Indian Taxation System

It is Income tax. The income tax is deducted from the income of a person. The person knows how much tax is deducted from his or her income and is paid as lump sum. Hence, the income tax paid by a person is felt as a personal obligation.

It is regressive tax. In the regressive tax, the rate of tax charged decreases with the increase in income. Hence, those who earn high income pay less tax as compared to the poor. Thus through this, the tax collected is the least in an economy, as the rich can pay high amount at higher rates, which is not possible in this system. The poor even at high rates are unable to pay high amount of tax as they earn less income.

It is sales tax. The sales tax cannot be evaded, as the sales tax is charged at the point of sale. When a person purchases the bare necessities such as wheat, sugar, match-box etc, he pays sales tax on all the items purchased in India. Hence, sales -tax cannot be evaded in India.

It is central excise duty. The central excise duty is the excise duty charged on goods manufactured within India like match-box, television etc. These goods are manufactured throughout the year, and, therefore, central excise duty is charged continuously on these goods. Hence, it is a continuous source of revenue for central government throughout the year.

Income tax is the most elastic tax in nature. The income tax is paid annually in India. At the time of emergency like war, floods etc, the rate of income tax can be increased quickly so that the government has adequate financial resource to meet the emergency. The rates of other types of taxes are not so easy to increase.

It is correct. In India, taxes are imposed by central, state and local governments. The income tax is imposed by the central government, the Value Added Tax is imposed by the state government and municipal tax is imposed by the local self-government. Hence, it is essential that there is co-ordination between these three types of government so that there is no overlapping of tax in order to safeguard the interest of tax payer and the government.

It is a source of non-tax revenue for state government. The state charges royalty for allowing to use the forests, mines owned by the state government. The royalty earned by the state government is the revenue earned not by imposing any tax. Hence, it is a source of non-tax revenue for state government.

It is income tax. The income tax does not fall with equal weight on every class of people. The rich have to pay higher rates of income tax as compared to the poor in India. Hence, the weight of income tax falls with greater force on the rich class rather than on the middle class. The poor do not have to pay any income tax in India.

It is the most diverse tax in India. The Value Added tax is the tax, which is imposed on the value added in goods from production to retail stage. Moreover, this tax is imposed each time the value is added to the goods or services. Hence, it is the most diverse tax in India.

It is sales tax. The sales tax is paid at the point of sale of a commodity. It is to be paid only if expenditure is incurred on the purchase of a commodity or goods otherwise not. Hence, sales tax cannot be paid, if no expenditure is incurred.

It is Value Added Tax. The value added tax can be paid many times in the production of goods and services as it is paid each time the value is added to goods and services. For instance, in the manufacture of car, when the tyres are assembled the tax is charged; when steering is assembled, VAT is imposed for adding the value of steering. Same is the case with services.

The entertainment tax is not levied on playing table-tennis in own house. If the person plays table-tennis in his own house, then entertainment tax is not to be paid as he or she is the owner of the table-tennis and hence entertainment tax is not to be paid. In fact, no tax is payable on it.

It is sales tax. The sales tax is charged at the point of sale and purchase of a product. The retailer collects the tax from customer and later pays to the government.

It is value added tax. The value added tax is to be charged on the value added in goods and services. It is difficult to estimate the demand for such products and services, as the prices of goods and services rise due to imposition of value added tax. Hence, it is very difficult to estimate the income from value added tax.

It is not an example of ad valorem tax. The service tax is charged according to the price of service provided. It is taxed according to the price of the service provided, not according to its value. Hence, service tax is not an example of ad valorem tax.