Taxation in India

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Taxation in India

Indian Taxation Explained

Taxation is an important construct in any economy. Tax is an involuntary fee levied on corporations and individuals that is enforced by a level of government in order to finance government activities.

  • Since ancient times the concept of tax was regarded as the duty of citizens towards their king and country. The rate of taxation in a country is inherently linked to the stability of that country.
  • Historical facts state that times of peace and prosperity were mainly due to low taxes and a generous regime while revolutions and civil wars were mainly due to high taxation and an oppressive monarch as seen in the case of French and Russian revolutions.
  • The rate of taxation in a country is inherently linked to the stability of that country.
  • Authority to levy a tax is derived from the constitution of India which allocates the power to levy various taxes between the Centre, State and the local governments.
  • Article 265 of the constitution of India states that “no tax shall be levied or collected except by the authority of the law. “Any tax levied by the government which is not backed by law or is beyond the powers of the legislating authority may be struck down as unconstitutional

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