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What is Tax Collection?
In order to garner income for the government to finance social projects, tax is collected from individuals and corporations via direct tax and indirect tax. These two tax collections form the government's revenue.
Revenue receipts can be of two types — non-tax revenue and tax revenue. Tax revenue is the income gained by the government through taxation.
Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget. Union Budget keeps the account of the government's finances for the fiscal year that runs from April 1 to March 31. Union Budget is classified into Revenue Budget and Capital Budget.
Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country's output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy's resources.
Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country's output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy's resources.
Taxes collected from both direct tax and indirect tax are the government’s tax revenue. It includes collections from income tax, corporation tax, customs, wealth tax, tax on land revenue, etc.
Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied. Income tax, wealth tax, corporation tax, and property tax are some examples of direct tax.
Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of indirect tax. Corporation tax forms a large chunk of the government’s tax revenue.