Public Revenue – Tax and Non-Tax

What are Government Revenue and Public Revenue?Tax and Non-Tax

The Public Finance Report is an in-depth study of all state-related financial activities. It is also concerned with the full revenue and expenditure of the public authorities and administrative systems, modified together.
The principle of public finance encompasses public spending, public debt, and public revenue and profits.
Public revenue is precisely the revenue obtained from government sources to meet public spending requirements.

What is Public Revenue?

Generally, public revenue applies to government revenue. Taxes, the selling of public goods and services, fines, contributions, etc., are significant sources or ideas used in public revenue.

Tax and non-tax income are the principal sources of public revenue.
Public Revenue Sources

A) Revenue from Tax:

Tax is the primary source of public profits. In describing taxation, it is claimed that taxation is the compulsory imposing by government organizations of an obligation on public authorities to comply with the requirements of the general public as a whole.

Therefore, those points are illustrated as below with the previous section-defined term:

  • A tax is a mandatory obligation imposed by the state. If any person refuses to pay taxes, he can be fined or penalized.
  • Tax based on a taxpayer essentially requires some comprehension and sacrifice.
  • Tax is an obligation and not a penalty,
  • Most of the revenue is raised by the central government from taxation.

The wide tax divisions are direct and indirect taxes.

Direct taxes: Direct taxes are imposed on individuals’ or organizations’ wealth and income. Personal income tax, corporate tax, and gift or asset tax are such taxes. Direct taxes affect the same person. Direct taxes are evolving in nature, and along with the tax base, the tax rate is rising. Progressive direct taxes, especially in growing countries, are involved in decreasing income discrimination.

The following significant direct taxes are listed:

1. Tax on Personal Income:

Personal income tax is the obligation levied after unique allowable deductions on a person or group of individuals. As mentioned below, personal income taxes are planned:

Income (rs) Rate
0-1, 60,000 0%
1, 60,000 – 5, 00,000 10%
5, 00,000 – 8, 00,000 20%
8, 00,000 and above 30%

Senior citizens are excluded from income tax payments up to Rs: 2 40,000.
Females are exempted from income tax payments of up to Rs: 1, 90,000,000

2. Charge on corporations:

  • Corporate tax is a charge to be levied on the earnings of registered corporate corporations.
  • Corporate tax is a direct tax since a legal entity is given to the corporation.
  • Present rates of corporate tax are:

30 percent + 7.5 percent surcharge for the Indian Organization.
40 percent + 2.5% surcharge for international organisations.

Corporate tax accounted for 40 percent of overall tax revenue in 2009-2010.

3. Other Taxes Direct:

  • Income tax, interest tax, gift tax, spending tax, etc., are a list of other direct taxes.
  • The proportion of such taxes is unimportant.
  • Taxes indirectly
  • On products & commodities, indirect taxes are levied.
  • Sales tax, excise duty, service tax, customs duty, VAT, etc., are included in these taxes.
  • The effect of indirect taxes on various persons can be inferred.
  • Indirect taxes are not egalitarian in nature but regressive. Here, the customer’s responsibility is borne indirectly or explicitly, irrespective of their level of income.
  • For developing countries and others facing low-income levels, indirect taxes are of paramount importance.

The Indirect Main Taxes:

A) Excise obligation:

  • Such taxes are imposed in India on manufactured products and consumables.
  • Excise duty is the primary and single largest source of tax revenue production.
  • Excise duty rates face a dropping trend.

