history of the taxation full information on this prject.docx

1.  History of Taxation in India
The word ‘tax’ is derived from the Latin word tax are or tax. It means ‘to assess the worth of something’. Taxes
are imposed by government for the use and service of the State. They are levied and collected by the State for
the purchase or sale of merchandise or a service. Taxes provide revenue to the state, and is therefore one of the
most significant aspects of any system of administration by any form of government.
The strength of an economy depends upon how good the tax system is. A just tax system can propel the
economic growth of a country and lead to its prosperity. This in turns makes its citizens happy and more
productive. An efficient taxation policy leads to growth in GDP; it is considered sound if it performs allocative,
distributional and stabilization function in the economy.
There are two types of taxes – direct and indirect. Direct taxes are those that an entity remits to the government
directly, and include income tax, property tax, etc. indirect taxes are those that an entity remits through third
parties. Service tax is an example of indirect tax imposed by the government of India.
Any tax imposed by the government (Central, state or local) has the following important
characteristics:
 It is mandatory: since any form of tax is imposed by the government for the benefit of the country, it is
required by law to pay taxes
 It is a contribution: tax is a contribution made by citizens for the betterment of their country. The
government of India provides basic healthcare, infrastructure, defense, etc. with the money collected
from taxes
 It is for public benefit: the purpose of collecting taxes is for the benefit and upliftment of the society in
general. Taxes are not supposed to favor specific individuals. Disaster maintenance and rescue is an
important aspect of the money collected in the form of taxes
 It is paid out of income earned or wealth: you pay tax only when you generate income. If an
individual does not generate a minimum threshold income (defined and modified from time to time by
the government), they need not pay some taxes like income tax.
 It boosts economy: this is one of the most important aspects of collecting taxes. Since the government
provides for infrastructure in the form of roads, trains, power stations, damns, etc., it utilizes the tax
revenue for economic growth of the nation

2. History of Taxation in India
Income is the money that an individual or business receives in exchange for providing a good or services. A
formal tax system was in existence in India since the time of Maurya dynasty. The higher class of citizens
contributed 1/6th of their income as tax. It is said that even before the Maurya’s, tax was mentioned in Manu
Smriti, one of the most ancient scriptures of India. The subsequent Mughal invaders brought with them their
own taxation system. The infamous Jezail was a tax imposed on the non-Islamic people of the land. In India, it
was abolished by Akbar.
The income tax as we know today was first introduced in India in 1860 by the British. It was introduced to
compensate for the losses sustained by the government due to the rebellion of 1857. Income tax is defined as the
annual charge levied on both earned income (wages, salaries or commission) and unearned income like
dividends, interest or rent. In addition to financing a government’s operations, progressive income taxation is
designed to distribute wealth creation more evenly in a population and to serve as buffer in case of fluctuations
in the economic cycle. There are two basic types of income tax: personal income tax and corporation income
tax.
The Income Tax Act was passed in India in 1886, and there have been constant revisions and refinements in the
Act since then. After the first World War, a new Income Tax Act was passed, in 1918, again to counter the
residual effects of economic devastation caused by the war. This income tax Act was in place till 1922, when it
was replaced by another Act. After 40 years, and 15 years after India gained freedom from the British, the
income tax Act was modified again. The current Income Tax Act has been adopted in 1961, and bought into
force with effect from April 1, 1962. It encompasses the whole of India, including Sikkim, Jammu and Kashmir.
The Central Board of Revenue bifurcated and created a separate Board for Direct Taxes called as the Central
Board of Direct Taxes under the aegis of Central Board of Revenue Act, 1963.
Currently, there are five broad heads under which income is taxed by the govt. of India:
 Income from salary
 Income from business or profession
 Income from capital gains
 Income from property
 Income from other sources
Each successive government amends the Act with an aim to finance government operations, and to try and
distribute wealth more evenly. A noticeable feature of the Income Tax Act of India is that agricultural income in
India is not taxable. Income tax in India (and all other countries) is assessed annually for the previous financial
year.

3. India currently has a three-tier setup for taxation. The central government and the state government can both
impose tax. The State government in turn can delegate taxation to the local governing bodies like the municipal
corporations and gram panchayats. It is said that that the Indian tax system is one of the most complex in the
world, including the likes of income tax, wealth tax, property tax, gift tax, sales tax, VAT, custom duty, excise
duty (now replaced by GST), corporate tax, income tax and a plethora or other taxes? Indeed, it is one of the
reasons why there is a high demand in India for income tax consultants, GST consultants, auditors, and other
professionals.
As a nation evolves, its needs change. India is no exception. No doubt as the nation progresses, the tax structure
of India will undergo many refinements. For example, the Goods and Services Tax (GST), which has replaced
the Central and State indirect taxes such as VAT, excise duty and service tax, was implemented in India on July
1, 2017. GST has been already introduced in more than 160 countries, starting from France where it was
introduced way back in 1954. So, it can be safely said that GST is a tired and tested taxation solution; India
need not worry unnecessarily about its effectiveness.
Development of Indian Tax System:
Pre and Post-Colonial Influences
Development of Indian Tax System: Pre and Post-Colonial Influences
Abstract This article examines the origins, growth, and development of taxation practices in India. Based on
multiple perspectives from historical research, the article divides up developments in the Indian tax system into
four different governance regimes. These are the pre-colonial period (Ancient and Medieval), the colonial
period (1857–1947), India as a Sovereign State under the 1950 Constitution (1950–1991) and post-economic
liberalization (1991–2020). In each of these periods, several major taxation developments that occurred in the
country are reviewed, and the article highlights how different political and governance systems influenced the
changes in the Indian tax system. Based on such changes and influence, the study also proposes agenda for
future research. The article makes significant contributions to economic and business history research from a
developing economy perspective and provides insights for any future developments in relation to tax systems.

4. Latest Updates, Facts and Figures about Taxation in India
o There has been more than 80% growth in the number of returns filed in the last four financial years, and
tax-to-GDP ratio rose to 5.98% in FY 2017-18.
o The share of Indirect taxes has increased by up to 50 percent of the gross tax revenue in FY2019.
o India’s tax-to-GDP ratio is 16.6% against the OECD average of 34%.
Types of Taxation in India
The taxation system in India has been divided into two categories: Direct Tax and Indirect Tax.
Fig: Taxes in India
Direct Tax with Detailing Examples
o Direct tax is levied directly on the individual whose impact and incidence cannot be transferred.
o Direct taxes are progressive.
o The Central Board of Direct Taxes overlooks direct taxes.
o The important types of direct taxes are Income tax, Corporation tax, Capital Gains tax, Securities
transaction tax,
Indirect Tax with Detailing Examples
o Indirect taxes are taxes levied on considerations and impact and incidence of which can be transferred to
some other individual.
o Indirect taxes are regressive in nature.
o Central Board of Indirect Taxes overlooks them.
o Some indirect taxes include Sales tax, Customs duty, and Toll tax, etc.
Eligibility (Individual, Organization) of Taxation in India
The taxability of an individual depends on his residential status, which is defined on the basis of his physical
presence in India as per the Income Tax Act. The taxability of an organization (Company or Limited Liability
Partnership) depends on the residential status of the company, i.e., where the effective management is in India
or outside India.

5. Taxation in India
Taxation in India is a three-tier federal structure which consists of the Centre, State and local bodies. The power
to levy taxes has been provided for in Article 256 of the constitution, which states that ‘No taxes can be levied
or collected except by the authority of law’.
State Taxes
o Taxes levied and collected by the states vary from state to state. These are levied and collected by the
state governments.
o Some examples of state taxes are:
o Professional tax: This tax is levied on any person who earns income by profession.
o Stamp duty: It is levied on official documents like registration of marriage, and the amount of
this tax depends on the value of the transaction.
o Entertainment tax is usually levied on movie tickets, exhibition or amusement parks.
o Luxury Tax: It is levied by the hotels or any establishments that provide accommodation to the
individuals.
Central Taxes
o Taxes levied by the central government are called central taxes.
o These taxes may be wholly attributed to the central government or divided between the central and the
state governments.
o Examples of central taxes are:
o Excise duties: These are levied on goods manufactured in India.
o Gift tax: It is levied on gifts whose value exceeds Rs 50,000.
o Income tax: It is levied on the income of the individual.
Stakeholders Related to Taxation in India
The stakeholders involved in taxation in India are:
Ministry of Finance
o The Ministry of Finance serves as the treasurer in India and is responsible for economic decisions in the
country.

6. o It consists of various departments that assist in the country’s economic management by formulating
policies and programmers.
o The various departments under the Ministry of Finance, playing a key role in the economic decisions of
the country are:
o Department of Revenue
o Department of Financial Services
Income Tax Department
o It functions under the Department of Revenue, Ministry of Finance.
o The main function of the Income Tax Department is to collect direct taxes in India.
o The Central Board of Direct Taxes heads the income tax department.
Central Board of Indirect Taxes and Customs
o The Central Board of Indirect Taxes and Customs has been renamed post rollout of GST.
o It assists the government in formulating policies concerning GST.
Taxation in India: Income Types
The types of Income, as per Section 14 of the Income Tax Act, can be classified as under:
o Salaries.
o Income from house property.
o Profits and gains of business or profession.
o Capital gains.
o Income from other sources.
Taxation in India: Exemptions on Deductions
o Exemption on taxes are deductions which lead to lowering of tax liability.
o These deductions are subtracted from the total tax liability to ascertain the total amount of tax payable.
o Various types of deductions available are:
o House Rent Allowance: HRA exemption is availed in case of rented accommodation.
o Medical Insurance Deductions: This is available on the premium paid for any medical policy.
o Section 80C: Availed for any investment made.
o Section 80CC: Deduction for premium paid for Annuity plan of LIC.

7. o Section 80CCD (1): Availed for contribution to pension account.
Taxation in India: Cryptocurrency
o In Budget 2022-23, the central government has proposed a specific tax regime on the taxation of virtual
digital assets.
o This came into effect from April 1, 2022, and is levied under Section 115BBH of the Income Tax Act.
o The virtual assets would be taxed at the rate of 30%.
o Further, the central government has clarified that no deduction would be allowed regarding any
expenditure made or loss incurred during the transaction of such assets.
o Also, gifts of virtual assets would be taxable in the hands of the recipient.
Impact of Taxation on Cryptocurrency
The imposition of taxation on cryptocurrency had mixed impacts.
o The imposition of taxes has led to a decrease in the trading volumes of cryptocurrencies. Trading
volumes on Nazir and Coindex dropped by at least 80 per cent.
o The traders of cryptocurrency have now shifted to other international exchanges to bypass the heavy
TDS.
o Many Startups are considering shifting to crypto friendly countries to execute their operations.
o Further, it has also resulted in a positive impact on investors and has reduced speculation and
manipulation in the crypto industry.
o It has reduced the tendency of fraudulent active
Role of Taxation in Economy
The importance of taxation in India is:
o It provides funds for infrastructure development in the country.
o Progressive taxes act as automatic stabilizers in the economy and thus reduce inequalities.
o It helps in creating a vicious cycle of growth in the economy.
o It provides the government the much-needed funds to carry out welfare activities.
o Taxes can be used as a medium to control inflation in the economy during periods!

