Context: Supreme Court in a judgement held that a state legislature has the right to impose tax on lotteries conducted by other States within its jurisdiction. Case: The judgement came on appeals filed by the Karnataka and Kerala governments against the decisions of their respective High Courts to quash laws enacted by their legislatures to tax lotteries organised and …
Facts: The tax department has conducted a record level of searches in the current fiscal year and found an undisclosed income of Rs 32,000 crore. What are the issues in India’s present tax regime? Tax-to-GDP ratio in India remains low and stagnant. Consequently, weak revenue collection puts pressure on government finances and limits the capacity …
Context: The agreement to pay compensation for the loss of revenue was for a period of five years, which will come to an end by June 2022. States are demanding to continue it for another five years as it was hoped that the tax structure would stabilise in the first five years, however, the reform …
Vision behind GST: GST was launched in July,2017 with the vision of “one nation one tax”. It was expected to improve tax-GDP ratio, end tax cascading, enhance efficiency, competitiveness, growth, and ensure lower prices. Many exemptions, along with different tax rates, have been accommodated to protect the interests of different stakeholders. Key features of GST: GST Council and GSTN: …
Why India’s Tax Policy is pro-rich? Replacing the wealth tax with an income tax for households that earned more than 1 crore rupees annually. Reduction in the corporate tax rate for companies from 30 percent to 22 percent. Corporate tax for manufacturing firms incorporated after October 1, 2019, was reduced from 25 to 15 percent. …
Context: Government has decided to scrap retrospective taxation. Adverse decision of International Arbitration Court in Cairn case. Appeal by Indian authorities against Vodafone case decision. Vodafone and Cairn cases: An international arbitration court has turned down tax authorities’ demand for 22,100 crore in retrospective taxes and penalties relating to the Vodafone’s acquisition of an Indian …
Issues existing with GST Non-expanding tax base: The tax base of GST does not appear to be expanding. The Tax to Gross value addition (GVA) is only about 5% to 6.5% though GVA growth was much higher. Political architecture: The fundamental weakness of the GST is its political architecture. In the voting, the central government has one-third vote …
Government dependence on Petro Taxes: Central revenue from taxing petroleum products has multiplied more than five-fold in last seven years. In 2014, International oil prices had crossed $100, but India’s petrol price was a little over Rs 70. It is the opposite today, only because excise on petrol has been trebled per liter, and that …
Current Tax sharing structure between Centre and State: In India, direct taxes are collected entirely by the Central government. State governments get funds from the Central government according to the Finance Commission’s recommendations. Though this is based on a formula, often politics intervenes, leading to discrepancy in receivables of different state. After the Fifteenth Finance Commission recommendation, the Central government is supposed to distribute 41% of …
Utility: Direct question can be asked on this issue. Also, it can be quoted in answers related to India-US relations, Global Trade related questions. What is the Digital Services Tax (DST) imposed by India? The DST imposes a 2% tax on revenue generated from a broad range of digital services offered in India like: Digital platform …