Priscilla
Introduction
Tax is a compulsory fee levied on the individuals of a country by the Government and also serves as a major source of revenue to the Government. In India, taxes are collected under different heads and by different authorities. The former being direct taxes and indirect taxes, the latter being The Central Government, State Governments or the local municipal authorities.
Origin of Tax in India
References as to taxes are found in the ManuSmriti and Arthashastra, which date back to ancient India. Also, the British introduced the tax system in India in 1860, which has been a forerunner to the present tax laws in the country. Sir James Wison, the then Finance Minister of Pre-Independent India introduced “The Income Tax Act 1860”, in order to compensate for the losses incurred in the ‘Sepoy Mutiny’ aka ‘The Great Revolt of 1857’.
How law plays a role in taxes Article 265 of the Indian Constitution says that “No tax shall be levied or collected except by authority of law”. Therefore, only persons who are authorised by law can collect taxes and none else. The Income Tax Act, 1961 governs the assessment, collection of taxes and lays down the procedure for redressal of disputes which may arise in the sphere of taxation.
Types of Taxes
Basically there are two major heads under which taxes are collected;
Direct taxes and Indirect taxes.
Direct taxes are taxes that are levied directly on the individual. The individual pays the tax directly to the Government and such a type of tax cannot be transferred to any other person. The burden lies on the self same person. For eg. Income tax, wealth tax, gift tax etc.
On the other hand, Indirect taxes are taxes which are paid to the Government indirectly through goods and services. For eg. VAT, octroi, service tax, customs duty, Goods and Services Tax (GST) etc.
Income tax is the most common type of tax which is levied on citizens, who are not exempted under the maximum exemption limit stated by the Income Tax Act, 1961, and under the Act, the ‘assessee’(section 2(7)) is bound to pay the taxes which are due from him/her, as per the income tax slab fixed by the Government.
Duty to pay taxes
Though it is not an explicit fundamental duty to pay taxes to the Government, (the payment of taxes not falling under ‘Fundamental Duties’ of the Indian Constitution), it is a moral duty of every earning citizen, to pay income taxes and every other type of taxes as owed by him/her under law. Ultimately, it is to be understood that, it is only with the tax money the Government carries out various welfare schemes and undertakes several activities for the betterment of the country. Also, it is to be kept in mind that non-payment of taxes invites serious consequences under the taxing statutes.
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