strong> With multiple indirect taxes replaced by GST, backed by a robust IT system, administration becomes simpler.<\/li><li><strong>Better Controls on Leakage: <\/strong>GST&#8217;s design incentivizes tax compliance by traders, resulting in better tax compliance.<\/li><li><strong>Higher Revenue Efficiency:<\/strong> GST is expected to decrease the cost of tax revenue collection, leading to higher revenue efficiency.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_Council\"><\/span>GST Council:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The GST regime was implemented after the Constitutional <strong>(122nd Amendment)<\/strong> Bill was passed by both Houses of Parliament in 2016, ratified by more than 15 Indian states, and received the President&#8217;s assent. The GST Council oversees the implementation and functioning of the GST system.<\/li><li>The GST Council is a collaborative platform comprising representatives from both the Centre and the States, established by the President under Article 279(A) (1) of the amended Constitution.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Members\"><\/span>Members:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>The council includes the Union Finance Minister (as Chairperson), and the Union Minister of State (Finance) from the Centre. Additionally, each state has the authority to nominate a Minister responsible for finance, taxation, or any other relevant Minister as a member.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Functions\"><\/span>Functions:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>According to Article 279, the Council is tasked with providing recommendations to both the Union and the States on crucial GST-related matters.<\/li><li>This encompasses decisions on the inclusion or exemption of goods and services from GST, formulation of model GST Laws, and determining various GST rate slabs.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-cse-gs-integrated-course?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=GS+Integrated\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" width=\"1280\" height=\"300\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/8.png\" alt=\"\" class=\"wp-image-42401 lazyload\" data-srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/8.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/8-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/8-585x137.png 585w\" data-sizes=\"(max-width: 1280px) 100vw, 1280px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1280px; --smush-placeholder-aspect-ratio: 1280\/300;\" \/><\/a><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_Reform_Committees\"><\/span>Tax Reform Committees:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Several committees have played pivotal roles in shaping tax reforms in India:<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Taxation_Enquiry_Commission_1953-54\"><\/span>1. Taxation Enquiry Commission (1953-54):<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Emphasized the need to broaden the base of excise duties for a stable tax structure.<\/li><li>Chaired by John Mathai, it addressed issues related to taxation at the Centre, State, and Local levels.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Tax_Reform_Committee_1956\"><\/span>2. Tax Reform Committee (1956):<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Headed by Nicolas Fedor, it focused on direct taxation matters.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Mahavir_Tyagi_Committee_1968\"><\/span>3. Mahavir Tyagi Committee (1968):<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Under the Chairmanship of Mahavir Tyagi, it aimed to address evasion issues and enhance fiscal structure effectiveness.<\/li><li>Recommended the introduction of a <strong>Permanent Account Number<\/strong> (PAN) for taxpayers, implemented in 1972.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_KN_Wanchoo_Committee_1970\"><\/span>4. KN Wanchoo Committee (1970):<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Formed to rationalize and simplify the tax structure.<\/li><li>Recommended the establishment of the <strong>Income-Tax Settlement Commission<\/strong> as an alternative dispute resolution body.<\/li><li>Focused on bringing out black money, reviewing concessions under corporation tax, and reforming tax administration.<\/li><li>Presented its report in 1972, critiquing the prevailing control and licensing system.<\/li><li>These committees have played crucial roles in shaping India&#8217;s tax policies and administration over the years.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Committee_on_Taxation_of_Agricultural_Property_Income\"><\/span>Committee on Taxation of Agricultural Property Income:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Central Government, recognizing the complexity surrounding agricultural taxation, established the committee under the leadership of Dr. KN Raj in February 1972. Tasked with examining the taxation of agricultural wealth and income comprehensively, the Raj Committee presented its findings in October 1972.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Major_Recommendations\"><\/span>Major Recommendations:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Introduction of Agricultural Holdings Tax (AHT) on agriculturists.<\/li><li>Inclusion of income from agriculture in the total income for non-agricultural tax-paying assessees.<\/li><li>Taxation of income from livestock, poultry, dairy farming, etc.<\/li><li>Implementation of integrated taxation on agricultural property through wealth tax.<\/li><li>Imposition of capital gains tax on land transfers.<\/li><li>Direct Taxation Reform Committee (1978):<ul><li>Under the leadership of CC Choksey, the committee was formed in 1978, focusing on filing returns and suggesting reforms in direct taxation.