Tax: The word “taxation” comes from Latin word “Taxio”. It means to determine the payable quantum on the estimate. So, a tax is the revenue collected by the government from persons and organizations under different taxing Act. It is a compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions.
According to Taylor, Taxes are the compulsory payments to the government without exception of direct benefit to the taxpayer.
There are several very common types of taxes:
Income Tax, Corporate Tax, Sales Tax, Property Tax, Tariff tax, Estate tax etc.
Characteristics of tax: Against the backdrop of the definition of the tax, following characteristics of tax may be identified –
- It is a compulsory levy to pay the government under ITO 1984.
- Taxpayers cannot claim direct and quid qua pro service for payment of tax.
- It is a price paid to the government for living in civilized society.
The objectives of tax can be identified as follows:
Collection of revenue: The main objective tax is the collection of revenue.
Redistribution of Income: Concentration of money and income in few hands can create a socio-economic and political problem. Thus taxation redistributes the income.
Economic Control: To guide the economy in desired direction Government needs to control inflation push money to the economy develop certain sectors of all the economy and central some activities.
Protection of Industry: Its helps to the protection of industry.
Economic development: It creates economic development.
Full Employment: Collection of tax helps the government to achieve full employment.
Raising National Income: Collection of tax helps to raise the national income of a country.