14 Aug 2021 The sovereign right to taxation
Context:
- The government has decided to repeal the retrospective taxes amendment to the I-T Act that was proposed in March 2012.
- While eliminating the retrospective levy is thought to offer investors clarity by removing a key source of misunderstanding in taxation rules, the government has underlined the importance of establishing its “sovereign right to taxation.”
About:
‘sovereign right to taxation’ in India:
- The Indian Constitution grants the government the jurisdiction to levy taxes on persons and organizations, but it also states that no one has the authority to levy or collect taxes unless they are authorized by law. Any tax imposed must be supported by legislation passed by the legislature or Parliament.
- According to a document on the Ministry of Statistics and Programme Implementation’s website, a tax is a “pecuniary burden imposed on individuals or property owners to support the government, a payment exacted by legislative authority,” and a tax “is not a voluntary payment or donation, but an imposed contribution exacted pursuant to legislative authority.”
- India has a three-tier tax system based on the central, state, and local governments, with separate heads of taxation under the Union and State lists in the Constitution’s Seventh Schedule. According to the document, there is no specific head under the Concurrent list, indicating that the Union and the States do not have concurrent taxation powers.
Source: PIB
Syllabus: GS 3 (Taxation)
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Yojna IAS Current Affairs Team
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