<\/li><\/ul><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Parthasarathi_Shome_Committee_2014\"><\/span>Parthasarathi Shome Committee (2014):<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>In 2014, the committee, chaired by Partha Sarathi Som, was established for administration reform and direct tax reform.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"RV_Easwar_Committee_2015\"><\/span>RV Easwar Committee (2015):<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>An expert committee led by Justice (retired) RV Easwar submitted a report to the Union Finance Ministry in 2015. Recommendations aimed at simplifying income tax laws, especially provisions related to Tax Deduction at Source (TDS), tax refunds, and expenditure claims.<\/li><li>Raja J Chelliah Committee (1991-1992):<\/li><\/ul>\n\n\n\n<p>Appointed in 1991, the Chelliah Committee focused on making the tax system more elastic and broad-based, simplifying existing laws, and ensuring easier enforcement and compliance.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Main_Recommendations\"><\/span>Main Recommendations:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Acceptable tax system and burden for taxpayers.<\/li><li>Maximum income tax rate not exceeding 40% of total income.<\/li><li>More income-elastic tax system.<\/li><li>Reduced tax rates for foreign companies.<\/li><li>Concessions for Special Economic Zones (SEZs) and tax exemptions for export projects.<\/li><li>Dr Vijay L Kelkar Committee (2002):<\/li><\/ul>\n\n\n\n<p>Tasked with simplifying and rationalizing direct and indirect taxes, the Kelkar Committee submitted its final report in December 2002.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Major_Recommendations-2\"><\/span>Major Recommendations:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>Increase the exemption limit to 1 lakh for general taxpayers.<\/li><li>Raise the exemption limit to 1,50,000 for women and senior citizens.<\/li><li>Abolish surcharge on personal income tax.<\/li><li>Propose two rates of personal income tax (20% for income up to 4 lakh, and 30% for income exceeding 4 lakh).<\/li><li>Advocate uniformity in all State Legislations relating to VAT.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MK_Gupta_Committee_2012\"><\/span>MK Gupta Committee (2012):<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Established in 2012 under the leadership of MK Gupta, the former Vice-chairman of the Customs and Central Excise Settlement Commission. The government tasked this committee with developing a uniform Common Tax Code to streamline and coordinate excise duty and service tax with GST.<\/li><li>High Level Committee for Direct Tax (2015):<\/li><\/ul>\n\n\n\n<p>In response to the complexities surrounding direct taxes, the Ministry of Finance formed a High Level Committee chaired by Mr. A P Shah on May 20, 2015. Mr. Shah, the Chairman of the 20th Law Commission, played a pivotal role in addressing issues related to direct taxes.<\/p>\n\n\n\n<p><strong>Recommendation:<\/strong> The committee suggested resolving disputes related to Minimum Alternative Tax (MAT) on Foreign Institutional Investors (FIIs).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Important_Terms_Related_to_Taxation\"><\/span>Important Terms Related to Taxation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table><tbody><tr><td><strong>Terms<\/strong><\/td><td><strong>Description<\/strong><\/td><\/tr><tr><td>Tax Haven<\/td><td>A country or territory with low or no taxes, leading to revenue loss for governments and potential issues like money laundering. Examples include Cayman Islands, Gibraltar, and Liechtenstein.<\/td><\/tr><tr><td>Pigouvian Tax<\/td><td>Imposed on activities with negative externalities, such as carbon tax to address pollution.<\/td><\/tr><tr><td>Tobin Tax<\/td><td>A tax on foreign exchange transactions to control speculative flows, applied when capital enters or leaves a country.<\/td><\/tr><tr><td>Transfer Pricing<\/td><td>The price at which divisions of a company transact with each other, often used when treating individual entities as separate entities.<\/td><\/tr><tr><td>Specific Duty<\/td><td>Tax levied based on weight or quantity of a product.<\/td><\/tr><tr><td>Ad Valorem<\/td><td>Tax levied based on the value of a product, not its weight or quantity.<\/td><\/tr><tr><td>Withholding Tax<\/td><td>Withholding a portion of certain payments (e.g., salary, contractor payments) at the source, similar to Tax Deducted at Source (TDS).<\/td><\/tr><tr><td>Capital Gains Tax<\/td><td>Tax on gains from buying and selling assets like land or shares, with a distinction between short-term and long-term capital gains.<\/td><\/tr><tr><td>Base Erosion and Profit Shifting (BEPS)<\/td><td>Strategies that exploit gaps in tax rules to artificially shift profits to low-tax locations, impacting developing countries relying heavily on corporate income tax.<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax-Related_Primary_Concepts\"><\/span>Tax-Related Primary Concepts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_Evasion\"><\/span>Tax Evasion&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Definition:<\/strong> The illegal act of evading taxes by individuals, corporations, and trusts, involving deliberate misrepresentation of their financial state to tax authorities.<\/li><li><strong>Activities:<\/strong> Deliberate underreporting of income, profits, or gains, as well as overstating deductions to reduce tax liability.<\/li><li><strong>Definition:<\/strong> Transferring some or all of the tax burden of an entity (e.g., a subsidiary) to another entity (e.g., the parent firm).<\/li><li><strong>Tax Shift or Tax Swap:<\/strong> A change in taxation that eliminates or reduces certain taxes while establishing or increasing others, with the overall revenue remaining unchanged.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_Avoidance\"><\/span>Tax Avoidance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Definition:<\/strong> The legal use of the tax regime to one&#8217;s advantage, within the bounds of the law, to minimize the amount of payable tax.