Assistant Professor, Economics, D.A.V. College for Girls, Yamuna Nagar
Online published on 19 May, 2016.
Taxes are compulsory contributions imposed by the government on its citizens to meet its general expenses incurred for the common good, without any corresponding benefits to the tax payer. A fund raised through the various taxes is referred to as tax revenue. Taxes constitute a significant part of public revenue in modern public finance. Taxation is an important tool to enhance the economic development and to finance the expenditure responsibilities of a government. Taxes in India are levied by the Central Government and the state governments. Some minor taxes are also levied by the local authorities such as the Municipality. The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Centre and the State. An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law". Therefore, each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature. There are two major types of taxes: direct taxes and indirect taxes. In this research paperwe have takena sample of taxrevenue collected under the heads of direct and indirect taxes. This sample ranges from 2002–2003 to 2013–14. The study shows that in India more income is generating from indirect taxes. By fitting the regression equations and the standardized betas, we come to know that in India, more revenue is charged by levying indirect taxes.
