Introduction
Taxation means the imposition of compulsory levies on individuals or entities by the government. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures and to serve other purposes. Tax law is used as an instrument to impose the tax.
What is a Tax Law?
Tax law is a government document, numbering thousands of pages that detail the rules for individuals and businesses. Usually, the tax laws will be implemented through respective acts, rules & regulations, procedures, circulars, and orders. They must follow the law and be responsible for remitting a percentage of their income to the government.
Tax Laws in India
Tax laws in India are governed by both the Central Government and state governments. Some minor tax laws are governed by the local authorities such as the municipality and the local governments.
Direct Taxes in India were governed by two major legislations, Income Tax Act, 1961 and Wealth Tax Act, 1957. The new legislation, Direct Taxes Code (DTC), was proposed to replace the two acts. The idea of DTC dropped when the Wealth Tax Act was revoked in 2015.
Over the last few years, the Central and many state governments have undertaken various policy reforms and process simplification towards great predictability, fairness, and automation. The reforms have consequently lead to India’s meteoric rise to the top 100 in the World Bank’s Ease of Doing Business (EoDB) ranking in 2018. The Goods & Services Tax (GST) reform is one such reform to ease the complex multiple indirect tax regime in India.
Major Central Tax Laws are: 1. Income Tax Act 2. Customs Act 3. Central Goods & Services Tax Act (CGST Act) 4. Integrated Goods & Services Tax Act (IGST Act)
Major State Taxes are: 1. State Goods & Services Tax Act (SGST Act) 2. The Registrations Act (Stamp Duty & Registration)
The following are the authorities under the finance ministry, which oversees the implementation of direct & indirect tax laws in India 1. Central Board of Direct Taxes (CBDT) 2. Central Board of Indirect Taxes & Customs (CBIC)
