INTRODUCTION OF TAXATION SYSTEM

   
 

      The Constitution of India (COI) has given power to levy tax to central and State Government under seventh schedule. The taxation in India is either charged by the State Governments or by the Central Government. In the basic scheme of taxation in India, it is conceived that Central Government will levy and collect tax revenue from Income Tax (exception Agricultural Income), Excise (except on alcoholic drinks, Etc.) and Customs while State Government will get tax revenue from Local Sales Tax, Excise on liquor and tax on Agricultural Income and the Municipalities will get tax revenue from Octroi and Property Tax.
 

Taxes are of two type?s viz. Direct Taxes and Indirect Taxes. 
 
      
Direct Tax is the tax, which is paid directly by people to the government, while indirect tax is paid indirectly by people to the government through registered government representatives. 
 
      Income Tax is paid directly to the government therefore it is a direct tax while excise duty is paid by people to the manufacturer who pays it to the government, therefore it is an indirect tax.