<\/li><li><strong>Related Terms:<\/strong> Tax mitigation (used as an alternative to the pejorative term tax avoidance), tax havens (jurisdictions facilitating reduced taxes).<\/li><li><strong>Definition:<\/strong> A term denoting the flexibility of a government in its spending choices and financial well-being.<\/li><li><strong>Explanation:<\/strong> Refers to the room in a government&#8217;s budget that allows it to allocate resources for desired purposes without compromising financial sustainability or economic stability.<\/li><li><strong>Example:<\/strong> India&#8217;s debt to GDP ratio and the appointment of a committee by Dr. Vijay Kelkar to outline a roadmap for fiscal consolidation.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Other_Concepts_Related_to_Tax\"><\/span>Other Concepts Related to Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Direct_Tax_Code_DTC\"><\/span>Direct Tax Code (DTC)&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Definition:<\/strong> A significant reform proposed by the UPA Government to consolidate laws related to direct taxes, aiming to simplify tax laws into a single legislation.<\/li><li><strong>Purpose:<\/strong> Replace the Income Tax Act, 1961, Wealth Tax Act, 1957, and Gift Tax Act, 1958.<\/li><li><strong>Changes Introduced in 2012-2013 Budget:<\/strong> General Anti-Avoidance Rule (GAAR), Advance Pricing Agreement (APA), revised income tax exemption limit, altered tax slabs, reduced Securities Transaction Tax (STT), establishment of the National Bench of GST Appellate Tribunal (GSTAT).<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"National_Anti-Profiteering_Authority\"><\/span>National Anti-Profiteering Authority<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Definition:<\/strong> A statutory body established under Section 171 of the Central GST Act, 2017, responsible for ensuring that trade and industry pass on rate reductions under the Goods and Services Tax (GST).<\/li><li><strong>Role:<\/strong> Resolving disputes between the Centre and the States, maintaining uniformity in dispute resolution, possessing the powers of a civil court.<\/li><li>Key functions of the National Anti-profiteering Authority include:<ul><li>Ensuring that traders do not unfairly profit by overcharging consumers in the name of GST.<\/li><li>Investigating and scrutinizing instances of profiteering, with the authority to recommend punitive actions, such as license cancellations.<\/li><li>Examining whether registered individuals have passed on the benefits of additional input tax credits or tax rate reductions to consumers through corresponding price reductions.<\/li><\/ul><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"General_Anti-Avoidance_Rule_GAAR\"><\/span>General Anti-Avoidance Rule (GAAR):<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Proposed in mid-March as part of the Fiscal Year 2013 budget, GAAR was originally slated to be effective from April 1, 2013. However, a modified version was announced to come into effect from April 2016 in the 2013-2014 budget.<\/li><li>GAAR&#8217;s primary goal is to combat tax evasion, particularly by preventing Indian companies and investors from routing investments through tax havens like Mauritius solely to avoid taxes.<\/li><li>One major advantage of GAAR is its potential to significantly reduce tax avoidance and curb the misuse of Double Taxation Avoidance Agreements (DTAA).<\/li><li>GAAR investigates arrangements primarily aimed at securing a tax benefit or those lacking commercial substance, and it can be invoked when good business principles are not followed for tax avoidance purposes.<\/li><li>GAAR applies to foreign investors who have not utilized benefits under Double Taxation Avoidance Agreements (DTAA).<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-Tax_Revenue\"><\/span>Non-Tax Revenue:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Non-tax revenue comprises receipts obtained from sources other than taxes, such as fees, fines, etc.<\/li><li><strong>Fee, License, and Permit:<\/strong> A significant contributor to the government&#8217;s non-tax revenue is derived from fees, licenses, and permits. Fees are payments made to the government for the services it provides to the public, such as land registration fees, birth and death registration fees, passport fees, court fees, etc.<\/li><li><strong>License and Permit Fees:<\/strong> The fee charged by the government for granting permission to individuals for specific activities is known as a license or permit fee. License fees are levied when the government grants permission for certain activities, such as obtaining a driving license or import license. It&#8217;s important to note that license fees differ from general fees as they are paid for permission rather than for specific services rendered.<\/li><li><strong>Escheat:<\/strong> Escheat refers to the income received by the state from property that lacks a legal heir. In cases where there is no claimant for the property, the state holds the sole legal right over it.<\/li><li><strong>Special Assessment:<\/strong> Another source of non-tax revenue for the government is special assessment. This payment is made by property owners whose property values have increased due to government-led developmental activities.<\/li><li><strong>Fines and Penalties:<\/strong> Fines and penalties serve as payments made by those who violate the law, providing economic consequences for unlawful behavior. The primary goal is not revenue generation but rather to encourage adherence to laws and regulations. The determination of fines and penalties is arbitrary and not based on administrative costs.