What is the meaning of Assessed Value?

Assessed Value refers to the assessment of the property for its monetary worth for the purpose of taxation. This price is known as its assessed value. The assessment is usually done annually keeping in mind common factors like the value of the property and other market conditions in the neighbourhood. The assessment is done by […]

Tax Reforms in India

Prior to the liberalization of Economy, India’s tax regime suffered numerous problems. These problems which were in vogue in 1960s and 1970s were as follows: There was a high degree of progressiveness (rich needed to pay exorbitant taxes). On the other hand, tax collection efficiency was very low (rich were smart enough to evade tax). […]

Progressive, Regressive and Proportional Taxes

There are three kinds of the taxes on the basis of their quantum / ratio of charging viz. regressive tax progressive tax and proportional or flat tax. Regressive Tax A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to […]

Capital Gains Tax: Meaning & Current Government Policy

A recent speech of prime minister had started speculation that government may impose long term capital gains tax in the upcoming budget. Capital gain refers to the gain or profit from the sale of property or an investment. Investment may be in shares, equity, gold, real estate or valuables like paintings {a prelims question was […]

Implications of GST as a Destination Based Tax

Indirect taxes can be either origin based or destination based. Origin based tax (also known as production tax) is levied where goods or services are produced. Destination based tax (consumption tax) are levied where goods and services are consumed. In destination-based taxation, exports are allowed with zero taxes whereas imports are taxed on par with […]

Comparison of Direct and Indirect Taxes

There are several parameters on which the direct and indirect taxes can be compared. Firstly, direct taxes are progressive and they help to reduce inequalities but indirect taxes are regressive and they widen the gap of inequalities. Thus, direct taxes result in more equitable distribution of income and wealth, though it might not be always […]

Functions of a Budget

The key functions of a government budget are discussed below: Public Policy Document The budget serves as a public policy document expressed in money and is an embodiment of implied policy objective in monetary terms. Redistribution of Wealth The most important function of budget is redistribution of wealth. However, that needs proper integration of revenue […]

History of Budget in India

Etymologically, the term budget is related to Latin bulga , which refers to a ‘leather bag. The term comes from a Gaulish source connected to the Irish bolg, which means a bag. It got associated with finance in mid 18th century following up a pamphlet titled “The Budget Opened” sarcastically attacking the tax plans of Great Britain’s […]

Merits and Demerits of Progressive Taxation

A progressive tax is imposed to raise the tax rate effectively more than the rate at which it was applied. It is characterised by a more than proportional rise in the tax burden relative to the increase in income. Thus, progressive taxes are seen as fighting inequalities in income distribution. The taxes that are often […]

Exempt-Exempt Tax

Under the Exempt-Exempt Tax (EET) principle, the contributions towards certain savings are deductible from income (this represents the first ‘E’ under the EET method), the accumulation/accretions are exempt (free from any tax incidence) till such time as they remain invested (this represents the second ‘E’ under the EET method) and all withdrawals at any time […]