Basics about Taxes in India
Q: -1- Whatistax?
Answer: – There is no specific legal definition given but tax is a levy by governments on natural and artificial persons (i.e. On living persons and business entities). In India taxes levy and collect by State governments and Central governments.
Q: –2– Why should we abide the tax laws enacted by the government? Answer: – We are a citizen of this country by virtue of our birth, or by virtue of our citizenship, we are accorded the fundamental rights and duties in our Constitution. Hence a law enacted by the government, if it follows the fundamental rights and duties, and to levy, administration, collection, and recovery of Taxes under Constitution. so, we must abide by it.
Q: -3- Right to make laws related to taxes drawn from?
Answer: – As per article 245, 246 read with 7th Schedule, 248 and 265 of the Indian Constitution.
At present there are 92 entries in Union list (initially 97 entries were there), there are 59 entries in State list (initially 66 entries were there) and there are 47 entries in Concurrent list. List of entries effecting the tax laws in India are enumerated below.
|82||Taxes on income other than agricultural income.|
|83||Duties of customs including export duties.|
|Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies|
|87||state duty in respect of property other than agricultural land|
|88||Duties in respect of succession to property other than agricultural land.|
|89||Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights.|
|90||Taxes other than stamp duties on transactions in stock exchanges and futures markets.|
|Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce|
|Taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce|
|96||Fees in respect of any of the matters in this List, but not including fees taken in any court.|
|Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists.|
|46||Taxes on agricultural income.|
|47||Duties in respect of succession to agricultural land.|
|48||Estate duty in respect of agricultural land.|
|49||Taxes on lands and buildings.|
|50||Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development|
|Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced
elsewhere in India –
|(a) alcoholic liquors for human consumption|
|(b) opium, Indian hemp and other narcotic drugs and narcotics|
|53||Taxes on the consumption or sale of electricity.|
|Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of
international trade or commerce of such goods. (Subs.)
|56||Taxes on goods and passengers carried by road or on inland waterways.|
|57||Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tram-cars subject to the provisions of Entry 35 of List III [Concurrent list].|
|58||Taxes on animals and boats|
|60||Taxes on professions, trades, callings and employments.|
|Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.|
|Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty|
|66||Fees in respect of any of the matters in this list, but not including fees taken in any court|
|Recovery in a State of claims in respect of taxes and other public demands, including arrears of land- revenue and sums recoverable as such arrears, arising outside that State.|
|Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.|
Fees in respect of any of the matters in this List, but not including fees taken in any court.
Q: -4- What is the logic behind such entries like why a particular tax is covered under union list why not in state list or vice a versa?
Answer: – Because under Constitution duties and rights of Union and states are specifically demarcated, hence the matter which is under the jurisdiction of any government they have a right to make laws on such matter for eg. Foreign affairs or stock markets has to regulate or monitor by central government hence they have right to make law related to such matters.
Q: -5- Types of Taxes
Answer: – There are 2 types of taxes in India
- Direct taxes
- Indirect taxes
Examples of these taxes are Income tax, Wealth tax (now repealed), property tax, gift tax etc are covered in direct taxes and GST, Excise duty, Custom duty, Security Transaction tax etc are covered under indirect taxes.
Q: -6- Why such bifurcation of taxes like Direct or Indirect?
Answer: – Because direct taxes are those taxes burden of which can not be shifted that means a person on whom direct taxes are levied only such person has to pay these taxes and in respect of Indirect tax burden can be shifted to ultimate buyer
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