Tax System in India

Taxes in India are levied by both the Central Government and the state governments. Some of the minor taxes are levied by the local authorities such as the Municipality and corporations.

Constitution of India which allocates the power to levy various taxes between the Center and the State. An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law. Therefore each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature.

Constitutional authority over collection of taxes

Constitutionally established scheme of taxation

List - I entailing the areas on which only the parliament is competent to make laws,

List - II entailing the areas on which only the state legislature can make laws, and

List - III listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently.

	Taxes by Central Government of India……
1	Taxes on income other than agricultural income (List I, Entry 82)
2	Duties of customs including export duties (List I, Entry 83)
3	Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I, Entry 84)
4	Corporation Tax (List I, Entry 85)
5	Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on   capital of companies (List I, Entry 86)
6	Estate duty in respect of property other than agricultural land (List I, Entry 87)
7	Duties in respect of succession to property other than agricultural land (List I, Entry 88)
8	Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I, Entry 89)
9	Taxes other than stamp duties on transactions in stock exchanges and futures markets (List I, Entry 90)
10	Taxes on the sale or purchase of newspapers and on advertisements published therein (List I, Entry 92)
11	Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce (List I, Entry 92A)
12	Taxes on the consignment of goods in the course of inter-State trade or commerce (List I, Entry 93A)

	Taxes levied by State Governments
1	Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues (List II, Entry 45)
2	Taxes on agricultural income (List II, Entry 46)
3	Duties in respect of succession to agricultural income (List II, Entry 47)
4	Estate Duty in respect of agricultural income (List II, Entry 48)
5	Taxes on lands and buildings (List II, Entry 49)
6	Taxes on mineral rights (List II, Entry 50)
7	Duties of excise for following goods manufactured or produced within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics (List II, Entry 51)
8	Taxes on entry of goods into a local area for consumption, use or sale therein (see Value added tax) (List II, Entry 52)
9	Taxes on the consumption or sale of electricity (List II, Entry 53)
10	Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54)
11	Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55)
12	Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry 56)
13	Taxes on vehicles suitable for use on roads (List II, Entry 57)
14	Taxes on animals and boats (List II, Entry 58)
15	Tolls (List II, Entry 59)
16	Taxes on profession, trades, callings and employments (List II, Entry 60)
17	Capitation taxes (List II, Entry 61)
18	Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling (List II, Entry 62)
19	Stamp duty (List II, Entry 63)

Income Tax Department functions under the Department of Revenue in Ministry of Finance. It is responsible for administering following direct taxation acts passed by Parliament of India.

Income Tax Act

Wealth Tax Act

Gift Tax Act

Expenditure Tax Act

Interest Tax Act

Various Finance Acts (Passed Every Year in Budget Session)

Central Board of Direct Taxes

The Central Board of Revenue as the Department apex body charged with the administration of taxes came into existence as a result of the Central Board of Revenue Act, 1924. Initially the Board was in charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central Board of Excise and Customs

The CBDT is headed by CBDT Chairman and also comprises six members, all of whom are Special Secretary to Government of India.

Member (Income Tax)

Member (Legislation and Computerisation)

Member (Revenue)

Member (Personnel & Vigilance)

Member (Investigation)

Member (Audit & Judicial)

Corporate Taxes are annual taxes payable on the income of a corporate operating in India. For the purpose of taxation companies in India are broadly classified into domestic companies and foreign companies.

The VAT belongs to the family of Sales Tax(one of the Indirect Taxes). It can be defined as " A Tax to be   paid by the manufacturers or traders of goods and services on the basis of value added by them". It is not on the total manufactured or sold products but on the Value added by the manufacturers and producers.

VAT = Tax Base(Value Added by the manufacturers) * rate of tax

Dividend distribution tax is the tax imposed by the Indian Government on companies according to the dividend paid to a company’s investors. Dividend amount to investor is tax free. At present dividend distribution tax is 15

Municipal Corporation in every city imposed tax in terms of property tax. Owner of every property has to pay this tax. This tax rate varies in every city.

Education cess is deducted and used for Education of poor people in INDIA. All taxes in India are subject to an education cess, which is 3% of the total tax payable. The education cess is mainly applicable on Income tax, excise duty and service tax.

Gift tax : A gift if from someone it is clubbed with your income and you need to pay tax on it. This tax is called as gift tax. This tax is applicable if gift amount or value is more than 50000 Rs/- in a year.

Toll Tax : At some of places you need to pay tax in order to use infrastructure (road, bridge etc.) build from your money given to government as Tax. This tax is called as toll tax. This tax amount is very small amount but, to be paid for maintenance work and good up keeping.