The tax has become an integral part of the current situation.





The main purpose of this study is to find out how the tax changes in history and the current tax system.





There is a different tax for a different purpose and for a different reason but they all created to finance the government.





They have started tax way back in 1799 where The Britishers collect the tax to fund the war against French and this laid the foundation of modern tax.





was collected for funding wars but they have changed the definition of war for the upcoming years. In history, most of the taxfor funding wars but they have changed the definition of war for the upcoming years.





is been the main revenue for the government for financing its various activities. Nowadays taxthe main revenue for the government for financing its various activities.

Tax changes over time.





As time changes the collection of tax also changed.





In India there is a different tax like Income tax, VAT, Excise duty etc. but all these taxes are replaced by GST.





But what is tax how it starts and how many taxes are there in India till now?





Before GST there was a vast tax system in India and how GST unite this tax all this we will see in this paper

I will post this Blog in two parts as this topic is more lengthy than I anticipated.





Chapters

1. History of Tax

2. Taxation policy before Independence

3. Taxation policy till GST

4. GST





1. History of Tax

What is mean by Tax?

According to Oxford dictionaries–

“ 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 Cambridge Dictionaries–

“ Money paid to the government that is based on your income or the cost of goods or services you have bought,"





In simple words, A Tax is a mandatory financial charge or some other levy imposed upon a taxpayer by a governmental organization to fund various public expenditures.





Worlds 1st known tax collected by the British Prime Minister William Pitt the Younger in 1799 to help to cover the cost of his country’s war with France.





Income Tax had also been introduced in this period.





was started collecting from 1864 because of the Civil war. In The US, Taxcollecting from 1864 because of the Civil war.





Arthasastra . In India, the tax system we all know today has been in force by the ancient times they refer various tax measures in both Manu Smriti and









According to Manu Smriti

th of their profits in Silver and Gold. The King should arrange the collection of taxes in such a manner that the taxpayer did not feel the pinch of paying taxes. He laid down that traders and artisans should pay 1/5of their profits in Silver and Gold.





th, 1/8th and 1/10th of the production. While the agriculturist was to pay 1/6, 1/8and 1/10of the production.





Arthasastra In

at the 1/6th share of the production, import and it determined export duties on the ad- valorem basis. Mentioned that each tax was specific and there was no scope for arbitrariness. Tax collectors determined the schedule of each payment and its time, manner and quantity being all pre-determined. They fixed the land revenueat the 1/6share of the production, import and it determined export duties on the ad-basis.





2. Taxation policy before Independence









In India tax was introduced in 1860, by Sir James Wilson to meet the losses sustained by the government on account of the Military Mutiny of 1857 The Indian debt, which was £51 Million in 1857 rose to £97 Million in 1862.





In 1918, they passed a new Income tax





In 1922 they passed a new act





In 1961-62 numerous amendments were made in the act.





1. Sulka ) which comprise import duty ( Pravesya ), Export duty ( Nishramya ) and octroi and other tools Customs duties () which comprise import duty (), Export duty () and octroi and other tools

2. Vyaji ) Transaction tax (

3. th share Share of production (Bhaga) 1/6share

4. Tax (Kara) Cash form

5. Taxes in Kind including labour supply of soldiers

6. Vaidharana ) Countervailing duties or taxes (

7. cess Road

8. Monopoly tax

9. Royalty

10. Army maintenance tax





Above are few names of taxes which were in India.





Most controversial tax in history was a salt tax. British East India Company imposed a tax on salt.





In 1772 Governor-General Warren Hastings brought the tax to control the companies and in 1780 rate was 2 rupees a mound with a tax of 1.1 to 1.5 rupees a maund





In 1781-82 tax revenue was 29,60,130 rupees





In 1784-85 tax revenue was 62,57,750 rupees









Year Rs. (Million) £ (Million)

1929-30 67 5.025 1930-31 68 5.1 1931-32 87 6.525 1932-33 102 7.65

wikipedia . org www.org









3. Taxation Policy till GST





As we all know, we have Direct and Indirect taxation policies in India





In this, we will talk about the indirect taxation policy





get the burden of payment of this tax. Sellers always shift the payment liability to the buyers. Indirect tax is a tax that can transfer from one person to another person and the last person on the chain is alwaysthe burden of payment of this tax. Sellers always shift the payment liability to the buyers.





They derive the authority of a levy from the Constitution of India which allocates the power to levy various taxes between the Central and the State





As per Article 265 of Constitution

be levied or collected except by the authority of law ” “No tax shallor collected except by the authority of law





be backed by an accompanying law, passed either by the parliament or the state legislature. Therefore, each tax levied or collected has toby an accompanying law, passed either by the parliament or the state legislature.





Tax policy in India is levied by the central and state government and local authorities also impose a tax on the people.





Following is the table of some different taxes imposed on people by both central and state government









1. Service Tax -

be provided . Service tax was a tax levied by Central Government of India on service provided or agreed to





to merged rate at 14% + 0.5% + 0.5% = 15% From 1st June 2016 service tax rateto merged rate at 14% + 0.5% + 0.5% = 15%





0.5% = education cess and higher education cess

Swach Bhart cess 0.5% =cess





Dr Raja Chelliah committee on tax reforms recommended introducing service tax in 1994.





st July 1994 till 2003 was levied. The flat 5% from 1July 1994 till 2003





th may the service tax structure out at a nominal 5% which is now 15% On 13may the service tax structure out at a nominal 5% which is now 15%





The only exemption is when the service provided during the financial year is not more than Rs. 10 lakh





I am presenting the diagram below of service tax revenue in past years (In Crore)

jagoinvestor .com .com

it estimates 2015–16 figure

2. Custom duty -

A customs duty is an indirect tax levied on the import and export of goods in the International trade.





It includes both import and export duties but as export duties contributed only a nominal revenue, due to raising the competitiveness of exports.





Import duties alone made up a major part of the revenue its most probably 10% but it varies





There are different customs duty few as follows

i. Basic Customs Duty

ii. Counter veiling Duty (CVD)

iii. Additional Customs Duty or Special CVD

iv. SafeGuard Duty

v. Anti-Dumping Duty

vi. National Calamity Contingent Duty

vii. Education Cess on Customs Duty

viii. Protective Duty





Press information bureau Govt. of India

Above diagram is Indirect tax collection of Customs, Central Excise & Service tax from April to October 2015 (IN Rs. Crore)





3. Excise duty -

An excise duty is on duty on manufactured goods they levy which at the moment of manufacture,





been changed from 12% to 12.5%, however, they have removed education cess and higher education cess The basic duty rate hasfrom 12% to 12.5%, however, they have removed education cess and higher education cess





Commodities Collection in FY 15* Collection In FY 16* % of excise Kitty in FY 16 Petroleum products 1,06,653 1,98,793 69.23 Tobacco products 16,676 21,463 7.47 Iron and steel 15,970 16,632 5.79 Motor vehicles 8,546 14,220 4.95 Cement 9,572 10,544 3.67 Machinery 3,707 6,421 2.24 Plastics 5,150 6,092 2.12 Chemical products 5,103 5,419 1.89











CAG

Fig in Rs. crore

4. Central Sales tax (CST) -

CST is a levy of a tax on sales it affects which in interstate trade or commerce.





According to the constitution, any state should not impose a tax on intrastate trade, only central Govt. have authority to do it.





They passed the Central Sales Tax Act 1956 to implementation of the tax and its vary from 5% to 12.5%









I will be posting the second part of this Blog soon.