Smart Facts –
- Raja Chelliah Committee (1991) and Kelkar Committee (2001) recommended increased of Direct Taxation and decrease of Indirect Taxation
Five Major Taxes (Higher to Lower) –
- Corporate Tax
- Income Tax
- Exercise Duty
- Custom Duty
- Service Tax
Taxes are classified are as follows :
1. Direct and Indirect Taxes –Direct Tax – Its burden cannot be shifted . It is paid by the same person on whom it is imposed , Exaples are as follows :
- Income Tax
- Wealth Tax
- Fringe Tax
- Corporate Tax
- Professional Tax
- Property Tax
Indirect Tax – The burden of Indirect Tax can be Shifted , Examples are as follows :
- Exercise duty
- Customs duty
- VAT
- Entertainment Tax
2. Ad Valorum and Specific Tax –
- Ad Valorum – Tax imposed on the basis of the total value of the commodity produced or sold
- Specific Tax – It is imposed on the basis of specific attributes like length , breadth , quantity , size etc . e.g – Cigarettes
3. Progressive and Regressive Tax –
- Progressive Tax – As income of a person increases , the rate of taxes also increases , so that he ends up paying more .
- Regressive Tax – As income of a person increases , the rate of tax goes down .
Some Important Taxes –
- Value Added Tax (VAT) – It is a tax on value addition at each stage from the first stage of production to the last stage of distribution up-to the final consumer , so that at each stage tax is paid on value addition
- Goods and Service Tax (GST) – It is a tax on consumption . Recommended by the Vijay Kelkar Task Force , GST is the ultimate reforms in the Indirect Taxation . The proposed GST will subsume a multiplicity of central and state level Indirect Tax , so as to bring about an uniform Indirect Tax Structure in India .
- Minimum Alternate Tax (MAT) – It is imposed on such companies which make profits , distribution dividends to shareholders and ye so adjust and lawfully manipulate their accounts that they end up as zero tax company . Thus , they lawfully avoid tax by using various rebates , Concessions and exemptions provided in the Income Tax Law . On Such companies , Government imposes MAT of 18% and more at their book profits .
