About Tax and Non-Tax Revenue
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 cause government deficit.
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 enclosed deduction in rates of all import 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 the 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 actually 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 to 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 afterward 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 proportion of tax skill has additionally accumulated.
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 within the tax skill 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 the 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.