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sources_of_Revenue\"><\/span>Sources of Revenue<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table><tbody><tr><td><strong>Union Sources<\/strong><\/td><td><strong>State Sources<\/strong><\/td><\/tr><tr><td>Corporation tax<\/td><td>Capitation tax<\/td><\/tr><tr><td>Duties of excise on tobacco and certain goods<\/td><td>Duties of excise on certain goods produced or<\/td><\/tr><tr><td>manufactured or produced in India.<\/td><td>manufactured in the state (e.g., alcoholic<\/td><\/tr><tr><td><\/td><td>liquids, opium, etc.)<\/td><\/tr><tr><td>Estate duty in respect of property other than<\/td><td>Duties in respect of succession to agricultural<\/td><\/tr><tr><td>agricultural land.<\/td><td>land.<\/td><\/tr><tr><td>Fees in respect of any matters in the Union<\/td><td>Fees in respect of any matters in the State<\/td><\/tr><tr><td>list, excluding any fees taken in any court.<\/td><td>List, excluding fees taken in any court.<\/td><\/tr><tr><td>Foreign loans<\/td><td>Lotteries organized by the Government of India<\/td><\/tr><tr><td><\/td><td>or the Government of the State.<\/td><\/tr><tr><td>Post office savings bank<\/td><td>Fees in respect of bills of exchange, cheques,<\/td><\/tr><tr><td><\/td><td>promissory notes, etc. (excluding those<\/td><\/tr><tr><td><\/td><td>specified in the Union List).<\/td><\/tr><tr><td>Post and telegraphs, telephones, wireless,<\/td><td>Taxes on agricultural income<\/td><\/tr><tr><td>broadcasting, and other forms of communication.<\/td><td>Taxes on land and buildings<\/td><\/tr><tr><td>Property of the Union<\/td><td>Taxes on mineral rights (subject to limitations<\/td><\/tr><tr><td><\/td><td>imposed by Parliament relating to mineral<\/td><\/tr><tr><td><\/td><td>development).<\/td><\/tr><tr><td>The public debt of the Union<\/td><td>Taxes on the consumption or sale of electricity<\/td><\/tr><tr><td>Railways<\/td><td>Taxes on the entry of goods into a local area<\/td><\/tr><tr><td><\/td><td>for consumption, use, or sale therein.<\/td><\/tr><tr><td>Rates of stamp duty in respect of documents<\/td><td>Taxes on the sale and purchase of goods other<\/td><\/tr><tr><td>other than those specified in the Union List.<\/td><td>than newspapers.<\/td><\/tr><tr><td>Reserve Bank of India<\/td><td>Taxes on advertisements (excluding those<\/td><\/tr><tr><td><\/td><td>published in newspapers).<\/td><\/tr><tr><td>Taxes on income other than agricultural income<\/td><td>Taxes on goods and passengers carried by road<\/td><\/tr><tr><td><\/td><td>or on inland waterways.<\/td><\/tr><tr><td>Taxes on the capital value of assets, exclusive<\/td><td>Taxes on vehicles<\/td><\/tr><tr><td>of agricultural land of individuals and<\/td><td>Taxes on animals and boats<\/td><\/tr><tr><td>companies.<\/td><td><\/td><\/tr><tr><td>Taxes other than stamp duties on transactions<\/td><td>Taxes on professions, trades, callings, and<\/td><\/tr><tr><td>in stock exchanges and future markets.<\/td><td>employments.<\/td><\/tr><tr><td>Terminal taxes on goods or passengers carried<\/td><td>Taxes on luxuries, including taxes on<\/td><\/tr><tr><td>by railways, sea, or air.<\/td><td>entertainments, amusements, betting, and<\/td><\/tr><tr><td><\/td><td>gambling.<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revenue_from_Public_Enterprises\"><\/span>Revenue from Public Enterprises:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The government owns various public enterprises, including Indian Railways, Nangal Fertiliser Factory, Indian Oil, Bhilai Steel Plant, and more. The income generated from the sale of products produced by these enterprises contributes to the government&#8217;s overall revenue.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Finance_Commission\"><\/span>Finance Commission:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>As per Article 280 of the Constitution, the President appoints a Finance Commission every five years, making this provision a distinctive feature of the Indian Constitution not found in others.<\/li><li>The Finance Commission was established two years post the Constitution&#8217;s implementation and subsequently every five years.<\/li><li>The President holds the authority to appoint a new Finance Commission even before the completion of five years if deemed necessary. Thus, the appointment of the Finance Commission is an ongoing process per our Constitution.<\/li><li>The Finance Commission typically provides recommendations on the allocation of funds.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Objectives_of_the_Finance_Commission\"><\/span>Objectives of the Finance Commission<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>To determine the basis for the allocation of funds collected from the taxes, which are divisible between the Centre and the States. To formulate the principles regarding the grants to the States from the Centre.<\/li><li>To continue the agreements made between the Government of India and the States or to recommend changes in them. To consider any other financial matter in the interest of the country, on being notified by the President&nbsp;<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table><tbody><tr><td><strong>Finance Commission<\/strong><\/td><td><strong>Chairman<\/strong><\/td><\/tr><tr><td>1st (1951)<\/td><td>Mr. KC Neogy<\/td><\/tr><tr><td>2nd (1956)<\/td><td>Mr. K Santhanam<\/td><\/tr><tr><td>3rd (1960)<\/td><td>Mr. AK Chanda<\/td><\/tr><tr><td>4th (1964)<\/td><td>Mr. RV Rajamannar<\/td><\/tr><tr><td>5th (1968)<\/td><td>Mr. Mahavir Tyagi<\/td><\/tr><tr><td>6th (1972)<\/td><td>Mr. YB Chavan<\/td><\/tr><tr><td>7th (1977)<\/td><td>Mr. Brahmananda Reddy<\/td><\/tr><tr><td>8th (1983)<\/td><td>Mr. NKP Salve<\/td><\/tr><tr><td>9th (1987)<\/td><td>Mr. JM Shelat<\/td><\/tr><tr><td>10th (1992)<\/td><td>Shri KC Pant<\/td><\/tr><tr><td>11th (1998)<\/td><td>Prof AM Khusrau<\/td><\/tr><tr><td>12th (2002)<\/td><td>Dr. C Rangarajan<\/td><\/tr><tr><td>13th (2007)<\/td><td>Dr. Vijay L Kelkar<\/td><\/tr><tr><td>14th (2013)<\/td><td>YV Reddy<\/td><\/tr><tr><td>15th (2017)<\/td><td>NK Singh<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/refer-and-earn\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" width=\"1280\" height=\"300\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/09\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-10-1.png\" alt=\"\" class=\"wp-image-46428 lazyload\" data-srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/09\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-10-1.