(b) Duty of Customs Duty:

  • This duty is levied on selective-range exports and imports.
  • Custom duty has less value from a tax point of view,
  • The Custom Levy Peak Rate is 10%

c) Taxes on services:

  • This tax is levied on a certain group of corporations, entities, or individuals.
  • Service tax rates have been gradually raised,

D) Tax on Goods and Service

  • Products and service tax includes several taxes, including excise duty, service tax, tax on products, VAT, etc.
  • In certain industries, it includes product and service costs.
  • The ambiguity of charges on goods and services is usually simplified.
  • Revenues that are non-tax
  • Non-tax income covers all sales other than government-accumulated taxes.
  • Non-tax revenue is a fund generated from internal sources

The revenue sources are:

  • Revenues from administration
  • Commercial profits
  • Grants and giveaways

Significant non-tax revenue sources include

A) Special Evaluation:

  • This can be called a fee for change,
  • This tax is levied on a certain group of community members who typically profit from government programs or public functions, such as road building, railways, parks, etc.
  • The government, therefore, imposes special charges on such assets.

b) Public Companies Surplus

  • The government has arranged public sector enterprises dealing with commercial operations.
  • A significant source of non-tax revenue is the surpluses produced by these enterprises.
  • These sales are in the form of profits known as economic income.

C) Charges:

  • A fee is a major source of non-tax managerial profits paid to public members by government agencies for representation services.
  • There is no compulsion for fees to be charged. All of those services used can pay fees.
  • For obtaining licenses, passports or registrations, filing of court cases, etc., fees can be paid.

d) Penalty and Fine

  • These are generic sources of non-tax administrative income.
  • For non-compliance with such laws and regulations, this can apply to the public.
  • These are not seen as the government’s primary source of revenue.

(e) Grants and Gifts

  • Grants are financial support for funding
  • These are provided to the public authority for some social activities to be carried out.
  • The higher public authority creates these for lower ones.
  • E.g., E.g., World Bank loans to State Bank grants
  • There is no compulsory repayment.
  • Gifts and gifts are made to the Central Government voluntarily by individuals, organizations, or foreign governments.
  • In the event of disasters or natural calamities, these gifts are created by natural feelings.
  • Gifts are not known to be a revenue source.
  • To raise government revenue, tax, therefore, plays an important role. In developing income, non-tax is important.

Changing patterns in India’s tax and non-tax revenues

To fulfill its expenditure from tax and non-tax revenue sources, the Government elevates economics. Government spending, as a matter of fact, goes beyond government revenue, resulting in budget inconsistencies.

Changing tendencies

A.) Income from taxes

  • It establishes and divides the tax structure as follows:
  • Central Government: levies income taxes, excluding customs duties on agricultural income, central excise duty, and tax on utilities.
  • STATE GOVERNMENT: Taxes are levied on state excise duty, agricultural revenue, VAT, land income tax, and skilled tax.
  • LOCAL GOVERNMENT BODIES: Octroi, land tax, and tax are charged for services such as the provision of water, sanitation, etc.
  • The Indian tax structure and system have confronted some reforms. These changes include reducing the rate of all major taxes, which simplifies laws and regulations and procedures, administration modernization, and machinery for compliance.

Benefit from Mainland Tax is:

Tax income patterns:

  • With the reduction of the tax rate, clear procedures, and a fast GDP growth rate, tax rate collection has increased.
  • The Central Government’s total tax revenue share as 1 % of GDP is a steady 9% to 10%.
  • In contrast with developing or developed countries, this is a low pace.
Year Tax Revenue Rate
1990-1991 57,576 10%
2002-2003 216266 8.8%
2009-2010 641979 10.4%

Trends in taxes that are overt and indirect:

  • Taxes were more than 70 percent of income before liberalization
  • This pattern has been reversed because of economic growth since 1990-91 (post-liberalization).
  • Owing to an increase in corporate tax and personal income tax, direct taxes contributed considerably.
Year Direct taxes Indirect taxes
1990-1991 19.1 80.9
2004-2005 43.3 56.1
2009-2010 57.7 42.0

Direct Tax Patterns

  • Direct tax shares are raised.
  • The Income and Wealth Tax Laws will be replaced by the Direct Tax Code and effective from April 1, 2011.

