For the welfare of society, the government has to perform various functions, so it requires revenue. The principal sources of revenue are taxes, fees, prices, special assessment and Raffle Scheme. Like any other country, taxes form the most important part of the revenue of India. This chapter explains what taxes are, the principles and types of taxation, direct and indirect taxes, and the Goods and Services Tax (GST).
1. Taxation and Taxes – Meaning
- Taxation is a term for when a taxing authority, usually a government, levies or imposes a tax. The term applies to all types of involuntary levies, from income to capital gains to estate taxes.
- Taxation is usually referred to as an act; the resulting revenue is usually called 'taxes'.
- Taxes are compulsory payments to the government without expectation of direct return or benefit to the taxpayers.