Taxation in India
An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law".
Nonetheless, tax evasion is a massive problem in India, ultimately catalyzing various negative effects on the country.
Article 246[3] of the Indian Constitution, distributes legislative powers including taxation, between the Parliament of India and the State Legislature.
Income tax returns are due in India generally on 31 July, 30 September or 30 November, depending on the category of taxpayer.
In February 2020, as part of India's attempts to increase and support local production, the government stated that it raised taxes on imports for items such as electronic devices, furniture and toys.
[19] The government had earlier proposed an excise duty in the Budget 2011–12, which had to be rolled back after massive protests by jewellers.
"[24] The tax is to be paid by the trader to the civic bodies and the rules and regulations of these vary amongst different States in India.
The tax power is vested in the states and it is delegated by law to the local bodies, specifying the valuation method, rate band, and collection procedures.
The rate structure is flat on rural (panchayat) properties, but in the urban (municipal) areas it is mildly progressive with about 80% of assessments falling in the first two slabs.
[26] The Indian government's deficiency in governmental expenditures is most notably attributed to wide spread tax evasion.
[27] India faces more difficulties in proliferating its income tax than a country like China, who subjects 20% of its population, because there is an emphatically low amount of formal wage earners.
Accordingly, basis the Action Plan Report 6 of the BEPS Project, member nations were required to adopt PPT test as a minimum standard.
[30] As many supplies were cut off and shortages were rampant, the prices of commodities and the level of taxes imposed by the government augmented.
[31] In addition, many individuals divert their incomes to spouses and children, or even create fictitious partnerships, in order to evade taxation.
In India, corrupt businessmen sponsor political parties with black money, in order to augment their wealth reduce their taxation.
While individuals blame the government for difficulties and shortages, many do not understand the importance of taking accountability and paying one's taxes.
In fact, the large volume of black money actually diverts governmental resources from national welfare and encourages the continuation of illegal activity.
[31] Besides depriving the state's exchequer and understating India's GDP, extensive tax evasion has encouraged the payment of huge dowries at the time of marriages.
[31] This ultimately makes it difficult for low and middle class individuals to marry off their children, adding a social detriment to this widespread economic problem.
[31] In addition, the introduction of the Prevention of Money‐Laundering Act makes any and all activities related to the laundering of money a federal offense with a minimum imprisonment of less than three years.
Additionally, India has attempted to eradicate tax evasion by requiring an identification number for all major financial deals.