8. Goods and Services Tax
o Goods and services tax were implemented on July 1, 2017.
o It is a multi-stage, consumption-based tax.
o Under it, tax is charged on each stage of the supply chain.
o It removes the cascading effect of taxes.
o It subsumed various kinds of taxes prevalent in the economy and simplified the country’s tax structure.
o It has three components: CGST, SGST, and IGST.
Objectives and Principles of Taxation



There are many sources of revenue for the government but taxation is the most significant source. A tax is a
mandatory payment made to the government by individuals and businesses based on certain well-established rules
or criteria. These criteria, such as income earned, property owned, capital gains realized, or expenditure incurred
(money spent) on domestic and imported goods. Taxation is utilized as an economic policy tool in the modern
world. It has an impact on overall output, consumption, investment, industrial location and techniques, the balance
of payments, income distribution, and so on.
Type of Taxes:
The types of taxes are proportional, progressive, and regressive. As its name suggests the proportionate
tax is one that places the same relative burden on all taxpayers. It is one in which tax liability and income
develop in lockstep. In the proportional tax system, regardless of income, everyone pays the same percentage
tax. A progressive tax increases tax liability in a way that is not proportionate to income growth. A regressive
tax increases the relative burden less than proportionally. As a result, progressive taxes are seen to reduce
income distribution inequities, but regressive taxes might actually increase them.
Objectives of Taxation:
1. Economic Development: Economic development is one of the most essential goals of taxes.
The expansion of capital formation is a major determinant of any country’s economic progress.
Capital formation is regarded to be the linchpin of economic progress. However, capital
shortages are common in less developed countries. To address capital scarcity, governments in

9. these nations deploy resources in order to accelerate capital formation. The government uses tax
income to increase both public and private investment through various expenditures. With proper
tax planning, the savings-to-national-income ratio may be raised with further helps the economy
in development. Some economists advocate for tax reforms that will encourage economic
growth. This strategy might require a qualitative reorganization of the tax system. However, tax
incentives have a limit, especially when it comes to stimulating the economic development of
specific businesses or areas.
2. Non-Revenue Goal: Non-Tax Revenue is the government’s recurring revenue from sources other than
taxes. They are extremely significant since they assist the government and enhance public finance. The decrease
in income and wealth inequality is another non-revenue goal of taxes. This can be accomplished by taxing the
wealthy at a greater rate than the poor, or by implementing a progressive taxation system.
3. Price Stability: Taxes may be used to maintain price stability, which is a short-term goal of taxation.
Taxes are seen to be a good way to keep inflation under control. Increased direct tax rates can be used to limit
private spending which further reduces excessive demand. Naturally, with this, the commodities market is under
less stress. When it comes to indirect taxes on products, they worsen inflationary trends. On the one hand, high
commodity prices discourage consumption while also encouraging saving. When taxes are reduced during
deflation, the opposite impact occurs.
4. Balance of Payment (BOP) Difficulties are Reduced: Growing current account deficits are
sometimes a sign of impending balance of payments problems. Capital inflows, other net currency inflows, or
a decrease in foreign currency reserves are all required to fund current account deficits. Customs tariffs and
other taxes are also used to regulate imports of particular commodities in order to reduce the severity of balance
of payments problems and encourage domestic manufacture of import alternatives.
5. Full Employment: Since the level of employment is determined by effective demand. A government seeking
to achieve full employment must lower its tax rate. As a result, disposable income will increase and in return
demand for products and services will also increase. Increased demand will drive investment, resulting in a rise
in income and employment through the multiplier effect. The bigger the disincentives to labor, the higher the
tax wedge. Reduced marginal tax rates on earnings and wages, for example, people may be more motivated to
work harder if they pay less tax on their profits
.
Principles of Taxation:

10. 1Horizontal Equity: The horizontal equity concept is important in taxation and it suggests that people in
similar or identical positions will have the same tax burden. It is an economic theory that maintains that people
with identical incomes and assets should pay the same tax rate. Horizontal equity should apply to people who
are regarded as equal.
2. The Ability-to-Pay Principle: According to the ability-to-pay concept, individuals with a better ability
to pay taxes (as measured by income and wealth) should pay more. This concept suggests that individuals who
have achieved success should be ready to give back a bit more to the society that helped them achieve it.
According to this, the overall tax burden should be allocated among individuals based on their ability to bear
it, taking into consideration all relevant personal characteristics. In this instance, personal levies are the most
suitable taxes.
3. The Principle of Benefit: Taxes, according to the benefit principle, serve a similar purpose to prices in
private transactions. Namely, they aid in determining what activities the government will undertake and who
will pay for them. In fact, most public services are difficult to apply the benefit principle because individuals
are often unwilling to pay for a publicly supplied service, such as a police department unless they can be
excluded from the service’s advantages. The benefit concept is most successfully applied in the funding of
roads and highways through vehicle fuel taxes and user fees (tolls), those who use have to pay for that.
4. Stability: Tax rules should be modified infrequently. When the tax rules are modified, they should be part
of comprehensive and systematic tax reform. The reform includes enough provisions for a fair and orderly
transition. Frequent changes in tax legislation can lead to lower compliance or behavior that tries to adjust for
possible future changes in the tax system.
5. Clarity: Tax rules and regulations must be understandable to the average taxpayer. They must be as
straightforward as feasible. Tax rules should be plain and definite. This not only leads to a significant amount
of inaccuracy but also undermines honesty and respect for the law. Unclear tax will discriminate against the
poor and the uninformed, who are unable to take advantage of the myriad legal tax-saving alternatives
accessible to the educated and wealthy. Attempts to establish fairness have occasionally generated
complications, contradicting reform goals.
The economic strength of a nation depends upon its taxation system. An efficient taxation system keeps the
revenue constant, stimulates industrial activity and leads to the economy’s overall growth (Gruber, 2010). Apart
from maintaining law and order, revenue-generating tax systems are requirement health care, education and
infrastructure (Frankia, 2010). Taxes are not the only source for raising funds to carry out governance but are an
essential fiscal tool for the economic development of any nation. It is also used to encourage investment and to
provide incentives to priority sectors of the economy. A sound system of taxation in any country is always
capable of performing allocative, distributional and stabilization functions in an efficient manner. Governments
generally use taxation to fund essential social services; finance long-term social investment; discourage the

11. consumption of undesirable goods and services; act as a tool for redistribution of resources, and act as an
important tool for fiscal policy. This article makes use of a range of concepts connected with discourse and
power, which have been used as a basis for discussion relative to the dynamics of history varying from the role
of the monarch (Mukhopadhyay, 2018; Pager, 1920; Prasad, 1987; Samson, 2002), colonial impact (Banerjee,
1928; Niyogi, 1929; Rao & Vakil, 1931; Reddy, 2006; Surry, 2006) and post-independence governance
mechanisms in respective counties. Based on these multiple the economic strength of a nation depends upon its
taxation
system. An efficient taxation system keeps the revenue
constant, stimulates industrial activity and leads to the
economy’s overall growth (Gruber, 2010). Apart from
maintaining law and order, revenue-generating tax systems
are requirement health care, education and infrastructure?
(Frankia, 2010). Taxes are not the only source for raising
funds to carry out governance but are an essential fiscal tool
for the economic development of any nation. It is also used
to encourage investment and to provide incentives to priority
sectors of the economy. A sound system of taxation in any
country is always capable of performing allocative,
distributional and stabilization functions in an efficient
manner. Governments generally use taxation to fund
essential social services; finance long-term social investment;
discourage the consumption of undesirable goods and
services; act as a tool for redistribution of resources, and act
as an important tool for fiscal policy.
This article makes use of a range of concepts connected
with discourse and power, which have been used as a basis
for discussion relative to the dynamics of history varying
from the role of the monarch (Mukhopadhyay, 2018; Pager,
1920; Prasad, 1987; Samson, 2002), colonial impact
(Banerjee, 1928; Niyogi, 1929; Rao & Vakil, 1931; Reddy,
2006; Surry, 2006) and post-independence governance
mechanisms in respective counties. Based on these multiple
Introduction
The economic strength of a nation depends upon its taxation

12. system. An efficient taxation system keeps the revenue
constant, stimulates industrial activity and leads to the
economy’s overall growth (Gruber, 2010). Apart from
maintaining law and order, revenue-generating tax systems
are requirement health care, education and infrastructure?
(Frankia, 2010). Taxes are not the only source for raising
funds to carry out governance but are an essential fiscal tool
for the economic development of any nation. It is also used
to encourage investment and to provide incentives to priority
sectors of the economy. A sound system of taxation in any
country is always capable of performing allocative,
distributional and stabilization functions in an efficient
manner. Governments generally use taxation to fund
essential social services; finance long-term social investment;
discourage the consumption of undesirable goods and
services; act as a tool for redistribution of resources, and act
as an important tool for fiscal policy.
This article makes use of a range of concepts connected
with discourse and power, which have been used as a basis
for discussion relative to the dynamics of history varying
from the role of the monarch (Mukhopadhyay, 2018; Pager,
1920; Prasad, 1987; Samson, 2002), colonial impact
(Banerjee, 1928; Niyogi, 1929; Rao & Vakil, 1931; Reddy,
2006; Surry, 2006) and post-independence governance
mechanisms in respective counties. Based on these multiply
 Old Taxation
The old tax regime was in place before the introduction of the new tax regime in the Union Budget 2023. It
has five old tax slab rates that range between 0% to 30%.
In this regime, the initial tax exemption limit for you is Rs. 2.5 lakhs, with an additional standard deduction
of Rs. 50,000.

