TAX STRUCTURE IN INDIA – 1

 

 

Taxes in India are levied by the Central Government and the state governments. Some minor taxes are also levied by the local authorities such as the Municipality.

The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Central and the State. An important restriction on this power is Article 265 of the Constitution which states that “No tax shall be levied or collected except by the authority of law”.

Constitutionally established scheme of taxation

Article 246 of the Indian Constitution, distributes legislative powers including taxation, between the Parliament of India and the State Legislature. Schedule VII enumerates these subject matters with the use of three lists:

 

  • List – I entailing the areas on which only the parliament is competent to make laws,
  • List – II entailing the areas on which only the state legislature can make laws, and
  • List – III listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently.

 

Central government of India

 

S. No. Parliament of India
1 Taxes on income other than agricultural income (List I(Union List), Entry 82)
2 Duties of customs including export duties (List I(Union List), Entry 83)
3 Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I(Union List), Entry 84)
4 Corporation Tax (List I(Union List), Entry 85)
5 Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I(Union List), Entry 86)
6 Estate duty in respect of property other than agricultural land (List I(Union List), Entry 87)
7 Duties in respect of succession to property other than agricultural land (List I(Union List), Entry 88)
8 Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I(Union List), Entry 89)
9 Taxes other than stamp duties on transactions in stock exchanges and futures markets
10 Tax on sales or purchase of newspaper and advertisement theirin;<P.M. BAKSHI>
11 Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce
12 Taxes on the consignment of goods in the course of inter-State trade or commerce
13 All residuary types of taxes not listed in any of the three lists of Seventh Schedule of Indian Constitution

 

State governments

S. No. State Legislate
1 Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues (List II, Entry 45)
2 Taxes on agricultural income (List II, Entry 46)
3 Duties in respect of succession to agricultural land (List II, Entry 47)
4 Estate Duty in respect of agricultural land (List II, Entry 48)
5 Taxes on lands and buildings (List II, Entry 49)
6 Taxes on mineral rights (List II, Entry 50)
7 Duties of excise for following goods manufactured or produced within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics (List II, Entry 51)
8 Taxes on entry of goods into a local area for consumption, use or sale therein (see Value added tax) (List II, Entry 52)
9 Taxes on the consumption or sale of electricity (List II, Entry 53)
10 Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54)
11 Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55)
12 Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry 56)
13 Taxes on vehicles suitable for use on roads (List II, Entry 57)
14 Taxes on animals and boats (List II, Entry 58)
15 Tolls (List II, Entry 59)
16 Taxes on profession, trades, callings and employments (List II, Entry 60)
17 Capitation taxes (List II, Entry 61)
18 Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling (List II, Entry 62)
19 Stamp duty (List II, Entry 63)

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