Constitution and Taxation of India
By replacing the Government of India Act (1935) The Constitution of India came into force on 26 January 1950. Constitution is the soul of every country. Indian Constitution is the Constitution of the people, by the people, for the people and hence every Indian feels proud to follow it and celebrate Republic Day. Parliament as well as State Legislatures gets the power to legislate various laws from the Constitution only and therefore every law has to be within the vires of the Constitution. Otherwise citizens may make appeal in the court against unconstitutional laws and provisions. Further Honorable Supreme Court and other courts of India take The Constitution of India as the base for giving decisions and thereby law and order prevails in the country.Keshav Nanda Bharti Case is one of the remarkable case of Honurable Supreme Court on this issue.
What are the articles related to taxes in The Constitution of India?
As per The Constitution of India’s Seventh schedule and various Articles, mainly Article 246, 265 powers to make tax laws are prescribed as per the list:
1. List I (referred to as the Union List) enumerates the matters in respect of which the Parliament has an exclusive right to make laws. Some of the examples are Duties of customs, Duties of excise, Corporation tax, Central Sales Tax i.e. Taxes on sale or purchase of goods other than newspapers in the course of Interstate trade or commerce, Service Tax.
2. List II (referred to as the State List) enumerates the matters in respect of which the legislature of any state has an exclusive right to make laws. Some of the examples are Local Sales Tax i.e. Tax on sale or purchase of goods other than newspapers except tax on interstate sale or purchase, Octroi or Entry Tax, Tax on professionals, trades, callings and employment.
How taxes are collected by the government?
India has a well-developed taxation structure. The tax system in India is mainly a three tier system which is based between the Central, State Governments and the local government organizations. If the taxes are collected unconstitutionally then collected taxes will have to be refunded to the taxpayers. There are various types of taxes, broadly divided into two categories i.e. Direct Tax and Indirect Tax.
What is Direct Tax and Indirect Tax?
Laws, rules and regulation are simple but they were made difficult by finding loopholes in it. A Direct tax is a kind of charge, which is imposed directly on the taxpayer and paid directly to the government by the persons (juristic or natural) on whom it is imposed. A direct tax is one that cannot be shifted by the taxpayer to someone else. Some examples of the important Direct Taxes imposed in India are Income Tax, Corporation Tax, Property Tax, Inheritance Tax, Gift Tax. Indirect taxes are those paid by consumers when they buy goods and services. Usually, these charges are passed on to the consumer. The consumer often does not know that he is paying the tax. The some important examples of Indirect Taxes imposed in India are Customs Duty, Central Excise Duty, Service Tax, Sales Tax, Value Added Tax and Securities Transaction Tax.
In simple and joyful manner the example of Direct and Indirect Tax is, “When husband himself gives money to her wife, then it is Direct Tax and when wife secretly takes away money from his husband’s wallet then it is indirect tax