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/09\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-10-1-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/09\/Attempt-our-Daily-Weekly-Current-Affairs-Quiz-now-10-1-585x137.png 585w\" data-sizes=\"(max-width: 1280px) 100vw, 1280px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1280px; --smush-placeholder-aspect-ratio: 1280\/300;\" \/><\/a><figcaption><a href=\"https:\/\/edukemy.com\/refer-and-earn\" target=\"_blank\" rel=\"noopener\" title=\"\">Refer &amp; Earn NOW<\/a><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"15th_Finance_Commission\"><\/span>15th Finance Commission:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The Chairman of the 15th Finance Commission, NK Singh, a former member of the Planning Commission, led a team tasked with examining the impact of the Goods and Services Tax (GST) on the finances of both the Centre and the States.<\/li><li>Other members included former Economic Affairs Secretary Shaktikanta Das, former Chief Economic Advisor Ashok Lahiri, NITI Aayog member Ramesh Chand, and Georgetown Professor Anoop Singh.<\/li><li>The commission, initially set to submit its report by October 2019, had its term extended&nbsp; by the Union Government until October 30, 2020, for a total duration of 11 months.<\/li><li>The recommendations of the 15th Finance Commission, originally intended for the period from April 1, 2020, to March 31, 2025, were extended for the fiscal years 2021-2026.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recommendations_of_the_15th_Finance_Commission\"><\/span>Recommendations of the 15th Finance Commission:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The commission reduced the vertical devolution, decreasing the share of tax revenues allocated from 42% to 41%. This 1% decrease aimed to accommodate the newly formed Union Territories of Jammu and Kashmir and Ladakh using resources from the Central Government.<\/li><li>Unlike the previous Finance Commission, which considered both the 1971 and 2011 populations, the 15th Finance Commission emphasized the 2011 population more (10% weight compared to 17.5% for the 1971 population).<\/li><li>Tax effort was introduced as a criterion to reward states with higher tax collection efficiency, calculated as the ratio of the average per capita own tax revenue to the average per capita state GDP during the period between 2014-2015 and 2016-2017.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"14th_Finance_Commission\"><\/span>14th Finance Commission:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Headed by former RBI Governor YV Reddy, the 14th Finance Commission endorsed the compensation roadmap for the Goods and Services Tax finalized by the Centre. It emphasized the need for an autonomous and independent GST compensation fund.<\/li><li>Members of the 14th Finance Commission included YV Reddy, Abhijit Sen, M Govinda Rao, Sushama Nath, and Sudipto Mundle.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recommendations_of_the_14th_Finance_Commission\"><\/span>Recommendations of the 14th Finance Commission:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>The 14th Finance Commission advocates that horizontal devolution should serve as the primary channel for transferring resources to the states, disregarding distinctions between plan and non-plan allocations. In addressing the states&#8217; needs, it employs comprehensive criteria such as population from 1971, changes in population since then, income distance, forest cover, and area, among other factors.<\/li><li>For the distribution of grants to states for local bodies, the commission relies on 2011 population data with a weight of 90% and area with a weight of 10%. These grants are further categorized into basic and performance grants for Gram Panchayats and Municipal bodies. The ratio of basic to performance grants is set at 90:10 for Panchayats and 80:20 for Municipalities.<\/li><li>In the fiscal years 2021-2026, the criteria established for the states&#8217; share may influence the allocation of the pool of Central taxes.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-table\"><div class=\"pcrstb-wrap\"><table><tbody><tr><td><strong>Criteria<\/strong><\/td><td><strong>14th Finance Commission (2015-2020)<\/strong><\/td><td><strong>15th Finance Commission (2021-26) (Same for 2020-21)<\/strong><\/td><\/tr><tr><td>Population (2011)<\/td><td>10.5<\/td><td>15.0<\/td><\/tr><tr><td>Population (1971)<\/td><td>17.5<\/td><td>45.0<\/td><\/tr><tr><td>Income Gap<\/td><td>50.0<\/td><td>10.0<\/td><\/tr><tr><td>Forest and Ecology<\/td><td>7.5<\/td><td>12.5<\/td><\/tr><tr><td>Forest Cover<\/td><td>&#8211;<\/td><td>15.0<\/td><\/tr><tr><td>Demographic Performance<\/td><td>&#8211;<\/td><td>15.0<\/td><\/tr><tr><td>Area<\/td><td>&#8211;<\/td><td>&#8211;<\/td><\/tr><tr><td>Tax and Fiscal Efforts<\/td><td>100<\/td><td>2.5<\/td><\/tr><tr><td>Total<\/td><td>2.5<\/td><td>100<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Committees_About_Finance\"><\/span>Committees About Finance:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>Various committees have been established to address government expenditure and financial discipline:<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rangarajan_Committee_2011\"><\/span>Rangarajan Committee 2011:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li>In 2011, an expert committee led by C. Rangarajan proposed the elimination of the distinction between plan and non-plan expenditure for both the Centre and the States.