Page 249 - General Knowledge
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GENERAL KNOWLEDGE                                                                               2019



              Each state gets that amount of the tax as is collected within its territory.
               Succession duty, estate duty on property other than agricultural land, taxes on railway fares
                and freights, taxes on newspaper sales and advertisements etc. fall in this category.
              Thirdly, certain taxes are levied and collected by the union but the proceeds are distributed
                between the centre and the states.
              Taxes  on  non-agricultural  incomes  (Art.  270)  and  excise  duties  on  items  in  the  union  list
                accept medicinal and toilet preparations, fall in this category.
            Methods of Taxation
              There are three methods of taxation prevalent in economics with their individual merits and
                demerits.
                  Progressive taxation
                  A progressive  tax is  a tax in  which  the tax rate  increases  as  the  taxable  amount
                    increases.
                  The term "progressive" refers to the way the tax rate progresses from low to high, with
                    the result that a taxpayer's average tax rate is less than the person's marginal tax rate.
                  Regressive Taxation
                  A regressive  tax is  a tax imposed in  such a manner  that  the tax rate decreases  as  the
                    amount subject to taxation increases.
                  "Regressive"  describes  a  distribution  effect  on  income  or  expenditure,  referring  to  the
                    way  the  rate  progresses  from  high  to  low,  so  that  the  average  tax rate  exceeds  the
                    marginal tax rate.

                  Proportional taxation
                  A proportional tax is an income tax system where the same percentage of tax is levied
                    from  all  taxpayers,  regardless  of  their  income.  A proportional  tax applies  the
                    same tax rate across low-, middle- and high-income taxpayers.
              Central Government levies taxes on the following:
                  Income Tax: Tax on income of a person
                  Customs duties: Duties on import and export of goods.
                  Central excise: Taxes on Manufacturing of dutiable goods.
                  Service tax: Taxes on provision of services.
            State Governments can levy the following taxes:
              Value Added Tax (VAT)
              VAT is tax on sale of goods.
              While the intra-state sale of goods is covered by the VAT Law of that state, inter-state sale of
                goods is covered by the Central Sales Tax Act.
              Even  the  revenue  collected  under  Central  Sales  Tax  Act  is  done  so  by  the  State
                Governments themselves and actually the Central Government has no role to play so.
              Implementation  of  VAT:  At  the  meeting  of  the  Empowered  Committee  of  State  Finance
                                                                                                                 st
                Ministers held on 18 June 2004, it was resolved to introduce VAT at the State Level from 1
                April 2005.
              VAT being a State subject, the Central Government has been acting as a facilitator for its
                successful launching and implementation.







            245 | P a g e                                                              shop.ssbcrack.com
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