13. Key Features of the Old Tax Regime:
1. Old Regime Tax Slabs:
The income tax old regime provides 5 tax slabs with old tax slab rates ranging from 0 to 30% p.a.
The following table shows the income tax slabs in India for the old regime:
Old Tax Regime Slabs (Rs. in lakhs) Old Regime Tax Slab Rates (in % p.a.)
0 – Rs. 2.5 lakhs Nil
Rs. 2.5 lakhs – Rs. 5 lakhs 5% (Rebate u/ Section 87A is available)
Rs. 5 lakhs – Rs. 7.5 lakhs 20%
Rs. 7.5 lakhs – Rs. 10 lakhs 20%
Rs. 10 lakhs – Rs. 12.5 lakhs 30%
Rs. 12.5 lakhs – Rs. 15 lakhs 30%
Rs. 15 lakhs & above 30%
2. More Tax Deductions and Exemptions:
Under the old tax regime, you have access to over 70 exemptions and deductions, including Section
80C, Section 10(10D), HRA and LTA. This enables you to lower your taxable income and reduce your tax
obligations.
3. LTCG Benefits: The old tax slab regime provides Long-Term Capital Gains (LTCG)
benefits on your investments in debt funds.
4. Some of the most common exemptions and deductions under the income tax old
regime are mentioned below:

14. o Section 80C: Allows for a deduction of up to Rs. 1.5 lakhs on investments made in various savings
schemes, such as ULIP, EPF, PPF, and ELSS.
o Section 80D: Allows for a deduction of up to Rs. 50,000 on medical expenses incurred for self, spouse,
parents, and children.
o Section 80 TTB: Allows for a deduction of up to Rs. 10,000 on interest income from savings accounts
and post office deposits.
o House Rent Allowance (HRA): Allows for a deduction of the actual amount of HRA received or
50% of the basic salary, whichever is lower.
o Leave Travel Allowance (LTA): Allows for a deduction of the actual amount of LTA received or
40% of the basic salary, whichever is lower.
o Tax Rebate: You can get a tax rebate on income of up to Rs. 5 lakhs under Section 87A.
o Standard Deduction: Salaried individuals can avail of tax deductions of up to Rs. 50,000.
About the New Tax Regime
In the Union Budget 2020, the Government of India introduced a new regime tax slab for individuals,
businesses, and Hindu Undivided Families (HUFs) under Section 115 BAC of the Income Tax Act, 1961.
This new tax regime has been in effect since 1 April 2020 (FY 2020-21). Later, in Budget 2023, the
government introduced a better and new tax structure under Section 115 BAC.
NOTE: The new tax regime of Budget 2023 replaces the previously introduced new tax regime of Budget 2020
under Section 115BAC of the Income Tax Act.
Key Features of the New Tax Regime:
 Reduced Tax Rates: The new tax regime offers lower tax rates for different income tax slabs. But you
have to give up various tax deductions and exemptions in the new tax regime in comparison to the old tax
regime.
Income Tax Slabs (in Rs.) Income Tax Rates (in % p.a.)
0 – Rs. 3 lakhs Nil

15. Rs. 3 lakhs – Rs. 6 lakhs 5%
Rs. 6 lakhs – Rs. 9 lakhs 10%
Rs. 15 lakhs & above 30%
 Default Option: The new tax regime is now the default option for taxpayers, meaning you have to
specifically select the old tax regime if you wish to utilize it.
 Higher Exemption Limit: The basic tax exemption limit in the new tax regime has been increased from
Rs. 2.5 lakhs in the old tax regime slabs to Rs. 3 lakhs in the new tax regime.
 Tax Rebate: A tax rebate has been introduced under Section 87A for income up to Rs. 7 lakhs, which
was previously set at Rs. 5 lakhs in the old income tax regime.
 Standard Deduction in New Tax Regime:
o For Salaried Income: In the new tax regime, the standard deduction of Rs. 50,000 remains applicable.
This means that regardless of your income, you can subtract Rs. 50,000 from your gross salary before
calculating the taxable income.
o For Family Pension: The deduction for family pension has been increased to Rs. 15,000 or 1/3rd of the
pension (whichever is lower). This benefit is provided to you if you receive a family pension from the
government or a private organization.
 Surcharge Reduction for High Net-worth Individuals (HNIs): The surcharge rate on income exceeding
Rs. 5 crores have been reduced from 37% in the old tax regime slabs to 25% in the new tax regime slabs.
This reduction will lower the effective tax rate for High Net-worth Individuals (HNIs) from 42.74% to
39%.
 Higher Leave Encashment Exemption: Non-government employees can now enjoy a higher exemption
limit for leave encashment. The leave encashment limit increased from Rs. 3 lakhs in the income tax old
regime to Rs. 25 lakhs in the new regime.
 No LTCG Benefit: The income tax slab new regime does not provide Long-Term Capital Gains (LTCG)
benefits on debt funds invested after 31 March 2023.

16. Old vs New Tax Regime in FY 2023-24 (AY 2024-25)
Deciding between the new tax regime vs the old one depends on a comparative analysis of the overall
benefits from different tax slab rates and deductions available for you under both tax regimes.
To make it easier, we have compared old and new tax regimes based on various parameters in the following
sections.
Income Tax Slab for Old Regime vs New Tax Regime
Income
Tax Slab
Income Tax Rate (in % p.a.)
Old Tax Regime New Tax Regime
For Individuals/
HUFs/ NRIs (age
< 60 years)
For Individuals/
HUFs/ NRIs (age
60 – 80 years)
For Individuals/
HUFs/ NRIs (age
> 60 years)
Tax Rates
until 31
March
2023
Tax
Rates
from 01
April
2023
0 – Rs. 2.5
lakhs
NIL NIL NIL NIL NIL
Rs. 2.5
lakhs –
Rs. 3
lakhs
5% NIL NIL 5% NIL
Rs. 3
lakhs –
Rs. 5
lakhs
5% 5% NIL 5% 5%

17. Rs. 5
lakhs –
Rs. 6
lakhs
20% 20% 20% 10% 5%
Rs. 6
lakhs –
Rs. 7.5
lakhs
20% 20% 20% 10% 5%
Rs. 7.5
lakhs –
Rs. 9
lakhs
20% 20% 20% 15% 10%
Rs. 9
lakhs –
Rs. 10
lakhs
20% 20% 20% 15% 15%
Rs. 10
lakhs –
Rs. 12
lakhs
30% 30% 30% 20% 15%
Rs. 12
lakhs –
Rs. 12.5
lakhs
30% 30% 30% 20% 20%
Rs. 12.5
lakhs –
30% 30% 30% 25% 20%

18. Rs. 15
lakhs
Rs. 15
lakhs &
above
30% 30% 30% 30% 30%
Surcharge Rates for Old vs New Tax Regime (FY 2023-24)
Surcharge Rates for FY 2023-24 (AY 2024-25)
Income Range Surcharge Rates for Old Tax
Regime FY 2023-24
Surcharge Rates for New Tax
Regime FY 2023-24
Rs. 50 lakhs- Rs. 1
crore
10% 10%
Rs. 1 crore- Rs. 2
crores
15% 15%
Rs. 2 crores- Rs. 5
crores
25% 25%
Rs. 5 crores- Rs. 10
crores
37% 25%
Rs. 10 crores &
above
37% 25%

19. Deductions/ Exemptions under Old vs New Tax Regime (AY 2024-25)
The tax deductions and exemptions under the old regime and new tax regime for FY 2023-24 are as
follows:
Income
Tax Deductions/
Exemptions
Details Old Tax
Regime
Previous Tax
Regime (until 31
March 2023)
New Tax
Regime
(Applicable
from 1 April
2023)
Income Limit for
Tax Rebate
Income tax rebate
provided for a certain
income limit
Rs. 5
lakhs
Rs. 5 lakhs Rs. 7 lakhs
Section 87A You can claim a 100%
tax rebate of up to Rs.
25,000 for income of
up to Rs. 7 lakhs.
Rs.
12,500
Rs. 12,500 Rs. 25,000
Standard
Deduction
Rs. 50,000 for Salaried
Class individuals
Rs.
50,000
NA Rs. 50,000
Effective Tax-Free
Salary Income
The tax-free income
level after including
deductions and
exemptions on salary
limit
Rs. 5.5
lakhs
Rs. 5 lakhs Rs. 7.5 lakhs
Standard
Deduction on
Family Pension
Lower of Rs. 15,000 or
1/3rd of the pension
amount for Pensioners
Rs.
15,000
Rs. 15,000 Rs. 15,000

20. HRA Exemption On HRA allowance for
salaried employees
YES NO NO
Transport
Allowance
For Especially Abled
individuals
YES YES YES
Conveyance
Allowance
Expenses for travelling
to and for for work OR
on transfer
YES YES YES
Entertainment
Allowance &
Professional Tax
Deductions on
entertainment
allowance and
professional tax
YES NO NO
Perquisites for
Official Purposes
Deductions on
perquisites paid for
office purposes
YES YES YES
Section 80CCD (1) Employee’s
contribution to National
Pension Scheme (NPS)
account
YES NO NO
Section 80CCD (2) Employer’s contribution
to the National Pension
Scheme (NPS) account
of an employee
YES YES YES
Section 80C Deductions on
investments made in
ULIP/ ELSS/ LIC/
YES NO NO

21. PPF/ Tax-Saver FDs/
Child Tuition Fee
Section 80D Deductions on medical
insurance premium
YES NO NO
Section 80E For interest paid on an
education loan
YES NO NO
Section 80 EEB Interest paid on Electric
Vehicle (EV) loan
YES NO NO
Section 80G Deductions on
donations paid to
political parties
YES NO NO
Section 80JJAA Deductions are allowed
when new employees
are employed
YES YES YES
Section 80U Deductions for disabled
individuals
YES NO NO
Other Chapter VI-
A Deductions
Other deductions
available under Chapter
VI-A of the IT Act,
1961
YES NO NO
Section 32 Depreciation on
tangible assets (other
than additional
depreciation)
YES YES YES

22. Section 24(B) Internet paid on home
loan for a self-occupied
or vacant property
YES NO NO
Section 24(A) Interest paid on a home
loan of a Letting-out
property
YES YES YES
Section 80 CCH Contributions made to
Agni veer Corpus Fund
YES NOT EXISTED YES
Gifts Up to Rs. 50,000 YES YES YES
Section 10(10C) On Voluntary
retirement amount
YES YES YES
Section 10(10) On Gratuity amount YES YES YES
Section 10(10AA) On leave encashment YES YES YES
Which one is Better: The Old vs New Tax Regime?
In an old vs new tax regime comparison, you may find the old regime advantageous if you are eligible for
deductions and exemptions. However, the new tax system in India provides reduced rates for individuals
earning up to Rs. 15 lakhs annually.
1. Advantages of Income Tax Old Regime:
o Lower tax liability: For high earners with substantial deductions, the overall tax burden can be lower.
o Investment benefits: Encourages long-term investments through tax-saving options.
o Higher returns: Allows earning income from investments while claiming tax deductions on them.
2. Advantages of the New Regime:
o Lower tax rates: Offers simplified tax slabs with lower rates for lower-income earners (up to 7 lakhs).

