FEATURES OF

TAXATION
 Types of Taxes
TAXATION
Definition
DIRECT TAX INDIRECT TAX
Taxation is the compulsory
financial charge or some
Income Tax Sales Tax
other type of levy imposed
upon a taxpayer (an CorporateTax Goods & Services Tax
individual or legal entity) by (GST)
Wealth Tax
Value Added Tax
a governmental
Gift Tax (VAT)
organization in order to
fund various public Capital Gains Tax Service Tax
expenditures.
 FEATURES OF
TAXATION
Compulsory Funding Public Administrative Progressive,
Transparency
Payment Expenditure Efficiency Proportional, or
Regressive

1 2 3 4 5 6 7 8 9

Legally Economic Fairness and Dynamic

Enforced Regulation Equity Nature
COMPULSORY
PAYMENT
Taxes are mandatory financial contributions levied by
the government on individuals and businesses. This
requisite financial burden serves as a crucial
Examples :
mechanism, ensuring a dependable source of revenue
to sustain public services, infrastructure, and Income tax, Sales
governmental operations. tax, and Property
tax.
Taxation is an unavoidable cost that makes it essential
to a state's ability to function. It allows the government
to meet social demands and carry out programmes
that advance the welfare and development of the
country as a whole.
LEGALLY
ENFORCED
Legally enforced, taxation serves as a fundamental mechanism
through which governments generate revenue. This compulsory
financial contribution is levied on individuals, businesses, and other
entities based on their income, transactions, or property. Legally
mandated, taxes guarantee compliance and create a basis for
equitable economic distribution, enabling public services like
healthcare, education, and infrastructure development.

The legal foundation for taxation highlights the function of taxes in

preserving social order and promoting the general welfare, highlighting
the duty of entities to make a proportionate contribution to the state's
budget.
FUNDING PUBLIC
EXPENDITURE
The funding of public expenditure through taxation is a
fundamental mechanism employed by governments
worldwide. Taxation serves as a primary means to
Finance Minister Nirmala
generate revenue necessary for financing various public
Sitharaman proposed to
services and infrastructure development. Through levying
raise the capital expenditure
taxes on individuals, businesses, and other entities,
target by 11.1% to record Rs.
governments secure funds to address societal needs such
11.11 lakh crore for the next
as education, healthcare, defense, and infrastructure
fiscal year 2024 - 25.
projects.

Taxation allows for the equitable distribution of the

financial burden among citizens, contributing to the overall
economic stability and welfare of the nation by facilitating
the provision of essential public goods and services.
ECONOMIC REGULATION
Economic regulation through taxation encompasses
government policies and measures aimed at influencing
and controlling economic activities within a society. Taxes
serve as a crucial tool for fiscal regulation, allowing Contributions made
governments to manage economic conditions, redistribute to certain relief funds and
charitable institutions can be
wealth, and fund public services. Tax policies can stimulate
claimed as a deduction under
or dampen economic growth, encourage specific Section 80G of the Income Tax
industries, and address social inequalities. Act.
GST on tobacco products and
Governments utilize various forms of taxation, such as cigarettes is 28%
income taxes, consumption taxes, and corporate taxes, to
shape economic behavior and achieve broader
socioeconomic objectives. Effective economic regulation
through taxation requires a delicate balance to ensure
both fiscal responsibility and social equity.
ADMINISTRATIVE
EFFICIENCY
Administrative efficiency in taxation is crucial for effective governance and
resource allocation. It involves streamlining processes, minimizing
bureaucracy, and optimizing the tax collection system. Efficient administrative
practices reduce compliance burdens on taxpayers, enhancing overall
economic productivity. Leveraging technology for online filing and processing
further expedites transactions.

Well-structured tax administration ensures fair and equitable revenue

collection, fostering public trust. Adequate training for tax officials and
continuous evaluation of procedures contribute to a transparent and
responsive tax system, ultimately supporting the government in fulfilling its
fiscal responsibilities with precision and effectiveness.
source : The Economic Times
FAIRNESS AND EQUITY
Fairness and equity in taxation are crucial principles aimed at distributing
the financial burden of supporting public services justly among citizens. This
entails creating tax structures that take into account people's financial
capacities and make sure that people with greater incomes make
proportionately larger contributions. A common strategy for achieving
fairness is progressive taxation, in which tax rates rise in proportion to an
individual's income.

Furthermore, lower-income persons may benefit from the use of

exclusions and deductions to lessen their tax burden. In the process of
developing a tax structure that supports social justice, policymakers
continue to face the difficulty of striking a balance between economic
efficiency and justice.
PROGRESSIVE, PROPORTIONAL,
OR REGRESSIVE
Progressive - A tax system is called progressive when people in the
higher income group pay a larger share of their earnings in taxes as
opposed to those in the lesser income groups.

Proportional - A proportional tax system is ideal because all

taxpayers pay the same share of their earnings in taxes. It is not
possible to have a truly proportional tax system.

Regressive - A tax system is regressive if people with lesser earnings

pay a larger portion of their income in taxes as opposed to those
with more earnings. Any system that taxes* people from the lesser
income group for necessities is considered regressive.
DYNAMIC NATURE
The dynamic nature of taxation refers to its continual evolution
and adaptation in response to changing economic, social, and
political landscapes. Taxation systems are not static; they
evolve over time to address emerging challenges, meet
Example :
revenue needs, and achieve policy objectives. Changes in tax
laws, rates, deductions, and credits reflect shifts in government E-filing of taxes
priorities, economic conditions, and societal values. and Digital Sales
Additionally, advancements in technology and globalization Tax
influence tax administration and compliance strategies. The
dynamic nature of taxation underscores the importance of
ongoing analysis, debate, and reform to ensure fairness,
efficiency, and effectiveness in revenue collection and public
finance management.
TRANSPARENCY
Transparency in taxation is paramount for fostering public trust and
accountability. It involves the clear and open disclosure of tax policies,
procedures, and financial information by the government. Transparent
tax systems enable citizens to understand how taxes are assessed,
collected, and utilized for public services. This openness helps prevent
corruption, minimizes tax evasion, and promotes fairness.

Accessible and comprehensible information about tax regulations

allows for informed citizen participation in the democratic process,
ensuring that taxation aligns with societal expectations. Overall,
transparency in taxation establishes a foundation for a just and
equitable fiscal environment.
THANK YOU
By -
Name - Sumit Kumar
Course - B.Com (H)
Enrollment No. - 00320688821
Session - 2021 -2024