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General Awareness
Indian Economics
भारतीय अर्थशास्त्र
(Part-Final)
Structure of Taxation in India
• Taxes in India are levied(Impose) by the Central Government and the State
Governments.
• The authority to levy a tax is derived from the Constitution of India which allocates
the power to levy (Impose) various taxes between the Central 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.
• Article 246 of the Indian Constitution, distributes legislative powers including
taxation, between the Parliament of India and the State Legislature.
Direct Taxation in India
• Direct Taxes in India were governed by two major legislations, Income Tax
Act, 1961 and Wealth Tax Act, 1957.
• However, the Wealth Tax Act was repealed in 2015.
• The Chairperson, Central Board of Direct Taxes (CBDT) is the senior-most
IRS civil servant in the Government of India.
• The current Chairperson of CBDT is Pramod Chandra Mody. Mody, a 1982-
batch IRS (IT) officer, succeeds Sushil Chandra
• Appointer- Finance Minister of India
Taxes as per Union List
• Income tax :Taxes on income other than agricultural income. (DIRECT)
• Custom Duty: Duties of customs(Imported Goods) including export duties.
(INDIRECT)
• Excise Duty- Duties of excise on goods manufactured or produced in
India(INDIRECT)
• Excise means- An excise or excise tax is any duty on
manufactured goods which is levied at the moment of manufacture, rather
than at sale.
• Corporation Tax- Corporation tax is a tax imposed on the net income of the
company. Companies, both private and public which are registered in India
under the Companies Act 1956, are liable to pay corporate tax.(DIRECT)
Taxes as per State List
• Electricity Duty:Taxes on the consumption or sale of electricity.
• Tolls
• Stamp Duty
• Duties of excise for following goods manufactured or produced within the
State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp
and other narcotic drugs and narcotics.
• Taxes on agricultural income.
• Taxes on lands and buildings.
Goods and Services Tax
• Goods and Services Tax is a indirect tax collected on supply of goods or
service.
• As a destination based tax, as it is collected from point of consumption
and not point of origin like previous taxes.
• The tax came into effect from July 1, 2017 through the implementation
of 101st Amendment of the Constitution of India by the Indian
government.
• he tax replaced existing multiple flowing taxes levied by the central
and state governments.
Earlier Taxes subsumed under GST
• Central excise duty
• Service Tax- It is an indirect tax wherein the service provider collects the tax
on services from service receiver and pays the same to government of India.
• Surcharges - 'Surcharge' is an additional charge or tax levied on an existing tax.
• State VAT
• Transaction within State- Central GST (CGST) by the Central Government and
State GST (SGST) by the State governments.
• inter-state transactions- Integrated GST (IGST) is levied by the Central
Government.
GST Council
• GST Council is the governing body of GST having 33 members.
• The council is headed by the union finance minister of India assisted with
the finance minister of all the states of India.
New Economic Policy 1991
• Manmohan Singh is considered to be the father of New Economic Policy
(NEP) of India.
• Manmohan Singh introduced the NEP on July 24,1991.
Private sector has been freed from
licensing and other restrictions.
Economic Planning in India
• In India the planned economic development begin in 1951 with the inception of
first five year plan.
• Developed, executed, and monitored by the Planning Commission (1951-2014).
• Replaced by NITI Ayog in 2015.
• PM- Ex-offico Chairman
• 12th Five Year Plan- 2012-2017
• No 13th Five year plan after dissolution of Planning Commision.
• The 13th five-year defence plan (2017-22) envisages an allocation of Rs
26,83,924 crore for the armed forces
NITI Ayog
• The Prime Minister as the Chairperson.
• A Governing Council composed of Chief Ministers of all the States and
Union territories with Legislatures and lieutenant governors of Union
Territories(except Delhi and Pondicherry)
Finance Commission
• The First Finance Commission was established by the President of India in
1951 under Article 280 of the Indian Constitution.
• It was formed to define the financial relations between the central
government of India and the individual state governments.
• As per the Constitution, the Commission is appointed every five years and
consists of a chairman and four other members.
• There have been fifteen commissions to date.
• The most recent was constituted in 2017 ( First in 151 , Chairman- K.C Niyogi)
• Chaired by N. K.Singh, a former member of the Planning Commission.
Five Year Plans
• First Five-Year Plan (1951–1956)- Main motive was to improve the
condition of agriculture in the country. (Harrod-Domar model.)
• Second Five-Year Plan (1956–1961)- The second five-year plan focused on
industry, especially heavy industry. (Mahalanobis model).
• Third Five-Year Plan (1961–1966)- The third plan stressed on agriculture
and improvement in the production of wheat but focused shifted to
military expansion after Sino-Indian War of 1962.
Economic Planning in India
• Fourth Five-Year Plan (1969–1974)- The Indira Gandhi government
nationalised 14 major Indian banks and the Green Revolution in India
advanced agriculture.
• Fifth Five-Year Plan (1974–1979)- Stress was by laid on
employment, poverty alleviation, and justice. Electricity Supply Act was
enacted in 1975, which enabled the Central Government to enter into
power generation and transmission.
• Sixth Five-Year Plan (1980–1985)-The sixth plan also marked the
beginning of economic liberalisation.
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