23. o Ease of compliance: No need to maintain investment proofs or claim deductions, making filing simpler.
o Increased disposable income: More take-home pay due to lower tax rates.
RESULT:
4. Old Tax Regime
 Promotes savings and investment.
 It not only saves your income tax liability but helps you grow your corpus in the long term through tax-
saving investments.
 The old income tax regime provides dual benefits of investments along with tax benefits.
New Tax
 It promotes consumer behavior, where your investments reduce and expendable income increases.
 It simplifies the tax structure to bring more taxpayers into its pivot.
To determine which tax system is preferable for you, let us have a look at the exam of two individuals.
Income Tax Authorities
Income tax authority [Explanation (a) to section 133A]:
“Income-tax authority” means a Commissioner, a Joint Commissioner, a Director, a Joint Director, an
Assistant Director or a Deputy Director or an Assessing Officer, or a Tax Recovery Off, and for the
purposes of clause (I) of subsection (1), clause (I) of sub-section (3) and sub-section (5), includes an
Inspector of Income-tax.
. Various Authorities
Section of the Income Tax Act, 1961 provides for the administrative and judicial authorities for
administration of this Act. The Direct Tax Laws Act, 1987 has brought far-reaching changes in the
organizational structure. The implementation of the Act lies in the hands of these authorities. The
change in designation of certain authorities and creation of certain new posts in the structure are the
main features of amendments made by The Direct Tax Laws Act, 1987. The new features of
authorities have been properly depicted in a chart on the facing page. These authorities have been
grouped into two main wings:

25. What are the new tax criteria in India?
Income Tax Slabs in FY 2023-24 (AY 2023-24) for HUF and Individuals
Annual Taxable Income New Tax Regime Old Tax Regime
Over Rs.9 lakh to Rs.10 lakh 15% 20%
Above Rs.15 lakh 30% 30%
What are the new rules of income tax?
Revised Income Tax Slab Rate AY 2024-25 (FY 2023-24)– For New Regime
Income Slabs Income Tax Rates FY 2023-24 (AY 2024-25)
Up to Rs 3,00,000 Nil
Rs 3,00,000 to Rs 6,00,000 5% on income which exceeds Rs 3,00,000
Rs 6,00,000 to Rs 900,000 Rs. 15,000 + 10% on income more than Rs 6,00,000
Is there any new tax regime slab for 2024 25?
Income tax slabs for FY 2024-25 (AY 2025-26), FY 2023-24 (AY 2024-25) under the new
tax regime
Income tax slabs under new tax regime for FY 2023-24, FY 2024-25

26. From 3,00,001 to 6,00,000 5
From 6,00,001 to 9,00,000 10
From 9,00,001 to 12,00,000 15
From 12,00,001 to 15,00,000 20
IT Returns 2024: New Income Tax rules
introduced in 2023 that would affect you in
2024
New tax rules 2023: One of the significant announcements regarding personal
taxation in 2023 was the declaration of the New Income Tax Regime as the default tax
regime.
New Income Tax rules: The Government of India announced several new rules
for the Income Tax in the Union Budget 2023. One of the significant
announcements regarding personal taxation was the declaration of the New
Income Tax Regime as the default tax regime.
In her Budget speech for 2023-24, Union Finance Minister Nirmala Sitharaman
said budget proposals under the new income tax regime will leave more money in
the hands of the people and it is up to the taxpayer to decide where to put his
money, rather than the government incentivizing or disincentivizing him to do so.
Here are the top Income Tax rules changed in 2023:
> New Tax Regime: The new tax regime was announced in Budget 2020.
Between April 2020 and March 2023, the new tax regime was optional. In Union
Budget 2023, it was made the default regime. FM Sitharaman said that the old tax

27. regime will be available to taxpayers but in case an individual does not specify the
tax regime for TDS from salary or while filing the income tax return, the income
tax will then be calculated on the basis of the new tax regime income tax slabs.
> New tax slabs: To make the new tax regime more attractive and taxpayers-
friendly, income tax slabs under this regime were changed.
Zero tax on income up to Rs 3 lakh
5% between Rs 3 lakh and Rs 6 lakh
10% on Rs 6 lakh to Rs 9 lakh
15% on Rs 9 lakh to Rs 12 lakh
20% on Rs 12-15 lakh
30% on Rs 15 lakh
> Income Tax Rebate: Before the Union Budget 2023, individuals with an annual
income up to Rs 5 lakh were not required to pay any tax. This limit was hiked to
Rs 7 lakh.
> Standard deduction under New Tax Regime: The standard deduction of Rs
50,000, which was earlier restricted to the Old Tax Regime, was extended to the
new tax regime in Union Budget 2023. Following the inclusion, the tax-free
income, including the rebate, now stands at Rs 7.5 lakh.
LTCG benefit on debt mutual funds removed: The Centre said that
investments made in debt mutual funds after March 31, 2023, will not be eligible
for Long Term Capital Gains taxation on withdrawal. This means that capital
gains on debt mutual fund units will be taxed as per taxpayers’ income slabs. The
gains will not be taxed as LTCG with indexation.
Earlier, debt MFs had the LTCG tax benefit over bank FDs. Investments in debt
MFs made till and on March 31, 2023, will be taxed as per old LTCG tax rules.

28. Reduced surcharge for High Net Worth Individuals: FM Sitharaman reduced
the surcharge rate on income over Rs 5 crores has been reduced from 37% to
25%. This move brought down the effective tax rate from 42.74% to 39%. This
was introduced only under the New Tax Regime.
Before this, the surcharge (the tax on tax for those with income exceeding Rs 5
crore) was 37% of the tax amount under both the Old and New Tax regimes. This
pushed the highest marginal tax rate (including surcharge) to 42.74%.
> Taxes on Life insurance maturity money: The Centre said that life insurance
maturity money will not be fully exempted from income tax. As per the new rule, if
the total premium paid on all non-ULIP life insurance policies exceeds Rs 5 lakh
in a financial year, then the maturity amount will be taxable.
The CBDT said that the taxable maturity amount will be calculated only if the life
insurance policies meet the specified criteria such as the total amount of premium
paid for single or multiple non-ULIP insurance policies.
For ULIP policies, the maturity amount is eligible for taxes if the premium payable
is more than Rs 2.5 lakh in a given financial year.
> Cap on capital gains deductions from property sale: The Centre has put a
cap of Rs 10 crore on the maximum deduction that can be claimed from capital
gains arising from the sale of residential property.
Taxpayers can claim deductions for this under Section 54 and Section 54F of the
Income-tax Act, 1961. Due to this, the Centre has put up a limit on investment in
the Capital Gains Account Scheme.
The new rule, which is already in effect, will impact individuals especially HNIs
who sell their old house or residential property and reinvest the money in new
property to save tax on LTCG.
> IT returns discarded: In 2023, the Income Tax department announced the
Discard return option, which allows individuals to completely delete their

29. unverified ITR. With this, taxpayers can delete their previously submitted ITR,
which is not verified, and make changes. This would ultimately help the taxpayers
in rectifying the errors before the verification process.
> TDS on online game winnings: The Centre introduced a new rule wherein it
was declared that the TDS on online winnings will be deducted at 30%. Till March
31, 2023, TDS was only applied when the winnings exceeded Rs 10,000 in a
financial year. As per the new rule, if the tax is deducted more than your taxable
income, then the taxpayers will be required to file ITR to claim an income tax
refund.
 DIRECT TAX
In India, direct taxes are imposed by the central government on individuals and entities based on their income or
profits earned. They are levied directly on the income of individuals, corporations, and other entities without
any intermediary. Broadly, direct taxes in India include income tax, corporate tax, and capital gains tax. These
taxes are essential sources of revenue for the government and play a crucial role in financing public expenditure
and promoting economic development.
Examples of Direct Taxes
Examples of direct taxes in India include income tax, which is levied on the income earned by individuals and
businesses. Corporate tax, which is imposed on companies’ profits; and capital gains tax, which is applicable on
the gains arising from the sale of capital assets, including property, stocks and mutual funds among others.
These taxes are directly collected from the taxpayers by the government authorities and contribute significantly
to the country’s overall revenue.

30. Types of Direct Taxes
In India, several types of direct taxes are levied by the central government. Let’s take a look at some of the most
common forms of direct taxes.
 Income Tax: It is a levy imposed on the income earned by individuals, Hindu Undivided Families (HUFs),
partnerships, and associations of persons (AOPs). Individuals have to pay income tax on the basis of their
income and age. The Income Tax Act 1961 provides guidelines for the computation and collection of income
tax in India.
 Corporate Tax: It is a form of direct tax levied on the profit’s companies, and corporations earn. Corporate Tax
applies to both domestic and foreign companies operating in India. The Finance Act determines the corporate
tax rates, deductions, and exemptions applicable to different categories of companies.
 Capital Gains Tax: This tax applies to the gains arising from the sale or transfer of capital assets, such as real
estate, stocks and mutual funds, among others. Capital gains are further classified into two categories – Long-
term capital gains and short-term capital gains. The rates and exemptions of capital gains tax vary with the asset
and the holding period.
 Securities Transaction Tax (STT): STT is a tax imposed on the purchase and sale of listed securities, such as
shares, bonds, derivatives, and equity-oriented mutual funds. The tax is payable by the buyer or seller,
depending on the type of transaction. STT aims to generate revenue and discourage speculative trading in the
securities market.
 Dividend Distribution Tax (DDT): It is a levy imposed on dividends distributed by the companies to their
shareholders. Income from dividends is added to the taxable income of the recipient and taxed as per the
applicable slab rate. Before 1 April 2020, it was levied on the company distributing dividends instead of the
recipient.
 Gift Tax: Gift tax was a direct tax imposed on the transfer of certain specified assets without consideration.
However, gift tax was abolished in India, and any income arising from gifts is now subject to income tax.
 Estate Tax: Estate tax, also known as inheritance tax, is a tax on transferring an individual’s estate or assets
upon their death. Currently, India does not have a specific estate tax provision at the national level.
These are some of the key types of direct taxes in India. The rates, deductions, and exemptions for these taxes
are subject to change as per the provisions of the relevant tax laws introduced or amended by the government

31. from time to time. It is advisable to consult with a tax professional or refer to the official tax authorities for the
most up-to-date information.
Who is eligible to pay Direct Tax?
 Individuals: Any resident individual, non-resident individual, or person of Indian origin who meets the criteria
of being a taxpayer as per the Income Tax Act is eligible to pay direct taxes. This includes salaried employees,
self-employed professionals, freelancers, and other individuals earning taxable income.
 Hindu Undivided Families (HUFs): HUFs are considered separate tax entity under the Income Tax Act. The
Karta, or the head of the HUF, is responsible for filing tax returns and paying taxes on behalf of the HUF.
 Partnership Firms: Partnership firms registered under the Indian Partnership Act, 1932 are eligible to pay taxes.
The profits of the partnership firm are taxed in the hands of the partners as per their respective shares.
 Companies: All types of companies, including domestic companies and foreign companies operating in India,
are liable to pay corporate tax on their profits. This includes public limited companies, private limited
companies, and one-person companies.
 Association of Persons (AOPs) and Body of Individuals (BOIs): AOPs and BOIs are entities consisting of
individuals, companies, or a combination thereof, with a common objective. They are subject to tax as separate
entities, and the income is taxed in their hands.
Tax liability is determined based on various factors such as income thresholds, tax slabs, exemptions,
deductions, and other provisions specified in the Income Tax Act.
Taxpayers are required to assess their income, calculate their tax liability, and comply with the filing and
payment obligations as per the applicable tax laws.
Advantages of Direct Taxes
There are multiple advantages of direct taxes.
 Economic and Social Balance: The government has implemented balanced tax slabs based on income and age to
achieve economic and social equality. Exemptions are provided to address income inequalities and ensure
fairness.