<\/li><li>Constituted by the Planning Commission, this committee aimed to provide recommendations for the effective management of government expenditure.<\/li><li>Key recommendations include abolishing the difference between planning and non-planning in public expenditure, fundamentally transforming the approach to government expenditure management by aligning the budget system with production and results.<\/li><li>The introduction of a new multidimensional budgeting and accounting system with uniform taxes for Central programs, sub-programs, and schemes implemented in the states.<\/li><li>A transition from the 12th plan to a full fiscal mode for all new schemes.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Kelkar_Committee\"><\/span>Kelkar Committee:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li>The government established an audit committee, chaired by Vijay Kelkar, with the objective of instilling financial discipline. The committee produced its report in less than a month.<\/li><li>Fiscal discipline pertains to achieving the ideal balance between government income and expenditures in an economy.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prelims_Facts\"><\/span>Prelims Facts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\"><li>Income tax in India was introduced by &#8211; James Wilson <strong><em>[UP RO\/ARO (Pre) 2014]<\/em><\/strong><\/li><li>Which tax is levied by the Union and shared by the Union and the States? &#8211; Corporation tax <strong><em>(IAS (Pre) 1995]<\/em><\/strong><\/li><li>Direct tax code in India is related to which tax? -Income tax \/<strong><em>UPPSC (Pre) 2018)<\/em><\/strong><\/li><li>Agriculture income tax can be levied in India by -State Government <strong><em>[UPPSC (Mains) 2009]<\/em><\/strong><\/li><li>Who assigns agricultural income tax to the State Governments? -Constitution of India<strong><em> [IAS (Pre) 1995]<\/em><\/strong><\/li><li>Which tax is levied by Gram Panchayats?- Tax on local fairs<strong><em> (UPPSC (Pre) 2018]<\/em><\/strong><\/li><li>By which department was the &#8216;e-Sahyog&#8217; project launched in October 2015? -Income Tax Department<strong><em> [MPPSC (Pre) 2016]<\/em><\/strong><\/li><li>Which tax does not directly increase the price of a commodity to buyers? -Income tax<strong><em> [UPPSC (Pre) 1995]<\/em><\/strong><\/li><li>In which year, service tax was introduced in India? -1994 to 1995<strong><em> [BPSC (Pre) 2015]<\/em><\/strong><\/li><li>CENVAT is related with -Value Added Tax <strong><em>[UPPSC (Mains) 2004, 2008]<\/em><\/strong><\/li><li>When was the wealth tax first introduced in India? -195<strong><em>7 [MPPSC (Pre) 2006]<\/em><\/strong><\/li><li>The tax levied on imports and exports is known as -Custom duty <strong><em>[UPPSC (Mains) 2005]<\/em><\/strong><\/li><li>The sales tax you pay while purchasing a toothpaste is a tax imposed and collected by the -State Government <strong><em>[IAS (Pre) 2014]<\/em><\/strong><\/li><li>In which budget, the Commodities Transaction Tax (CTT) was introduced in the Budget of India? -2013 to 2014 <strong><em>[BPSC (Pre)2020<\/em><\/strong><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"UPSC_NCERT_Practice_Questions\"><\/span>UPSC NCERT Practice Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Which_of_the_following_statements_are_true_for_the_income_tax_in_India\"><\/span>1. Which of the following statements are true for the income tax in India?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1. It is a progressive tax.<\/p>\n\n\n\n<p>2. It is a direct tax.<\/p>\n\n\n\n<p>3. It is collected by the State Governments.<\/p>\n\n\n\n<p>4. It is a proportional tax.<\/p>\n\n\n\n<p>Codes<\/p>\n\n\n\n<p>(a) Only 1<\/p>\n\n\n\n<p>(b) 1 and 2<\/p>\n\n\n\n<p>(c) 1,2 and 3<\/p>\n\n\n\n<p>(d) 2, 3 and 4<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Corporation_tax\"><\/span>2. Corporation tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) is levied and appropriated by the states.<\/p>\n\n\n\n<p>(b) is levied by the Union and collected and appropriated by the States<\/p>\n\n\n\n<p>(c) is levied by the Union and shared by the Union and the States.<\/p>\n\n\n\n<p>(d) is levied by the Union and belongs to it exclusively.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Which_of_the_following_is_not_a_direct_tax_in_India_UKPSC_Pre_2021\"><\/span>3. Which of the following is not a direct tax in India? UKPSC (Pre) 2021<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Income tax<\/p>\n\n\n\n<p>(b) Wealth tax<\/p>\n\n\n\n<p>(c) Estate duty<\/p>\n\n\n\n<p>(d) Sales tax<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_CENVAT_is_related_with\"><\/span>4. CENVAT is related with<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Custom duties<\/p>\n\n\n\n<p>(b) Union excise duties<\/p>\n\n\n\n<p>(c) Value Added Tax<\/p>\n\n\n\n<p>(d) Central sales tax<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Which_of_the_following_Union_Government_taxes_is_not_levied_by_the_Union_Government\"><\/span>5. Which of the following Union Government? taxes is not levied by the Union Government?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Gift tax<\/p>\n\n\n\n<p>(b) Entertainment tax<\/p>\n\n\n\n<p>(c) Personal income tax<\/p>\n\n\n\n<p>(d) Corporation tax<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_Consider_the_following_important_sources_of_tax_revenue_for_the_Central_Government_in_India_RASRTS_Pre_2016\"><\/span>6. Consider the following important sources of tax revenue for the Central Government in India. RAS\/RTS (Pre) 2016<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1. Union excise duty<\/p>\n\n\n\n<p>2. Corporation tax<\/p>\n\n\n\n<p>3. Income tax<\/p>\n\n\n\n<p>4. Service tax<\/p>\n\n\n\n<p>Which one of the following is the correct descending order in terms of Gross Tax Revenue?