All financial activities involving issues of financial administration including public budget, its passing, auditing.
Tax:
Tax is the main source of state income, which is compulsorily paid to the state.
Aims of Taxation:
The main aims of taxation are to secure money for expenditure, regulation of economy, equitable distribution of income.
Taxation in India:
Taxation is the one of the government's most significant source of revenue.
Different types of Tax policy:
the following are the different types of tax policy
- Progressive Tax structure: With increase income, the tax liability of a tax payer increases not only in absolute terms but also proportion of his income.
- Regressive tax structure: when the increase income, the percentage of tax decreases it is termed as regressive tax.
- Proportional tax income: The tax structure of an economy is termed as proportional if the tax liability of a tax payer increases in the same proportion as the increases in his income.
- Degressive tax System: The rate of taxation increases with the increase in income upto a limit but the rate of tax remains same after that limit.
Tax Revenue in India:
Tax is a compulsory payment by the citizens to the government to meet the public expenditure. Tax on income are of two kinds.
Direct Tax:
These are taxes where the burden of tax falls on the person on whom it is levied. These are largely taxes on income or wealth. Income tax (on corporates and individuals), FBT, STT and BCTT are direct taxes.
Income Tax:
It is the tax levied directly on the income of the people by the central government.
Gift Tax:
This tax is imposed by the central government on all donations and gifts.
Corporate Tax:
it is levied on the profit of the companies. It is the latest source of revenue of the government.
Wealth Tax:
This tax is levied on the net wealth of the individuals.
Interest Tax:
It is imposed on the interest income of commercial bank on their gross loans and advances.
Indirect Tax:
In indirect taxes the incidence of tax is usually not on the person who pays the tax. These are largely taxes on expenditure and include customs, excise and service tax.
Excise Duty:
Excise duties are imposed by the central government on the goods produced within the country except certain goods. These goods include Liquor, Drugs etc.
Custom Duty:
These are imposed on commodities, which are imported or exported from India.
Service Tax:
Service tax is imposed on a person, who avails any specified service. Its importance as a sources of revenue has been increasing in recent years.
Value Added Tax (VAT):
It is imposed on value added at the various stages of production or value adding.
VAT is imposed at each stage of production or value adding.
VAT = Total sales-Cost of intermediate consumption.
Direct Tax Code (DTC):
Direct tax code has been bought in place of income tax Act, 1961. Under DTC the three tax rates prevailing has been kept as it is 10%,20%,30%.The DTC has been already in place and was implemented in mid of financial year 2012-13.
Committees on Tax Performs:
The following are the committees.
Chelliah Committee:
It was set up in 1991 under Chairmanship of Professor
Raja Chelliah. The committee submitted its report in 1993 and most of the recommendations were included from 1993-94 Budget.
Kelkar Committee:
It was set up in 2002 by the central government submitted its report in same year. The committee was headed by Professor
Vijay Kelkar.
MK Gupta Committee:
It was set up in 2012 Professor the purpose of internationalization of common tax code, under goods and service tax. The finance ministry has introduced simpler income tax return forms
Sahaj and Sugam aimed at reducing compliance burden on salaried persons and small businessmen will not be required to get his accounts audited if the annual total sales, turnover is less than Rs. 60 lakh. The limit was increased by Finance minister
Pranab Mukherjee in 2010-11 budget from Rs. 40 lakh.
General Anti Avoidance Rules(GAAR):
GAAR was introduced by previous Finance minister Mr. Pranab Mukherjee in his budget speech. GAAR was in controversies again when Vodafone acquiring of Hutchisian came into light tax authorities claimed a loss of Rs. 11,000 crore and due on Vodafone.
Fiscal Responsibility and Budget Management (FRBM) Act, 2003 :
FRBM Act was passed by the Union Government to provide a legislative control over the fiscal situation of the country.
Budget:
The budget is an extensive account of the government finances, in which incomes from all sources and costs of all exercises are aggregated.
The finance minister presents the union budget every year in last week of February in the parliament that contains the government of India's income and consumption for one monetary year, which keeps running from first
April to 31st March.
Types of Budgeting:
The following are the types of budget.
Traditional Budget:
It is the type of budget which uses the income and expenses from the previous year or month to predict the next year or month's budget. A traditional budget is easy to create since it is meant to predict a future period of finances in relation to the previous period.
Performance Budget:
A budget that reflects the input of resources and the output of services for each unit of an organisation.
Zero-Based Budgeting:
It is a type of budget in which all budgetary allocations are set to nil at the beginning of a financial year.
Outcome Budgeting:
This type of budgeting tries to ensure that budget outlays translate into concrete outcomes.
Gender Budgeting:
It came into being in 2004-05. To contribute towards the
women empowerment and removal of inequality based on gender, role of budgeting has been accepted through this step.
Agencies involved in Budget Formulation in India :
The budget is prepared by the budget division of department of Economic Affairs in the Ministry of Finance, after consulting with other ministries and the planning commission.
Budget Fact File:
John Mathai proposed the first Republic of India in 1950 and also the creation of planning commission. Finance Minister
Morarji Desai has given budget for the maximum number of times (10) followed by
P Chidanbaram, who has given the 8 budget.
CD Deshmukh was the first Indian governor of RBI to have presented the Interim budget for the year 1951-52.
Mrs. Indira Gandhi is the only women to hold the post of the finance minister and to have presented the budget in her capacity as the prime minister of India in 1978.
Finance Commission:
According to Article 280(1) of constitution, the president appoints a
finance commission after every 5 years. The finance commission was appointed after 2 years after the implementation of the constitution and every 5 years there after. and the president has the power to appoint the new finance commission even before the expiry of five years.
Fourteenth Finance Commission:
The fourteenth finance commission
constituted under the chairmanship of former RBI Governor
YV Reddy. A five member panel is to submit its report by
31st October, 2014.
Thirteenth Finance Commission:
It was appointed by the President of India, under the chairmanship of
Dr Vijay L Kelkar on 13th November, 2007. The commission was asked to its recommendations for a period of five years from 1st April 2010 to 31st March, 2015.
Introduction