32.  Productivity: As the workforce and economy grow, the revenue generated from direct taxes also increases,
making them a productive source of government income.
 Inflation Control: During inflationary periods, the government can increase taxes, reducing the demand for
goods and services, which helps curb inflation.
 Certainty: Direct taxes provide clarity and certainty to both taxpayers and the government. Taxpayers know the
amount they are required to pay, while the government has a predictable source of revenue.
 Wealth Distribution: Higher taxes are levied on individuals or organizations with higher incomes, and the
additional funds are utilized to support and uplift disadvantaged sections of society.
DISADVANTES OF DIRECT TAX
Due to the fact that individuals are required to pay directly for direct taxes, direct taxes are not very well
received. Because of this, most people express their resentment toward the government whenever the rate of a
direct tax is increased. For example, when the rate of the corporate profit tax or personal income tax is
increased, the people who will be affected voice their disapproval loud and clear. The disadvantages of direct
tax are:
1. Pinching- The fact that direct taxes must be paid in one lump sum puts even more pressure on taxpayers. As a
result, taxpayers’ resentment is always a result of a direct tax’s announcement effect.
2. Inconvenient- Convenience does not apply to direct taxes like income tax returns or wealth taxes. They are
required to be submitted on time, and each taxpayer is responsible for keeping accurate records. Additionally,
paying these taxes in one lump sum is very inconvenient.
3. Corruption and Evasion- Since the voluntary declaration by the taxpayer of their income, wealth, etc. is
required for the assessment of direct taxes: by hiding real income, there is a lot of room for tax evasion. As a
result, direct taxation actually penalizes dishonesty while taxing honesty. Corruption is also a result of tax
evasion.
4. Uneconomical- Direct Taxes aren’t as cost-effective as they claim to be. When the tax base is small, they are
uneconomic. Additionally, since each assessed must be contacted individually and properly checked to prevent
tax evasion, sophisticated machinery is required for their collection. However, it must be acknowledged that

33. direct taxes typically generate more revenue than indirect taxes. In addition, indirect taxes are uneconomic in
this regard.
5. Narrow based- Most direct taxes have a narrow base; As a result, a significant portion of the populace
remains unaffected, and as a result, they fail to achieve their goal of fostering civic awareness among citizens.
Particularly, the unfortunate segment of the local area stays immaculate under direct Charges.
6. Arbitrary- The exchequer has total discretion over direct taxes’ nature and basis. When determining the tax
payer’s potential to pay taxes, the Finance Minister makes use of his own value judgments. The evolution of
direct taxation’s gradation and progression has no scientific basis or formula.
7. Disincentivizes- Because they are based on wealth and income, direct taxes that are too high may make it
hard to work hard and save money.
However, if we look at all of these drawbacks, we might discover that they are not the result of any economic
principle but rather of administrative difficulties and inefficiencies. So, the Irish economist, Charles Francis
Bastable is right when he says that direct taxation should be a part of every modern financial system, despite its
flaws and benefits. However, how much it can be used will obviously depend on the country’s economic
situation. Direct taxation is more permissible in a wealthy country than in a poor one. Despite a few
disadvantages, direct taxes play a crucial role in India’s economy. When implemented effectively, they
contribute to maintaining price stability and preventing inflation.
How to Calculate Direct Tax?
Calculating direct tax, such as income tax, involves several steps. Here’s a general outline of how to calculate
income tax in India for individuals:
 Determine your income: Calculate your total income for the financial year, including income from salary,
business or profession, house property, capital gains, and other sources.
 Identify applicable tax slabs: Understand the income tax slabs and rates applicable for the specific financial
year. The slabs and rates may vary based on your age, income level, and residential status.
 Compute taxable income: Deduct eligible deductions and exemptions from your total income to arrive at the
taxable income. Common deductions include investments in specified savings schemes, insurance premiums,
medical expenses, and home loan interest.

34.  Calculate tax liability: Use the income tax slab rates to calculate the tax liability on your taxable income. The
tax rates increase progressively with higher income levels.
 Consider surcharges and chess: Factor in any applicable surcharges and health and education chess as per the
prevailing tax laws. These additional charges are calculated based on the tax amount.
 Apply for any tax credits: Subtract any eligible tax credits, such as tax deducted at source (TDS) or advance tax
payments made, from your tax liability. These credits help reduce the overall tax payable.
 Final tax payable or refundable: After considering deductions, tax rates, surcharges, chess, and tax credits, you
will arrive at the final tax payable or refundable amount. If the tax paid in advance exceeds the calculated tax
liability, you may be eligible for a tax refund.
It is important to note that tax calculations can be complex, and it is advisable to consult a tax professional or
refer to the official guidelines and tax calculators provided by the Income Tax Department of India for accurate
calculations.
Tax Rate for the Different Types of Direct Tax
Here’s a table outlining the tax rates for different types of direct taxes in India (as of my knowledge, cut off in
September 2021):
Direct Tax Tax Rate (for individuals) Tax Rate (for companies)
Income Tax
Progressive tax rates ranging from 0% to 30% based
on income slabs and age. Additional surcharges may
apply for high-income earners.
25% for domestic companies; 40% for
foreign companies. Additional
surcharges may apply.
Corporate Tax NA
25% for domestic companies; 40% for
foreign companies. Additional
surcharges may apply.

35. Capital Gains Tax
Varies based on the type of asset, holding period,
and nature of gain (short-term or long-term).
Generally, 15% or 20% for long-term capital gains
and as per applicable income tax slab rates for short-
term capital gains.
25% for short-term capital gains on
listed securities. Long-term capital
gains on listed securities are exempt if
Securities Transaction Tax (STT) is
paid.
Securities
Transaction Tax
(STT)
Applicable rates on specific transactions. Rates vary
based on the type of security and transaction.
NA
Note that tax rates and provisions keep changing. It’s advisable to refer to the latest tax laws and consult with a
tax professional or refer to the official guidelines provided by the Income Tax Department of India for the most
accurate and up-to-date information.
Income Tax as Direct Tax
Income tax is one of the prominent forms of direct tax imposed by the government on individuals, businesses,
and other entities. It is levied on the income earned during a specific financial year.
Income tax is calculated based on progressive tax rates, where the tax liability increases as the income level
rises. Factors such as age, income slabs, and applicable deductions are considered while determining the tax
liability. The revenue generated from income tax plays a significant role in financing public expenditure,
funding welfare programs, and promoting economic development.
It is a crucial tool for the government to ensure equity, fairness, and social welfare by redistributing wealth and
providing resources for essential services and infrastructure.
How to pay direct tax?
To pay direct taxes, such as income tax, in India, you can follow these steps:
 Calculate your tax liability by assessing your total income, deductions, and applicable tax rates.
 Generate a challan using the online tax payment portal or obtain a physical challan from authorized banks. Fill
in the required details such as PAN, assessment year, and tax amount.

36.  Make the payment through online banking, debit card, or credit card, or by depositing cash at the designated
bank branches. Ensure that you select the correct tax type and provide accurate information.
 Retain the challan as proof of payment upon successful payment, which can be used for future reference or
while filing your income tax return.
Remember to file your tax return by the due date to complete the tax payment process.
I) Administrative [ Income Tax Authorities] [ Sec. 116]
a. the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of
1963),
b. Directors-General of Income-tax or Chief Commissioners of Income-tax,
c. Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals),
1. (cc) Additional Directors of Income-tax or Additional Commissioners of Income-tax or
Additional Commissioners of Income-tax (Appeals),
2. (coca) Joint Directors of Income-tax or Joint Commissioners of Income-tax.
d. Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of
Income-tax (Appeals),
e. Assistant Directors of Income-tax or Assistant Commissioners of Income-tax,
f. Income-tax Officers,
g. Tax Recovery Officers,
h. Inspectors of Income-tax.
(ii) Assessing Officer [ Sec. 2(7A)]
“Assessing Officer” means the Assistant Commissioner or Deputy Commissioner or Assistant Director or
Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or
orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the
Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to
exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer
under this Act;
Importance of Assessing Officer:
In the organizational setup of the income tax department Assessing Officer plays a very vital role. He is the
primary authority who initiates he proceedings and is directly connected with the public. Form the time of filing
of return till the assessment is completed he plays a pivotal role. He can start proceedings for non-filing of
return, imposition of penalties etc. Orders passed by him can be challenged only on approval. The department

37. can revise his orders only if it is proved that there are prejudicial to the revenue and that too only by the
Commissioner of Income Tax.
(iii) Appointment of Income-Tax Authorities [ Sec. 117]
1. Power of Central Government: The Central Government may appoint such persons as it thinks fit to
be income-tax authorities. It kept with itself the powers to appoint authorities up to and above rank of an
Assistant Commissioner of Income-Tax [ Sec. 117 (1)]
2. Power of the Board and Other Higher Authorities: Subject to the rules and orders of the Central
Government regulating the conditions of service of persons in public services and posts, the Central
Government may authorize the Board, or a Director-General, a Chief Commissioner or a Director or a
Commissioner to appoint income-tax authorities below the rank of an Assistant Commissioner or
Deputy Commissioner. [ Sec. 117 (2)]
3. Power to appoint Executive and Ministerial Staff: Subject to the rules and orders of the Central
Government regulating the conditions of service of persons in public services and posts, an income-tax
authority authorized in this behalf by the Board may appoint such executive or ministerial staff as may
be necessary to assist it in the execution of its functions.
(iv) Control of Income-Tax Authorities [ Sec. 118]
The Board may, by notification in the Official Gazette, direct that any income-tax authority or authorities
specified in the notification shall be subordinate to such other income-tax authority or authorities as may be
specified in such notification.
Income Tax:
Depending on the individual’s age and salary, he/she will fall under a particular tax slab. The three different tax
slabs are mentioned below:
Tax slab Income tax
Up to Rs.2.5 lakh Nil

