Government Revenue Flashcards
Describe an ideal tax structure.
Should have the following properties.
- The distribution of tax burden should be progressive in nature.
- It should help attain growth and stability in the economy.
- it should improve the efficiency of the market rather than distort it.
What is impact?
Impact of a tax refers to the person who pays it to the government in the first instance.
What is incidence?
Incidence of a tax refers to the money burden of a tax on the person who ultimately pays it.
What are the various direct taxes?
- Personal income tax.
- Corporate tax.
- Capital gains tax.
- Wealth tax.
What are the various indirect taxes?
- Custom duty.
- Union excise duty.
- VAT.
- Service tax.
- Sales tax.
- Education cess.
- GST.
What is personal income tax?
It is levied on the total income of all individuals and HUFs.
What is corporate tax?
It is a tax on the net income of corporations. Corporations are regarded as separate entities for income tax purpose in India. The taxable income of the company is the sum of all incomes under various categories. (i.e, tax base for a company consists of the company’s profits, minus legal deductions, tax concessions, and the incentives granted).
What is capital gains tax?
A capital gains tax is imposed on the net gains realized on the sale of property at higher price than it was paid for.
What is wealth tax?
A tax on the net wealth of individuals and HUF is levied annually in India. It is not a major source of revenue but it is justified on the grounds of equality.
What is customs duty?
Custom duties are imposed on goods and commodities imported into India and also on those goods exported from India (Import/Export duties).
What is union excise duty?
Excise duty is levied by the Centre on commodities which are produced within the country. However, the the commodities on which State levies and excise duty (liquor, drugs, etc.) are exempted from central excise.
What is value added tax?
VAT is a general consumption tax that is assessed on the value added to goods and services. VAT is a multi - stage tax levied only on value that is added at each stage in the cycle of production of goods and services with the provision of set - off for the tax paid at the earlier stages in the cycle / chain.
What is service tax?
Tax imposed by the government on services rendered is known as service tax.
What is sales tax?
Sales tax is levied on the sale of a commodity which is produced or imported and sold for the first time. If the product is sold subsequently without being processed further, it is exempted from sales tax.
What is GST?
Goods and services tax is a comprehensive tax levied on manufacture, sale and consumption of goods and services at a national level. Through a tax credit mechanism this tax is collected on value added goods and services at each stage of sale or purchase in the supply chain.