<\/p>\n\n\n\n<p>(a) 1, 2, 4, 3<\/p>\n\n\n\n<p>(c) 2, 3, 1, 4<\/p>\n\n\n\n<p>(b) 2, 4, 1, 3<\/p>\n\n\n\n<p>(d) 4, 1, 2, 3<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"7_Which_one_of_the_following_is_not_related_with_income_from_corporate_sector_in_India\"><\/span>7. Which one of the following is not related with income from corporate sector in India?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Fringe benefit tax<\/p>\n\n\n\n<p>(b) Minimum alternate tax<\/p>\n\n\n\n<p>(d) Tax on company profit<\/p>\n\n\n\n<p>(c) Capital gains tax<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"8_Which_one_of_the_following_taxes_is_the_largest_source_of_revenue_in_India\"><\/span>8. Which one of the following taxes is the largest source of revenue in India?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Income tax<\/p>\n\n\n\n<p>(b) Corporate tax<\/p>\n\n\n\n<p>(c) Union excise duties<\/p>\n\n\n\n<p>(d) Custom duties<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"9_Which_one_of_the_following_is_not_related_to_the_income_of_the_corporate_sector_in_India\"><\/span>9. Which one of the following is not related to the income of the corporate sector in India?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Collective additional profit tax<\/p>\n\n\n\n<p>(b) Minimum alternative tax<\/p>\n\n\n\n<p>(c) Capital gains tax<\/p>\n\n\n\n<p>(d) Tax on profit of companies<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"10_Which_among_the_following_taxes_is_not_shared_by_the_Central_Government_with_Uttar_Pradesh_Government_under_the_Finance_Commission_Award\"><\/span>10. Which among the following taxes is not shared by the Central Government with Uttar Pradesh Government under the Finance Commission Award?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Income tax<\/p>\n\n\n\n<p>(b) Custom duty<\/p>\n\n\n\n<p>(c) Excise duty<\/p>\n\n\n\n<p>(d) Agriculture income tax<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"11_Consider_the_following_taxes\"><\/span>11. Consider the following taxes.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1. Company tax<\/p>\n\n\n\n<p>2. Customs tax<\/p>\n\n\n\n<p>3. Wealth tax<\/p>\n\n\n\n<p>4. Excise duty<\/p>\n\n\n\n<p>Which of the above statement(s) is\/are indirect tax?<\/p>\n\n\n\n<p>(a) Only 1<\/p>\n\n\n\n<p>(b) 2 and 4<\/p>\n\n\n\n<p>(c) 1 and 3<\/p>\n\n\n\n<p>(d) 2 and 3<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"12_Which_of_the_following_tax_is_not_included_in_the_Goods_and_Services_Tax_GST_CGPSC_Pre_2020\"><\/span>12. Which of the following tax is not included in the Goods and Services Tax (GST)? CGPSC (Pre) 2020<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Excise duty<\/p>\n\n\n\n<p>(b) Custom duty<\/p>\n\n\n\n<p>(c) Value Added Tax<\/p>\n\n\n\n<p>(d) Service tax<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"13_Which_of_the_following_statements_given_below_isare_correct\"><\/span>13. Which of the following statement(s) given below is\/are correct?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1. The provisions of the General Anti-Avoidance Rule (GAAR) in India will come into force from 1st April. 2015.<\/p>\n\n\n\n<p>2. The purpose of the provision of GAAR was to prevent tax avoidance by overseas investors.<\/p>\n\n\n\n<p>Code&nbsp;<\/p>\n\n\n\n<p>(a) Only 1<\/p>\n\n\n\n<p>(b) Only 2<\/p>\n\n\n\n<p>(c) Both 1 and 2<\/p>\n\n\n\n<p>(d) Neither 1 nor 2<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"14_The_non-plan_grants_to_the_states_by_the_Central_Government_are_made_on_the_recommendations_of_UPPSC_Mains_2017\"><\/span>14. The non-plan grants to the states by the Central Government are made on the recommendations of UPPSC (Mains) 2017<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Finance Commission<\/p>\n\n\n\n<p>(b) Reserve Bank of India<\/p>\n\n\n\n<p>(c) Ministry of Finance&nbsp;<\/p>\n\n\n\n<p>(d) State Bank of India<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"15_Who_among_the_following_was_the_Chairman_of_the_First_Finance_Commission_of_India_UPPSC_Pre_2021\"><\/span>15. Who among the following was the Chairman of the First Finance Commission of India? UPPSC (Pre) 2021<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>(a) Shri Santhanam<\/p>\n\n\n\n<p>(b) Shri KC Neogy<\/p>\n\n\n\n<p>(c) Dr Rajamannar<\/p>\n\n\n\n<p>(d) Shri AK Chanda<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"16_Consider_the_following_statements_IAS_Pre_2023\"><\/span>16. Consider the following statements IAS (Pre) 2023<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Statement I<\/strong> Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.<\/p>\n\n\n\n<p><strong>Statement II <\/strong>lnvITs are recognised as borrowers under the &#8216;Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002&#8217;.<\/p>\n\n\n\n<p>Which one of the following is correct in respect of the above statements?<\/p>\n\n\n\n<p>(a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement 1.<\/p>\n\n\n\n<p>(b) Both Statement-I and Statement Il are correct and Statement II is not the correct explanation for Statement 1.<\/p>\n\n\n\n<p>(c) Statement I is correct but Statement II is incorrect.<\/p>\n\n\n\n<p>(d) Statement I is incorrect but Statement II is correct.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"17_Consider_the_following\"><\/span>17. Consider the following:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1. Demographic performance<\/p>\n\n\n\n<p>2. Forest and ecology<\/p>\n\n\n\n<p>3. Governance reforms<\/p>\n\n\n\n<p>4. Stable government<\/p>\n\n\n\n<p>5. Tax and fiscal efforts<\/p>\n\n\n\n<p>For the horizontal tax devolution, the 15th Finance Commission used how many of the above as criteria other than population area and income distance?<\/p>\n\n\n\n<p>(a) Only 2<\/p>\n\n\n\n<p>(b) Only 3<\/p>\n\n\n\n<p>(c) Only 4<\/p>\n\n\n\n<p>(d) All of the above<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"18_With_reference_to_Union_Finance_Commission_which_of_the_following_statements_isare_correct\"><\/span>18. With reference to Union Finance Commission, which of the following statement(s) is\/are correct?