38. For resident individuals and Hindu Undivided Families (HUFs) who are below the age of 60 years:
For senior citizens who are above the age of 60 years and below the age of 80 years:
For resident Indians who are above the age of 80 years (Super Senior Citizen)
Tax slab Income tax
Up to Rs.5 lakh Nil
From Rs.5,00,001 to
Rs.10,00,000
20% of the total income that is more than Rs.5 lakh + 4% chess
Above Rs.10 lakh
30% of the total income that is more than Rs.10 lakh + Rs.1,00,000 +
4% chess
From Rs.2,50,001 to
Rs.5,00,000
5% of the total income that is more than Rs.2.5 lakh + 4% chess
From Rs.5,00,001 to
Rs.10,00,000
20% of the total income that is more than Rs.5 lakh + Rs.12,500 +
4% chess
Income of above Rs.10 lakh
30% of the total income that is more than Rs.10 lakh + Rs.1,12,500
+ 4% chess
Tax slab Income tax
Up to Rs.3 lakh Nil
From Rs.3,00,001 to
Rs.5,00,000
5% of the total income that is more than Rs.3 lakh + 4% chess
From Rs.5,00,001 to
Rs.10,00,000
20% of the total income that is more than Rs.5 lakh + Rs.10,500 + 4%
chess
Income of above Rs.10 lakh
30% of the total income that is more than Rs.10 lakh + Rs.1,10,000 +
4% chess

39. New Income Tax Slab for Individuals
The tax rates for domestic and international companies are mentioned below:
Domestic companies:
 In case the turnover of the company is less than Rs.250 crore, the corporate tax that is levied is 25%.
However, if the turnover of the company is more Rs.250 crore, the corporate tax that is levied is 30%.
 A surcharge of 10% of the taxable income is levied in case the taxable income is between Rs.1 crore and
Rs.10 crore.
 In case the taxable income of the company is more than Rs.10 crore, the surcharge that is levied is 12%.
 4% of the corporate tax is levied as chess.
International companies:
Income Tax Slab Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2,50,001 to Rs.5,00,000 5% of the total income that is more than Rs.2.5 lakh + 4% chess
From Rs.5,00,001 to Rs.7,50,000 10% of the total income that is more than Rs.5 lakh + 4% chess
From Rs.7,50,001 to Rs.10,00,000
15% of the total income that is more than Rs.7.5 lakh + 4%
chess
From Rs.10,00,001 to
Rs.12,50,000
20% of the total income that is more than Rs.10 lakh + 4%
chess
From Rs.12,50,001 to
Rs.15,00,000
25% of the total income that is more than Rs.12.5 lakh + 4%
chess
Income above Rs.15,00,001
30% of the total income that is more than Rs.15 lakh + 4%
chess

40.  In case companies are earning less than Rs.1 crore, a corporate tax of 41.2% is levied. The corporate tax
includes 40% basic tax and 3% education chess.
 In case companies are earning more than Rs.1 crore, a corporate tax of 42.024% is levied. The corporate
tax includes 40% basic tax, 2% surcharge, and 3% education chess.
 In case companies earn more than Rs.10 crore, a surcharge of 5% is levied apart from the basic tax.
 Capital Gains Tax
 According to the normal tax slabs, short-term capital gains is levied.
 In case Capital Gains Tax is computed considering indexation benefit, the long-term capital gains that
are levied are taxed as 20%.
 In case Capital Gains Tax is computed without considering indexation benefit, the long-term capital
gains that are levied are taxed at 10%
 Wealth Tax
 Depending on the net wealth, Wealth Tax is levied. Net wealth can be calculated by the sum of all
taxable assets minus the total debt that is owed.
 The formula for net wealth is, Net Wealth = (Sum of all assets) – (sum of all debt).
 The value of net wealth is considered on March 31 of every year that immediately precedes the
assessment year.
 However, with effect from 1 April 2016, for wealth that was being held as of 31 March 2016, Wealth
Tax has been abolished.
Direct Tax Code
The Direct Tax Code or DTC was mainly drafted to replace the Income Tax Act of 1961. The main aim of DTC
is to establish a more equitable, effective, and efficient direct tax system. DTC was also drafted to amend and
stabilize all laws that are related to direct taxes so that the tax-GDP ratio increases and voluntary compliance
becomes easy.
Explanation of the Direct Tax Codes
The key features of the Direct Tax Code are explained below:
 All direct taxes have a single code: By bringing all direct taxes under one code, a single, unified
taxpayer system can be brought into effect. All compliance features can also be unified under one code.

41.  Stability: Currently, based on the Finance Act of the relevant year, taxes are formed. However, under
the Direct Tax Code, the tax rates are being made between the First and Fourth schedule of the DTC.
Any changes to the schedule can be made by passing an Amendment Bill before the Parliament.
 Regulatory Functions are eliminated: Other regulatory authorities must handle all regulatory
functions.
 Political contributions: 5% of the gross total income that can be deducted will be made towards
political contributions.
 Flexibility: A law has been created so that changes and requirement to grow the economy can be
accommodated without having to make amendments on a constant basis.
 Constant litigation problems have been eliminated: Special care has been put forth so that the code is
not misused or misinterpreted in order to avoid contradiction and ambiguity.
 Fringe benefits tax: The tax is levied on employees rather than employers.
DIRECT TAX COLLECTION IN INDIA -2023-24
“Direct Tax collection, net of refunds, stands at ₹14.70 lakh crore which is 19.41% higher than the net
collections for the corresponding period of last year. This collection is 80.61% of the total Budget Estimates of
Direct Taxes for F.Y. 2023-24,” the statement said.
Income Tax Slab in FY 2023-24 for Senior Citizens
SENIOR CITIZENS (Above 60 to 80 years)
SENIOR CITIZENS (Above 60 to 80 years)
NET INCOME
RANGE
OLD REGIME TAX
RATE
NEW REGIME TAX
RATE
INR 2.5 lakh to INR 3
lakh
Nil 5%

42. SENIOR CITIZENS (Above 60 to 80 years)
INR 3 lakh to INR 5
lakh
5% (tax rebate u/s 87A is
available)
5% (tax rebate u/s 87A is
available)
INR 5 lakh to INR 7.5
lakh
20% 10%
INR 7.5 lakh to INR
10 lakh
20% 15%
INR 10 lakh to INR
12.5 lakh
30% 20%
INR 12.5 lakh to 15
lakhs
30% 25%
Above INR 15 lakh 30% 30%

43. Income Tax Slab in FY 2023-24 for Super Senior Citizens
SENIOR CITIZENS (Above 80 years and above)
NET INCOME
RANGE
OLD REGIME TAX
RATE
NEW REGIME TAX
RATE
Up to INR 2.5 lakh Nil Nil
lakh
Nil 5%
lakh
20% 10%
lakh
20% 15%
lakh
30% 20%
INR 12.5 lakh to 15
lakhs
30% 25%
Above INR 15 lakh 30%

44. Super senior citizens (those above 80 years of age) are not eligible to avail income tax deductions under section 87A.
Following are the list of changes made in new tax regime 2023-2024, as announced in Union Budget 2023:
1. Tax rebate on annual income of INR 7 lakhs, which means no tax has to be paid if your taxable income is below INR 7
lakhs.
2. The standard deduction of INR 52,500 has been announced for salaried individuals earning more than INR 15.5 lakh
taxable income.
3. Highest surcharge under the new tax regime has been reduced to 25% from 37% for people earning more than INR 5
crore. This has brought down the tax rate from 42.74% to 39%.
Presumptive Taxation Limits Revised for Financial Year 2023-24:
Category New Limits Old Limits
For small business under section 44AD INR 3 crore INR 2 crore
For professionals under section 44ADA INR 75 lakh INR 50 lakh
 INDIRECT TAX
What is Indirect Tax? Explained with Types and Examples
Indirect tax is something that a manufacturer pays to the Government of his country. The burden of tax
payment is on end consumer as they are the ones purchasing the products. Unlike direct taxes, these are
levied on materialistic goods.
What is Indirect Tax?
Indirect tax is a tax that can be passed on to another individual or entity. Indirect tax is generally imposed on
suppliers or manufacturers who pass it on to the final consumer.
Examples of an Indirect Tax

45. Excise Duty, Customs Duty, Entertainment Tax, Service Tax, Sales Tax, Gross Receipts Tax and Value-Added
Tax (VAT) are examples of Indirect taxes.
An example of GST (Indirect tax)
Let’s say you eat at a restaurant. You could see your entire payment plus the GST on the bill (Indirect tax).
The GST rate is 5%, so let’s say the total was Rs.2500. Then, you will be required to pay Rs.2625(2500+125).
The service provider passes on the indirect tax to you in the amount of Rs.125.
Overview of Indirect Tax in India
There are many indirect taxes applied by the government of India. Taxes are levied on manufacture, sale, import
and even purchases of goods and services. These laws aren’t also well-defined Acts from the government, rather
orders, circulars and notifications are given out by relevant government bodies to this end. As such, it can be
cumbersome trying to understand every feature of indirect taxes in India.
Indirect taxes are touted to be streamlined following the introduction of the uniform Goods and Services Tax
(GST). The points below will help you understand more about the types of indirect taxes and where they are
applicable from a consumer’s perspective.
Different Types of Indirect Taxes
There are different types of indirect tax in India. However, after the implementation of GST, all these indirect
taxes were bundled into one singular tax for the citizens of India. We will have a look at the different types of
indirect tax in India:
1. Service tax: This tax is levied by an entity in return for the service provided by them. The service tax is
collected by the Government of India and deposited with them.
2. Excise duty: When any product or good is manufactured by a company in India, then the tax levied on
those goods is called the Excise Duty. The manufacturing company pays the tax on the goods and in turn
recover the amount from their customers.
3. Value Added Tax: Also known as VAT, this type of tax is levied on any product sold directly to
customer and are movable. VAT consists of Central Sales Tax which is paid to the Government of India
State Central Sales Tax which is paid to the respective State Government.
4. Custom Duty: This a tax levied on the goods imported to India. Sometimes, Customer Duty is also
levied on products which are exported out of India.

