Sources of government revenue
Introduction :
The revenue of the Government is money which is taken by the Government. This is the opposite factor for government spending and an important tool of the Fiscal-Policy made by the government. Revenue which the government earned are received by various sources like the tax which is levied in the income and wealth of people or the individual public and corporate world and on the produced goods and import-export, non-taxable sources like company’income, banking revenue and capital receipts from loans and debts from the various financial institution.
Sources of government revenue:
There are two main sources of government revenue which could be discussed by the following heads;
A. Tax Revenue
Excise duties-Excise duty is a vital source of revenue for the Indian Government and is imposed on commodities produced in the country as a domestic product.
The excise duties or excise tax is considered as the indirect tax, which means that the producer or the seller who pays the imposed duties to the government is wished to try to manage their loss by increasing the price paid by the buyer of that product or the goods. It is also levied in multiplying to an indirect tax such as sales tax or VAT.
Goods & Services Tax- It is also considered as an indirect tax which is levied on the supply of goods and services. The Goods and Services Tax is divided into five tax structures for collecting tax - 0%, 5%, 12%, 18%, and 28%. However, the products such as petroleum, drinks made of alcohol and electricity are not considered under the Goods and Services Tax and this tax is separately imposed by the central government. There is also a different rate of interest 0.255% on valuable and semi-valuable stones and 3% tax imposed on Gold.
Customs Duty- The second most valuable source for increasing revenue for the Government is Customs which is basically both the import and export duties. It is based on the value of goods.
Income tax- At present this is also an important thing for the central government. This tax is taken significantly on the basis of the income range of individuals. Income tax is imposed on both earned income (payment, salary and discount) and the income which is not earned directly (Shares, bonds and rent). If those taxable income increases, the Income Tax would also be increased and vice versa.
Corporation Tax- This kind of tax is levied on the actual taxable income of various companies both public & private sector which are entered in India under the Income Tax Act, 1961. It is also called Corporate Tax or Company Tax. This also takes part in the direct tax segment.
Gift Tax- This is the tax on gifts of individuals’ properties.
Capital Gain Tax- This kind of tax is imposed on capital gains which are collected from the deal, trade and commit of capital assets. In the Long period the rates of capital gain are 0%, 15%, 20% depends on the taxable income. These are actually lower than the short-term capital gain taxes.
Tax on Foreign Travel- A new tax is levied on foreign travel for conserving foreign exchange. The tax is implied for raising the revenue.
B. Non-Tax revenue
Interest Receipts- This is the largest source of non-tax revenue. The government receives mainly on the money which is a benefit to State Government to financial and industrial enterprises in the public sector.
RBI’s surplus of profit - The profit surplus of RBI also takes a part of the incomes of the Indian Government. Nowadays, these have been very important because of that the government is borrowing a significant amount from the Central Bank against T-Bills for implementing the five-year plan. There is no fixed milestone for transferring this surplus profit. Before the budget, the government and the Central Bank discuss the surplus amount for the calculation of profit.
Currency, Mint and Coinage- The government here makes income from the currency note printing presses which are running now. The profits are also made of the making of coins.
Railways- The railway is the biggest platform for the revenue system which is owned and run by the government. They pay a fixed dividend. Indian Railways carries daily on average twenty-three million passengers and three million ton of freight. The annual revenue receipt of the Indian railway for 2014-2015 was 1634.50 billion.
Profit and Public Enterprises- Public enterprises owned by the government such as the Steel Authority of India Ltd. (SAIL), Hindustan Machine Tools (HMT), Bharat Heavy Electrical Ltd. (BHEL), and State Trading Corporation (STC) also make a profit, which takes part in the revenue for the government. The public sector units are another source of revenue of the government.
Others- There are also other non-tax revenue sources of gaining revenue. The main source among them is the Departmental Receipts of various ministries of the Central Government by way of fees and penalties.
The sources of income (budget 2017-2018) of the government are as follows (in terms of paisa) :
1. Borrowing and other liabilities - 20 paisa
2. Corporate Tax - 18 paisa
3. Income tax - 15 paisa
4. Union Excise Duties - 13 paisa
5. Service tax and other taxes - 11 paisa
6. Non-tax revenue - 11 paisa
7. Customs Duties - 8 paisa
8. Non-debt capital Receipts - 2.5 paisa
Conclusion:
India is the second most populated country in the whole world and for that reason, the Indian Economy is very important for the world economy. In order to maintain the proper preservation in the economic environment of our country, our Government produces a Financial Budget at the beginning of every financial year. Through the budget, the government controls the price of every goods or product. The government also controls the whole taxation process through this financial budget. In order to control, it can be said that the instrument of tax is a great significance on -
❏ Increasing the economic activities,
❏ Reducing inequalities,
❏ Promoting economic growth.
Tax payment actually helps the government for increasing the government revenue. If the tax is not paid timely or the taxpayer avoids the rule for the payment then the Central Government may take action against this kind of offences.
Reference
0 Comments