Indian Taxation System

It is an example of Ad Valorem Tax. The import duty is an example of Ad Valorem Tax as the import duty is imposed according to the value of commodity. The tax imposed according to the value of something is Ad Valorem Tax.

It is not a characteristic of a good tax system The good tax system must be elastic or flexible and not inelastic. It means that the tax system should be such that the rate of tax can be increased or decreased according to the needs of the economy. For instance, at the time of inflation when people have more purchasing power, the tax rate must be increased to reduce their purchasing power and curb inflation.

It is Central Value Added Tax. The full form of CENVAT is Central Value Added Tax.

It will increase the value of money. When new currency notes are not issued by the government, it will not put extra purchasing power in the hands of people. The quantity demanded by people will also not increase. Hence, the prices will remain stable. Thus, the value of rupee will not decrease.

It is import duty. The import duty is charged for importing products from foreign countries. The importer sells the product to the consumer after adding it in the price of goods. Thus, when the consumer purchases that product, he has to incur the expenditure for purchasing that product and has to pay import duty as well. Hence, the import duty is imposed on expenditure of tax payer.

It is not an objective of imposing tax. The tax is not imposed for reducing dependence on foreign countries. The dependence on foreign technology, for instance, cannot be reduced by imposing tax.

It inculcates civic consciousness. The income tax is a direct tax and is charged from the salary or income of tax payer. The tax payer knows how much tax he or she has paid. Hence, the tax payer takes interest in seeing that these funds are properly utilised. This public awareness helps in checking the wastage of public expenditure.

This tax cannot be shifted. The perquisite tax is to be paid on the non-monetary benefits provided by employers to its employees like car provided with driver, medical reimbursements etc. The tax on non-monetary benefits provided by the employer to its employee is to be paid by the employer and it cannot be shifted.

Progressive tax is based on principle of equity. In the progressive tax, the rate of tax increases as the income of tax payer increases. Hence, the rich people are taxed at higher rates than the poor people. Therefore, the rich people pay more, and the revenue collected is used for the welfare of the poor. Thus, progressive tax is based on principle of equity.

The value added tax satisfies the canon of diversity. The value added tax is imposed on the value added in the goods and services from the production to retail stage. Hence, value added tax is imposed on a variety of goods and services and rich as well poor people contribute to it. Thus, it satisfies the canon of diversity.

It is custom duty. The custom duty is charged on goods imported from foreign country, which are domestically available and thereby encourage the domestic industry. The heavy custom duty is imposed so that the citizens of a country have to pay a very high price for it and hence they are forced to buy domestic products.

It is sales tax. The sales tax is to be paid on the goods purchased by the consumer. The rich have to pay the same rate of tax as the poor. For instance, the rich have to pay the same rate of tax as the poor on the brand of Babool toothpaste. But the poor people feel more burden as they have less money. Hence, sales tax is considered unjust.

This is not a characteristic of tax. A tax is not levied for any specific purpose and the individual cannot ask for special benefit from the state in return for the tax paid. The quid pro quo means more or less equal exchange in return of paying something, but as the individual cannot demand anything in return of tax paid; quid pro quo is not a characteristic of tax.

It is canon of expediency. According to canon of expediency, the tax should be based on sound principles so that it requires no justification from the side of the government. The tax payer must find it just and fair to impose tax. When it is so, the canon of expediency is followed.

Tax Information Network (TIN) is a system initiated by the Income Tax Department of India in January 2004 to modernize tax collection and administration. It is specifically designed for income tax operations, including TDS (Tax Deducted at Source) tracking, PAN verification, and tax payment processing. It is not associated with corporate tax, sales tax, or excise duty, which have separate systems.