46. 5. Stamp Duty: This is a tax levied on the transfer of any immovable property in a state of India. The state
government in whose state the property is located charges this type of tax. Stamp tax is also applicable
on all legal documents too.
6. Entertainment Tax: This tax is charged by the state government and is applicable on any products or
transactions related to entertainment. Purchasing of any video games, movie shows, sports activities,
arcades, amusement parks, etc. are some of the products on which Entertainment Tax is charged.
7. Securities Transaction Tax: This tax is levied during the trading of securities through Indian Stock
Exchange.
Advantages of Indirect Tax
Here are the main advantages of indirect taxes
 Convenience: Indirect taxes do not burden the taxpayer and are convenient as they are paid only at the
time of making a purchase. Moreover, state authorities find it convenient to levy indirect taxes because
they are collected directly at the stores/factories which helps in saving a lot of time and effort.
 Ease of collection: Indirect taxes are easy to collect in comparison with direct taxes. Since indirect taxes
are only collected at the time of making purchases, the authorities need not worry about their collection.
 Collection from the poor: Those who earn less than Rs.2.5 lakh p.a. is exempt from income tax, which
means that they do not contribute to the government. Since indirect taxes are charged at the point of sale,
all individuals, regardless of the income tax slab under which they fall, contribute towards the growth of
the economy.
 Equitable contributions: Indirect taxes are directly related to the costs of products and services. What
this essentially means that the basic necessities attract lower rates of tax while luxury items are charged
at higher tax rates, thereby ensuring that contributions are equitable.
 Reduce Negative Consumption: The highest indirect taxes are placed on goods that are bad for our
health, like alcohol, tobacco and other similar products. Thus, they are more expensive which helps curb
the spending and consumption of such harmful commodities.
Disadvantages of Indirect Tax
Some of the disadvantages of Indirect Tax are given below:
 Indirect Tax charged sometimes are cumulative. This means that in a point-based transaction system,
middlemen involved are likely to charge their own service tax which may result in the overall price of
the product increasing.
 Indirect Tax can be regressive in nature. For example, salt tax remains the same for both poor and rich,
However, if a rich person defaults the payment, then the penalties imposed will be higher as well.

47.  Indirect Tax are not industry friendly. Taxes are levied on raw materials and goods which in turn
increases the cost of production, thus not allowing industries to expand as their competitive capacity is
restricted.
 Indirect Tax is unpredictable: The amount of indirect taxes collected fluctuates. It is based on the
buying of goods and services. As a result, it is impossible for the government to predict how much
money will be raised through indirect taxes.
Features of Indirect Tax
In India, there are many different Indirect Taxes which are applicable on different kinds of goods, imports,
manufacturing and services. Indirect Tax has some defining characteristics. These are as follows:
1. Charged on Commodities
Indirect taxes are charged on material things such as goods and services. These are not levied on the income you
earn.
2. Shifts the Burden of Tax
Sellers of the goods are required to pay the indirect taxes to the government. But they transfer the liability to
their consumers.
3. Tax Evasion
Indirect taxes are already included in the price of the commodities. Thus, when you buy goods or a service, you
automatically pay your share of the tax. This can thus help to reduce tax evasion.
4. Paid by the Consumer
The liability of indirect tax is passed on by the sellers to the consumers. This tax is thus charged at the point of
sales and is paid by the customers.
5. Revenue for Government
Since this type of tax cannot be easily evaded and is applicable on most of the commodities, it serves as a major
revenue source for the govt. Its contribution is higher than the direct tax.

48. 6. Consumer is not Directly Affected
The main cause of direct tax evasion is that it is charged on the income directly. Indirect taxes face no such
problem as they are not directly affected.
Who is Eligible to Pay Indirect Tax?
The inception of Goods & Services Tax (GST) has consumed almost all the indirect taxes prevailing in India
before this. Let us take a look at the parties who are eligible to pay GST.
1. Goods & Services Tax (GST)
It stands for Goods and Services Tax. It came into action on 1st July 2017 and has been used since. In India,
there is a slab system under which several rates of GST are there. Each commodity can be put in a specific slab.
GST is levied on the supply of the goods.
If you buy a product, then you have to pay GST based on the slab rate the product falls in. If you run a business
and your turnover exceeds Rs 20 lakhs per year, then also you are eligible to pay GST.
Though GST has replaced all the previous taxes, there are still some taxes prevailing. There are some taxes that
are still active. Each of these taxes is required to be paid by different parties.
2. Customs Duty Tax
If you are involved in international trading then you are eligible to pay customs duty. This is a tax that is
charged on the goods that need to be transported outside of your country.
3. Excise Duty
Though GST has replaced this tax, but there are still some commodities that are charged with excise duty. These
commodities are Liquor, petroleum, fuel, etc. Excise is levied at the time when the goods are removed from the
warehouse.
How GST is an Indirect Tax?
As there are many different types of indirect taxes levied on the expense incurred by a buyer, the government
has tried to simplify the taxing process and merged all these indirect taxes into a common indirect tax called the
Goods and Service Tax (GST).

49. Merging of all these taxes has reduced the hassles of compliances associated with all these indirect taxes,
improving tax governance in the country. Introduced in 2017, the GST has eliminated the cascading effect of
multiple taxes.
INDIRECT TAX COLLECTION IN INDIA -2023-24
The total indirect tax collections were estimated to amount to Rs 15,29,200 crore in 2023-24. Income tax
collection was also expected to surpass the budget estimate for 2022-23 by 16.4 per cent. The indirect tax
collection in BE 2023-24 was estimated at ₹15.37 lakh crore. The receipt during H1 of FY 2023-24 was ₹7.03
lakh crore, which was about 6.5 per cent higher than the receipts of ₹6.60 lakh crore in H1 of FY 2022-23.
How much indirect tax is collected in India?
INDIRECT TAXES Rs. (In crores)
FIN. YEAR ACTUAL COLLECTIONS
2018-19 117813 231045
2019-20 109283 239452
2020-21 134750 389667
2021-22 199728 39080
Indirect Tax Changes in Budget 2023
The finance minister Smt. Nirmala Sitharaman unveiled the Union Budget 2023 on 1st February 2023.
Many new initiatives were proposed in this budget to simplify the tax process. This was the first time the
indirect taxes proposals were shared before the direct tax proposals. The growth rate is targeted to
improve from 7% to 10.5% during FY 2023-2024. Moreover, the fiscal deficit for FY 2023-2024 is
targeted at 5.9% of GDP, below the 6.4% projected during FY 2022-2023. The fiscal deficit is targeted at
below 4.5% of GDP by FY 2025-2026.

50. What are the amendments made under the Indirect Tax in budget 2023?
The notable changes under the Income Tax are as follows: –
 Changes in Custom Duty
1. The custom duties are revised under budget 2023 to promote domestic value addition and boost
green energy and mobility.
2. Items for which customs duty is revised are: –
1. Imported mobile camera lens
2. Imported capital goods for lithium-ion battery manufacturing
3. Denatured Ethyl Alcohol
4. Seeds for manufacturing lab-grown diamonds
3. The Customs duty rate on compounded rubberish increased to 25 percent from 10 percent or 30
per kg, whichever is lower.
4. Enhancement of the concessional Basic Customs Duty on copper scrap, Primary inputs for
making shrimp feed
5. National Calamity Contingent Duty (NCCD) on some cigarettes is increased
6. Enhancement in the custom duty or importing silver doer, bars, and articles.
7. Basic customs duty reduced on acid grade fluorspar (containing by weight more than 97 percent
of calcium fluoride) to 2.5 percent from 5 percent.
8. Custom duty on electric chimneys has been increased
9. Custom duty has been reduced on parts of open cells of TV panels.
10. Exemption on excise duty on GST-paid compressed bio-gas used in blended compressed natural
gas.
11. Some small changes are carried out in the BCD, cases, and surcharges on certain consumables
imported, such as bicycles, automobiles, toys, naphtha, etc.
 GST changes
1. Taxpayers can now opt into the composition scheme even if they supply goods through e-
commerce operators where TCS is collected under Section 52.
2. Recipient taxpayers must pay interest computed under Section 50 if they fail to pay their supplier
invoice value, including GST, within 180 days from the date of issue of the invoice.
3. Expenditure on CSR initiatives for corporates is now included in ineligible ITC under Section
17(5).

51. 4. High sea sales and similar transactions are considered exempt; hence, ITC proportional to such
sales cannot be claimed under revised Section 17(3).
5. Taxpayers are restricted from filing GSTR-1, GSTR-3B, GSTR-9, and GSTR-8 for a tax period
after the expiry of three years from the due date.
6. Penalties of Rs.10,000 or an amount equivalent to the amount of tax, whichever is higher, will be
charged for e-commerce operators who allow unregistered persons to supply goods or services or
both through them, except where such a person is exempted from GST registration.
7. Certain offenses have been decriminalized, and the limits for compounding offenses have been
changed: –
0. If a person obstructs or prevents an officer from discharging their duties under the CGST
Act, 2017.
1. If a person tampers with or destroys material evidence or documents.
2. If a person fails to supply information required under the CGST Act or Rules or supplies
false information, they can be penalized under section 122(1)(I) of the CGST Act, 2017.
 Compounding of offenses limits have been changed to 25% of the tax involved up to a maximum
amount of 100% of the tax involved.
 A new section 158A has been inserted in the CGST Act to allow businesses to share GST data digitally
with consent.
 To enable unregistered suppliers to make the intra-state supply through E-Commerce Operators (ECOs).

53. What Are the Key Differences Between Direct and Indirect Taxes?
Now, since we have understood the meaning and types of direct and indirect taxes of India. Let’s delve into the
differences between indirect and direct taxes. The table mentioned below covers all the differentiating points between
direct and indirect taxes.

54. Meaning Paid directly to the government Paid to the government via intermediary
Levied on Profits and income Goods and services
Taxpayer Individuals, HUFs and businesses
End-consumers of products, goods and
services.
Tax Rate
Directly depends on income and
profits
Same for everyone
Tax Burden Progressive
Rate of tax is flat so tax burden is
regressive
Transfer of
liability
Not transferable Can be transferable
Tax Collection Complex Quite convenient
Types Income Tax and STT Goods and Services Tax (GST)
Evasion Possible Not possible

55. Why GST is Indirect Tax?
The Goods and Services Tax, or GST as it is commonly known, was implemented on July 1st, 2017 to subsume
the various indirect taxes in the country. The taxes that were once compulsory are now done away with due to
the introduction of the new tax regime. One of the main benefits of GST is that it has eliminated the cascading
effect of tax, thereby ensuring that they do not end up paying for every value addition.
The taxes subsumed under GST on the state level include service tax, state excise duty, countervailing duty,
additional excise duty, and special additional custom duties. The taxes subsumed under GST at the central level
include sales tax, central sales tax, purchase tax, entertainment tax, luxury tax, octroi and entry tax, and taxes on
betting and lottery gambling. In July 2017, the GST law went into effect, bringing 17 indirect taxes under its
purview. The GST now includes all significant services and service tax.
GST at the state level GST at the central level
service tax sales tax
state excise duty central sales tax
countervailing duty purchase tax
additional excise duty entertainment tax
special additional custom duties luxury tax
– octroi
– entry tax
– taxes on betting and lottery gambling
Here are the key features of indirect taxes:
 Tax liability: The service provider or seller pays indirect taxes to the government, and the liability is
transferred to the consumer.
 Payment of tax: The seller pays indirect taxes to the government and the same is transferred to the
consumer.

