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Tax and Non-Tax Revenue

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Introduction:

The government hikes finance rates to accommodate its costs from tax and non-tax income/revenue sources.

In fact, government costs go above government assets that causes government deficit.

Changes:

The important trends in tax and non-tax income are discussed below:

Tax Revenue:

In India, the tax-structure is best developed and the ability to levy taxes and duties is broadcast as follows:

Central Government:

It levy charges on assets (apart from agronomical income), community duty, and central customs charges and service tax.

State Government:

It levies taxes on agronomical income, Value Added Tax or VAT, Stamp Duty, state customs duty, acreage revenue tax and professional tax.

Local Government Bodies:

Local government bodies levy Octroi and tax for utilities like water supply, acreage tax, Sanitation etc. Indian tax anatomy and arrangement have undergone assertive reforms since liberalization.

These reforms included deduction in rates of all significant taxes, widening the abject of all taxes, simplifying laws and processes and addition of authoritative and administration machinery.

Some of the vital trends in tax acquirement or revenue are:

Trends In Gross Tax-Revenue And Tax-GDP Ratio:

The accumulation of taxes has increased due to deduction of tax rates, description of procedures and a high GDP growth rate.

The allotment of Gross tax income of the Central Government as a % of GDP has remained fixed amid 9% to 10%.

This is actual low in allegory to the developed nation and various developing nations.

YEAR Tax Revenue Percentage of GDP
1990-1991 57,576 10%
2002-2003 216266 8.8%
2009-2010 641979 10.4%

 

Trends of Direct And Indirect Taxes:

Before privatization, the indirect taxes contributed larger than 70% to the absolute tax revenue.

Though, back 1990-91 (post-liberalization), this trend got upturned due to financial development.

The direct taxes contributed importantly due to enhancement in accumulated tax and claimed assets tax.

YEAR Direct Taxes (%) Indirect Taxes (%)
1990-1991 19.1 80.9
2004-2005 43.3 56.1
2009-2010 57.7 42.0

Trends In Direct Taxes:

The allotment of direct taxes in the tax acquirement/revenue of the Government has enhanced over the years.

The Direct Tax Code altered the Income and Wealth Tax Laws as it is active from April 1, 2011.

Main Direct Taxes Include:

i) Corporate Income Tax:

It is the most important direct tax in terms of revenue accumulation and addition to direct tax income.

The addition of corporate or accumulated tax has enhanced abundantly afterwards liberalization:

YEAR % Of Total Tax Revenue Rs. CRORES
1990-1991 9.3 5335
2004-2005 27.1 82680
2009-2010 40.0 256725

ii) Personal Income Tax:

The accumulation of claimed assets tax has also increased added abundantly since 1990-1991.

The addition of claimed assets tax as a percentage of direct tax acquirement has also increased.

YEAR % OF TOTAL TAX REVENUE Rs. CRORES
1990-1991 9.3 5371
2004-2005 16.2 49268
2009-2010 17.6 112850

 

Trends In Indirect Taxes:

The allotment of indirect taxes in the tax acquirement of the Central Government has steadily declined.

The trends in the allotment of three major Indirect Taxes are declared as follows:

Excise Duty:

YEAR Rs. CRORE % OF TOTAL TAX REVENUE
1990-1991 24,514 42.6
2004-2005 99,125 32.5
2009-2010 1, 06, 477 16.6
Increased Significantly Declined

 

Customs Duty:

YEAR Rs. CRORE % OF TOTAL TAX REVENUE
1990-1991 20,644 35.9
2004-2005 57,611 18.9
2009-2010 98,000 15.3
Increased Declined

 

Service Tax (Introduced In 1994-95)

YEAR Rs. CRORE % OF TOTAL TAX REVENUE
1990-1991 862 0.8
2004-2005 14,200 4.7
2009-2010 65,000 10.1

Increased considerably, due to quickly rising service sector.

B) Non-Tax Revenue:

Non-tax acquirement includes internally generated funds.

Greater concentration has to be paid to elevate funds through non-tax revenues because of the limitations of adopting acquirement through taxes.

In 2002, the government set up the Non-Tax Acquirement assemblage to admonish the government to access the accumulating of Non-Tax Revenue.

Since non-tax revenues augment the sources of revenue, they are basic in affair the growing budgetary arrears and allotment basement investments.

Share of Tax Revenue and Non-Tax Revenue(%):

 

YEAR TAX REVENUE NON-TAX REVENUE(%)
1990-1991 78.2 21.8
2004-2005 73.5 26.5
2009-2010 77.2 22.8

 

Conclusion:

Hence, there are assorted changes in the trends of tax and non-tax assets or revenue.

These changes are brought about to meet the ever-enhancing public expenses and accessible deficit. 

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