Mains Paper3 | Indian Economy and issues relating to planning, mobilization of resources, growth
Prelims: Direct Taxes
Mains level: Nothing much, just take note of the fact that direct tax collection has increased from last year, primary reasons cited for this are demonetization and increase in advance taxes.
- Net direct tax collections for April-September, the first half of the current financial year, grew 15.8 per cent from last year to Rs 3.86 lakh crore, according to the data released by Central Board of Direct Taxes (CBDT).
- This amounts to 4 per cent of the total Budget estimate for direct taxes for 2017-18.
Reasons for the rise in tax collection
- Positive effects of demonetisation
- The growth in advance tax collection is 11.5% but this growth has been slower than during the April-September period last year, when it had recorded an increase of 12.12 per cent.
- The net growth in corporate income tax collections was 2.56 per cent, while personal income tax collections recorded a rise of 18.6 per cent.
The government estimates to collect Rs 9.80 lakh crore from direct taxes in the current fiscal.
- It is paid directly by an individual or organization to an imposing entity.
- They are based are based on the ability-to-pay principle that is, those who have more resources or earn higher income should pay more taxes.
- They may also act disincentive to work hard and earn more money, because more money a person earns, the more taxes he pays.
- For example, a taxpayer pays direct taxes to the government for different purposes, including real property tax, personal property tax, income tax or taxes on assets.
- Advance tax refers to paying a part of your taxes before the end of the financial year.
- Also called ‘pay-as-you-earn’ scheme, advance tax is the income tax payable if your tax liability is more than Rs. 10,000 in a financial year.
- It should be paid in the year in which the income is received.