56.  Nature: Indirect taxes were initially regressive in nature, but thanks to the implementation of the Goods
and Services Tax, they are now pretty progressive.
 Saving and investment: Indirect taxes are generally growth-oriented considering the fact that they
encourage consumers to save and invest.
 Evasion: It is difficult to evade indirect taxes because they are now implemented directly through
products and services.
Government Agencies / Government / Tax
Ministry of Finance
The Ministry of Finance (IAST: Vitter Atalaya) is a ministry within the Government of
India concerned with the economy of India, serving as the Treasury of India. In particular, it concerns itself
with taxation, financial legislation, financial institutions, capital markets, center and state finances, and
the Union Budget.[1]
The Ministry of Finance is the apex controlling authority of four central civil services namely Indian Revenue
Service, Indian Audit and Accounts Service, Indian Economic Service and Indian Civil Accounts Service. It is
also the apex controlling authority of one of the central commerce services namely Indian Cost and
Management Accounts Service.
History
Sir Ramasamy Chetty Kandasamy Shanmugam Chetty KCIE (17 October 1892 – 5 May 1953) was the
first Finance Minister of independent India. He presented the first budget of independent India on 26 November
1947.[2]
Department of Economic Affairs
The Department of Economic Affairs is the nodal agency of the Union Government to formulate and monitor
country’s economic policies and programmers having a bearing on domestic and international aspects of
economic management. A principal responsibility of this department is the preparation and presentation of the
Union Budget to the parliament and budget for the state Governments under President’s Rule and union territory
administrations. Other main functions include:
 Formulation and monitoring of macroeconomic policies, including issues relating to fiscal policy and public
finance, inflation, public debt management and the functioning of Capital Market including Stock
Exchanges. In this context, it looks at ways and means to raise internal resources through taxation, market
borrowings and mobilization of small savings;

57.  Monitoring and raising of external resources through multilateral and bilateral Official Development
Assistance, sovereign borrowings abroad, foreign investments and monitoring foreign exchange resources
including balance of payments;
 Production of bank notes and coins of various denominations, postal stationery, postal stamps; and Cadre
management, career planning and training of the Indian Economic Service (IES
Department of Expenditure
The Department of Expenditure is the nodal department for overseeing the public financial management
system[5]
in the Central Government and matters connected with the state finances. The principal activities of
the department include a pre-sanction appraisal of major schemes/projects (both Plan and non-Plan
expenditure), handling the bulk of the Central budgetary resources transferred to States, implementation of the
recommendations of the Finance and Central Pay Commissions, overseeing the expenditure management in the
Central Ministries/Departments through the interface with the Financial Advisors and the administration of the
Financial Rules / Regulations /Orders through monitoring of Audit comments/observations, preparation of
Central Government Accounts, managing the financial aspects of personnel management in the Central
Government, assisting Central Ministries/Departments in controlling the costs and prices of public services,
assisting organizational re-engineering thorough review of staffing patterns and O&M studies and reviewing
systems and procedures to optimize outputs and outcomes of public expenditure. The department is also
coordinating matters concerning the Ministry of Finance including Parliament-related work of the Ministry. The
department has under its administrative control the National Institute of Financial Management (NIFM),
Faridabad.
The business allocated to the Department of Expenditure is carried out through its Establishment Division, Plan
Finance I and II Divisions, Finance Commission Division, Staff Inspection Unit, Cost Accounts Branch,
Controller General of Accounts, and the Central Pension Accounting.
Department of Revenue
The Department of Revenue function under the overall direction and control of the Secretary (Revenue). It
exercises control in respect of matters relating to all the Direct and Indirect Union Taxes through two statutory
Boards namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and
Customs (CBIC). Each Board is headed by a chairman who is also ex officio Special Secretary to the
Government of India (Secretary level). Matters relating to the levy and collection of all Direct taxes are looked
after by the CBDT whereas those relating to levy and collection of GSTs, Customs Duty, Central Excise duties
and other Indirect taxes fall within the purview of the CBIC. The two Boards were constituted under the Central
Board of Revenue Act, 1963. At present, the CBDT has six Members and the CBIC has five Members. The
Members are also ex officio Secretaries to the Government of India. Members of CBDT are as follows:

58. 1. Member (Income Tax)
2. Member (Legislation and Computerization)
3. Member (Revenue)
4. Member (Personnel & Vigilance)
5. Member (Investigation)
6. Member (Audit & Judicial)
Department of Financial Services
The Department of Financial Services covers Banks, Insurance, and Financial Services provided by various
government agencies and private corporations. It also covers pension reforms and Industrial Finance and Micro,
Small and Medium Enterprise. It started the Pradhan Mantri Jan Dham Yojana.
Sanjay Malhotra is the current secretary of this department.[7]
This department has ownership over the following central government establishments.
Recruitment Bodies
 Institute of Banking Personnel Selection (IBPS)
National Apex Bodies
 Indian Institute of Banking and Finance (IIBF)
 Insurance Institute of India
 Institute of Actuaries of India
Regulatory Bodies
 Reserve Bank of India (RBI)
 Securities and Exchange Board of India (SEBI)
o Forward Markets Commission (FMC)
o National Securities Depository Limited (NSDL)
o Central Depository Services Limited (CDSL)
o Association of Mutual Funds of India (AMFI)
 Insurance Regulatory and Development Authority of India (IRDAI)
 Pension Fund Regulatory and Development Authority (PFRDAI)
o NPS Trust (NPS)
All India Financial Institutions
1. National Bank for Agriculture and Rural Development (NABARD)

59. 2. National Housing Bank (NHB)
3. Small Industries Development Bank of India (SIDBI)
4. Export Import Bank (EXIM Bank)
5. National Bank for Financing Infrastructure and Development (Nab FID) (Came into force w.e.f. April
19, 2021)
Development Finance Institution
 Industrial Development Bank of India (IDBI)
 Industrial Finance Corporation of India (IFCI)
 Industrial Reconstruction Company of India (IRCI)
 Unit Trust of India (UTI)
 India Infrastructure Finance Company Limited (IIFCL)
 Agricultural Finance Corporation of India (AFCI)
 National Bank Financing Infrastructure and Development
 Board for Industrial and Financial Reconstruction
 Risk Capital and Technology Finance Corporation Limited
 Technology Development and Information Company of India Limited
 Discount and Finance House of India Limited
Central Public Sector Undertakings
1. Nationalized Banks
Presently there are 13 nationalized banks in India.
 State Bank of India
 Bank of Baroda
 Union Bank of India
 Punjab National Bank
 Canara Bank
 Punjab & Sind Bank
 Indian Bank
 Bank of Maharashtra
 Bank of India
 Central Bank of India

60.  Indian Overseas Bank
 UCO Bank
 Jammu & Kashmir Bank
2. Regional Rural Bank
Canada Revenue Agency
The Canada Revenue Agency (CRA; French: Agence du revenu du Canada; ARC) is the revenue service of
the Canadian federal government, and most provincial and territorial governments. The CRA collects taxes,
administers tax law and policy, and delivers benefit programs and tax credits.[4]
Legislation administered by the
CRA includes the Income Tax Act, parts of the Excise Tax Act, and parts of laws relating to the Canada Pension
Plan, employment insurance (EI), tariffs and duties.[5]
The agency also oversees the registration of charities in
Canada, and enforces much of the country’s tax laws.[6]
From 1867 to 1999, tax services and programs were administered by the Department of National Revenue,
otherwise known as Revenue Canada. In 1999, Revenue Canada was reorganized into the Canada Customs and
Revenue Agency (CCRA). In 2003, the Canada Border Services Agency (CBSA) was created out of the CCRA,
leading to customs being dropped from the agency’s mandate and the agency’s current name.
The CRA is the largest organization in the Canadian federal public service by number of personnel, employing
54,933 people and has an operating budget of $5.1 billion[7]
as of the 2018–19 fiscal year. The agency’s
headquarters are based in Ottawa, itself divided into five program branches, which directly support the CRA’s
core responsibilities, and seven corporate branches, which deliver internal services within the organization. The
CRA also has operations throughout the rest of Canada, including 4 Tax Centers (TCs), 3 National Verifications
and Collections Centers (NVCCs), and 25 Tax Services Offices (TSOs), organized into four regions: Atlantic,
Ontario, Quebec, and Western.
During the 2017 tax year, the CRA collected approximately $430 billion in revenue on behalf of federal and
provincial governments, and administered nearly $34 billion in benefits to Canadians.[7]
The CRA is responsible to Parliament through the minister of national revenue (Marie Claude-Bibeau since
2023). The day-to-day operations of the agency are overseen by the commissioner of revenue (Bob Hamilton
since 2016).

61. History
Prior to Confederation, the collection of taxes and customs duties was the responsibility of the Department of
Customs in each of the British North American colonies.[8]
In 1867, Parliament enacted legislation which
established two separate departments, Inland Revenue, and Customs.[9]
Until end of World War I, the majority
of federal revenue came from customs and excise duties, but as the war effort placed increasing pressure on
government finances, the Borden government introduced a personal income tax in 1917.[10]
While intended to
be a temporary measure at first, the federal government has since continued to levy personal income taxes, and
are now the largest source of revenue for the federal government.[11]
Both Inland Revenue and Customs were
eventually merged into a single department, Customs and Excise, between 1918 and 1927.
In 1927, the Department of National Revenue Act was enacted by Parliament, which changed the name of the
department from Customs and Excise to National Revenue, while retaining its earlier mandate.[12]
The
Department of National Revenue would gain increasing responsibility as new social programs, such as
the Canada Pension Plan, and new streams of revenue, such as the Goods and Services Tax (GST) were
gradually introduced over the latter half of the 20th century.[12]
In 1993, EFILE was first made available to
Canadian taxpayers wishing to submit their taxes electronically.
In 1999, the Chrétien government introduced legislation that would transform Revenue Canada from a
department to a new agency, the Canada Customs and Revenue Agency. This change was intended to reduce
duplication in tax administration, streamline services to Canadians, and provide the tax administration with
more flexibility in corporate planning, and in forming relationships with provincial, territorial, and Indigenous
governments.[13]
The CCRA was given a broad mandate that covered taxation, customs, and border protection.
This arrangement only lasted until December 2003, when the Canada Border Services Agency was spun off
from the CCRA due to issues relating to interdepartmental collaboration between the CCRA, Citizenship and
Immigration Canada and the Canadian Food Inspection Agency on border protection and immigration
enforcement.[14]
Structure
Leadership
The CRA is led by the minister of national revenue and the commissioner of revenue, who functions as the
agency’s chief executive officer (CEO).