Public Finance

Tax reforms in India

Introduction to Tax Reforms

  1. Tax reforms in India aim to create a more efficient, transparent, and equitable tax system.
  2. The focus has been on simplifying the direct and indirect tax structure, broadening the tax base, and improving compliance.
  3. Reforms have been undertaken since the 1991 economic liberalization era.

Key Reforms in Direct Taxes

  1. Implementation of the Income Tax Act, 1961, as the foundational legislation for direct taxes.
  2. Introductio

GST: Features, benefits, and challenges

Introduction to GST

  1. Goods and Services Tax (GST) is a comprehensive indirect tax implemented in India from July 1, 2017.
  2. It replaced multiple indirect taxes like VAT, Service Tax, Excise Duty, and others.
  3. GST is governed by the GST Council, which includes representatives from the Central and State governments.

Features of GST

  1. It is a destination-based tax levied at the point of consumption.
  2. Divided into three categories: CGST (Ce

Types of taxes: Direct and indirect

Introduction to Taxation

  1. Taxation is a primary source of revenue for the government, used to fund public services and development projects.
  2. In India, taxes are categorized into direct and indirect taxes based on their nature and method of collection.
  3. Taxation policies are framed by the Central and State Governments.

Direct Taxes

  1. Direct taxes are levied directly on the income or wealth of individuals or organizations.
  2. Examples inc

FRBM Act: Objectives and challenges

Introduction

  1. The FRBM Act was enacted in 2003 to ensure fiscal discipline and long-term financial stability in India.
  2. It aims to reduce the fiscal deficit, control public debt, and promote transparency in fiscal operations.
  3. Applies to both the Central and State Governments.

Objectives of the FRBM Act

  1. Ensure macroeconomic stability by reducing fiscal deficits and public debt.
  2. Promote fiscal discipline in government expenditure.
  3. Improve

Types of deficits: Fiscal, revenue, primary

Introduction

  1. A deficit occurs when a government's expenditure exceeds its revenue.
  2. There are three key types of deficits in public finance: Fiscal Deficit, Revenue Deficit, and Primary Deficit.
  3. Deficits indicate the financial health of a government and its reliance on borrowing.

Fiscal Deficit

  1. Fiscal Deficit is the difference between the government's total expenditure and its total revenue receipts (excl

Structure: Revenue and capital budgets

Introduction

  1. The Government Budget is a statement of estimated receipts and expenditures of the government over a financial year.
  2. It is divided into two main components: the Revenue Budget and the Capital Budget.
  3. The classification helps in understanding the sources of funds and the purpose of expenditures.

Revenue Budget

  1. The Revenue Budget deals with the government’s current receipts and current expenditures.
  2. Revenue Rec
Public Finance