Principal direct taxes:

  • Charge on Corporate Profits
  • To collect taxes and contribute to overall tax revenue, this is the most significant direct tax.
  • The contribution of direct tax since liberalization has been increased:
Year % Of Total Tax Revenue Rs. Crores
1990-1991 9.3 5335
2004-2005 27.1 82680
2009-2010 40.0 256725

PERSONAL TAX OF INCOME:

  • Direct income tax collection has risen steadily since 1990-1991.
  • Personal income tax payments have also increased,
Year % Of Total Tax Revenue Rs. Crores
1990-1991 9.3 5371
2004-2005 16.2 49268
2009-2010 17.6 112850

Direct Tax Patterns

  • The overall share of central government-related indirect taxes has dropped.
  • There are three major indirect revenue-generating taxes.
  • Excise responsibility
YEAR Rs. CRORES % OF TOTAL TAX REVENUE
1990-1991 24,514 42.6
2004-2005 99,125 32.5
2009-2010 1,06,477 16.6

#CUSTOMS DUTY:

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

# SERVICE TAX (INTRODUCED IN 1994-95)

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

FAQs for Public Revenue – Tax and Non-Tax

What is the difference between tax revenue and non-tax revenue?

The difference between tax revenue and non-tax revenue can be explained as the former is based on the income of the person, which may be a direct tax. Indirect Tax is charged on the value of the transaction of goods and services. Non Tax revenue can be described as the charges charged against the services offered by the Government.

What are three sources of non-tax revenue?

The three sources are Electricity, Administrative Services, and Municipal Services.

What do you understand by non-tax sources of public revenue?

The sources of the non-tax revenues of the government are the Public incomes received through the administration, gifts, and grants, and commercial enterprises. 

What are the 4 types of tax?

  • Income Taxes
  • Sales Taxes
  • Property Taxes
  • Excise Taxes

Which type of tax is the major source of revenue?

The income tax is said to be the largest single source of federal revenue

What is the example of non-tax revenue?

Examples of non-tax revenue are fees and licenses, fines, and penalties.

What is meant by non-tax revenue?

Non-Tax revenue can be described as the income earned from several other sources apart from the taxes by the government. 

What are the main sources of public revenue?

Basically, public revenue is applied to government revenue. Taxes, taxes, the selling of public goods and services, fines, contributions, and many more are said to be the sources of public revenue. Also, tax and non-tax income are major sources of public revenue.

What is the difference between public receipts and public revenue?

The revenues are reported as the sales on the income statement; on the other hand, receipts increase the cash total on the balance sheet.

What are the various types of public revenue?

  • Grants and gifts.
  • Taxes.
  • Administrative revenues
  • Commercial revenues.

What is the non-tax revenue collected by the central government?

The non-tax revenue collected by the central government are received on the loans by the government to the states, railways, dividend, and profits received by the public sector companies. 

What is non-tax revenue? Give any two examples?

The two examples are – bond issues and profits of state-owned companies.

What is an example of non-tax revenue of the government?

The two examples are – bond issues and profits of state-owned companies.

What are the three major types of taxes?

Income Tax. Property Tax and Sales Tax are the three major types of taxes.

What are the 7 types of taxes?

The seven types of taxes are mentioned below:

  • Income Tax. 
  • Tariffs.
  • Sales Tax.
  • Property Tax.
  • Excise Tax.
  • Estate Tax.
  • Corporate Tax

What are the most important taxes?

The most important taxes are income taxes, sales taxes, property taxes, and excise taxes.

What are the two kinds of tax revenue?

The two kinds are tax and non-tax revenue.

What are the sources of tax revenue?

The biggest source of tax revenue is the corporation tax.

Are fees a non-tax revenue?

Yes, fees are non-tax revenue.

Is GST a non-tax revenue receipt?

GST is an example of indirect tax.

What is non-tax revenue in India?

Interest Receipts, profits, and dividends are the non-tax revenue in India.

What are the sources of public revenue in India?

The sources are taxes, process, fines, fees, penalties, grants, special assessment. 

What are the non-revenue objectives of taxation?

The subtraction of income and wealth is said to be the non-revenue objectives of taxation. 

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