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1. Finance Commission has a Chairman and six members.<\/p>\n\n\n\n<p>2. It submits its report to the NITI Aayog.<\/p>\n\n\n\n<p>Select the correct answer by using the codes given below.<\/p>\n\n\n\n<p>(a) Both 1 and 2<\/p>\n\n\n\n<p>(b) Only 2<\/p>\n\n\n\n<p>(c) Neither 1 nor 2<\/p>\n\n\n\n<p>(d) Only 1<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Know_Right_Answer\"><\/span>Know Right Answer<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>1. (b)<\/p>\n\n\n\n<p>2. (c)<\/p>\n\n\n\n<p>3. (d)<\/p>\n\n\n\n<p>4. (c)<\/p>\n\n\n\n<p>5. (b)<\/p>\n\n\n\n<p>6. (c)<\/p>\n\n\n\n<p>7. (c)<\/p>\n\n\n\n<p>8. (a)<\/p>\n\n\n\n<p>9. (c)<\/p>\n\n\n\n<p>10. (c)<\/p>\n\n\n\n<p>11. (b)<\/p>\n\n\n\n<p>12. (b)<\/p>\n\n\n\n<p>13. (d)<\/p>\n\n\n\n<p>14. (a)<\/p>\n\n\n\n<p>15. (b)<\/p>\n\n\n\n<p>16. (a)<\/p>\n\n\n\n<p>17. (b)<\/p>\n\n\n\n<p>18. (c)<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688 lazyload\" width=\"781\" height=\"182\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 781px; --smush-placeholder-aspect-ratio: 781\/182;\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions_FAQs\"><\/span>Frequently Asked Questions (FAQs)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q1_What_is_the_role_of_taxation_in_the_Indian_economy\"><\/span><strong>Q1: What is the role of taxation in the Indian economy?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A1: Taxation plays a crucial role in the Indian economy as it serves multiple purposes. It is the primary source of revenue for the government, enabling it to fund public infrastructure, social welfare programs, and other essential services. Additionally, taxes are used as a tool to redistribute wealth, promote economic stability, and control inflation. The Indian tax system comprises direct taxes (income tax, corporate tax) and indirect taxes (GST, excise duty), each serving specific economic objectives.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q2_How_does_the_Goods_and_Services_Tax_GST_impact_the_Indian_economy\"><\/span><strong>Q2: How does the Goods and Services Tax (GST) impact the Indian economy?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A2: GST, introduced in India in 2017, is a comprehensive indirect tax reform that has streamlined the taxation system. It has replaced multiple indirect taxes at the central and state levels, creating a unified tax structure. GST aims to eliminate tax cascading, enhance compliance, and boost economic efficiency. By simplifying the tax structure, GST promotes ease of doing business and facilitates seamless movement of goods and services across states, contributing to the overall growth of the Indian economy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q3_What_is_the_significance_of_fiscal_policy_in_the_context_of_the_Indian_tax_system\"><\/span><strong>Q3: What is the significance of fiscal policy in the context of the Indian tax system?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A3: Fiscal policy, which includes taxation and government spending, plays a vital role in influencing the economic activities of a country. In the Indian context, the government uses fiscal policy to achieve various macroeconomic objectives such as economic growth, employment generation, and price stability. Through tax policies, the government can influence consumer spending, investment, and overall economic behavior. Understanding the impact of fiscal measures on the Indian tax system is crucial for policymakers in formulating strategies to address economic challenges and promote sustainable development.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p>For Daily Updates and Study Material:<\/p>\n\n\n\n<p>Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>1. Learn through Videos &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3vOD8sU\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>2. Be Exam Ready by Practicing Daily MCQs &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3Q9z2nF\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>3. Daily Newsletter &#8211; Get all your Current Affairs Covered &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3bE2y5J\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><li>4. Mains Answer Writing Practice &#8211;&nbsp;<a href=\"https:\/\/bit.ly\/3mZuVxl\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a><\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Visit_our_YouTube_Channel_%E2%80%93_here\"><\/span>Visit our YouTube Channel &#8211;\u00a0<a href=\"https:\/\/www.youtube.com\/@EduKemyforIAS\">here<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n","protected":false},"excerpt":{"rendered":"<p>The tax system in India is designed with both the Central Government and State Governments imposing taxes. Local authorities, such as Municipalities and Local Governments, also impose minor taxes.<\/p>\n","protected":false},"author":17,"featured_media":21118,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[1227],"tags":[1052,1246,232,140],"class_list":["post-21117","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ncert-economy-notes","tag-ncert-notes","tag-tax-system","tag-upsc","tag-upsc_preparation_strategy"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/21117","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/comments?post=21117"}],"version-history":[{"count":4,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/21117\/revisions"}],"predecessor-version":[{"id":34519,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/posts\/21117\/revisions\/34519"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media\/21118"}],"wp:attachment":[{"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/media?parent=21117"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/categories?post=21117"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/edukemy.com\/blog\/wp-json\/wp\/v2\/tags?post=21117"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}