Role Of Taxation In India

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Country like India has undergone significant changes during the last twenty years for developing tax system. Tax policy was employed as a principal instrument for correcting severe budgetary system. Article 265 of constitution deals with taxes “No tax shall be levied or collected except by authority of law.” Basically there are two types of tax- Direct and Indirect Tax. Direct tax is direct charged on income, wealth etc. which is paid by an individual to the central government of India which is known as income tax. For many years government is generating revenue through this tax system. Indirect tax are sales tax, a specific tax, value added tax or good and services tax which are collected by an intermediary from the person which is paid indirectly…show more content…
Importance and role of…show more content…
From 1991 taxation plays a vital role in our worldwide economy. All the taxation policy used by the government is for the benefit for the society and the business as a whole. Taxation is also important for the society as all the tax collected by the government funds project related to health care system, education system and public transports. Also the money collected gives benefits to the unemployment, pensions and other matters which benefit the society as a whole and leads to the development of a country. For all this development government need tax; without tax government will be helpless and not be able to fund the essentials project and services. Although taxation may discourage investors from investing in a country with a strict tax rules but it affects the rate of economic growth of our country. Prof. Myles in his study discovered that in developing countries, tax contributions to almost 10% of the gross domestic product of the economy. Thus, it leads to an economic growth of our country. Tax benefit on society discourages certain undesirable activities such as; liquor, tobacco and gambling. On such activities the government imposes excise tax, discourages individuals from selling such type of commodities. The concept of taxation is also beneficial for the business, as the amount of tax taken from the each business is accumulated, tax is used to help business through the government funding this money come

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