Preparing Questions:

1> Discuss the historical development of tax law in India with the Salient features of Present Income
Tax Act. 1-Discuss the origin of the Law of Taxation. Why is taxation need in our society? '

2>Explain the difference between tax and fee. Can tax be imposed under the Concurrent List?

3>What is the procedure of distribution of tax revenues between centre and states? Explain.

4>Describe and differentiate between Direct and Indirect tax.

5-The Tax-evasion and Tax-Avoidance both are deemed to be illegal in Tax Laws. Discuss.

6-Different slabs of taxes for different income groups does not violate right to equality under Article
14. Explain.

7-There are certain incomes which are totally exempted and there are certain incomes which are
partially exempted from tax under section 10 of Income Tax Act, 1961? Explain such incomes.

8-Different slabs of taxes for different income groups does not violate right to equality under Article
14. Explain.

9-Discuss the provisions relating to taxation on freedom of trade, commerce and intercourse with in
the country, Refer to case laws.

6-Discuss the provisions relating to taxation on freedom of trade, commerce and intercourse with in
the country, Refer to case laws.

7-Describe the power of Judicial review of courts on the orders of Tax Authorities.

8-Write a note on power to levy taxes on income.

9-Different slabs of taxes for different income groups does not violate right to equality under Article
14. Explain.

10-Write short notes on any two of the following:

(a) PAN/fANinlncomeTaxAct

(b) Agriculture Income

( c) Pennittable deduction under Section 80 C.

4-Discuss the power of Central Government for imposing tax revenues.

2022 Exams: Non Repeated Questions:

3-There are certain incomes which are totally exempted and there are certain incomes which are
partially exempted from tax under section 10 of Income Tax Act, 1961? Explain such incomes.
4-Explain the meaning of the term "Capital gains". What are the kinds and how capital gains are
calculated?

5-What do you understand by Income from "House-property"? What deductions are allowed under
this head? Discuss.

6-What Incomes are included under Income from Salary? What deductions are allowed under this
head of Income?

10-Write short notes on any two of the following:

(a) Black-money

(b) Annual-value

(c) Assessment-year

(d) Previous year

2020 Exams Question:

1> Discuss the historical development of tax law in India with the Salient features of Present Income
Tax Act.

2>Explain the difference between tax and fee. Can tax be imposed under the

Concurrent List?

3>What is the procedure of distribution of tax revenues between centre and states ? Explain.

4-Discuss the power of Central Government for imposing tax revenues.

5>Describe and differentiate between Direct and Indirect tax.

6-Discuss the provisions relating to taxation on freedom of trade, commerce and intercourse with in
the country, Refer to case laws.

7-Describe the power of Judicial review of courts on the orders of Tax Authorities.

8-Write a note on power to levy taxes on income.

10-Write short notes on any two of the following:

(a) PAN/fANinlncomeTaxAct
(b) Agriculture Income

( c) Pennittable deduction under Section 80 C.

2022 Exams: Non Repeated Questions:

1-Discuss the origin of the Law of Taxation. Why is taxation need in our society? '

3-There are certain incomes which are totally exempted and there are certain incomes which are
partially exempted from tax under section 10 of Income Tax Act, 1961? Explain such incomes.

4-Explain the meaning of the term "Capital gains". What are the kinds and how capital gains are
calculated?

5-What do you understand by Income from "House-property"? What deductions are allowed under
this head? Discuss.

6-What Incomes are included under Income from Salary? What deductions are allowed under this
head of Income?

9-The Tax-evasion and Tax-Avoidance both are deemed to be illegal in Tax Laws. Discuss.

10-Write short notes on any two of the following:

(a) Black-money

(b) Annual-value

(c) Assessment-year

(d) Previous year

Discuss the historical development of tax law in India with the Salient features of Present Income Tax
Act.

Historical Development of Tax Law in India:

British Era:

a. East India Company: During the rule of the East India Company in the 18th and 19th centuries, various
taxes were imposed to generate revenue, including land revenue, salt tax, and customs duties.

b. Introduction of Income Tax: The first Income Tax Act was introduced in 1860 by James Wilson, the
Finance Member of the India Council. It aimed to tax incomes derived from British sources in India.

c. Evolution of Taxation: Over the years, income tax laws were modified and expanded to cover wider
categories of taxpayers and income sources.

Post-Independence Era:

a. Constitution of India: After India gained independence in 1947, the power to levy and collect taxes
was conferred to the central and state governments under the Constitution of India.

b. Income Tax Act, 1961: The present Income Tax Act, 1961, replaced the earlier income tax laws and
laid the foundation for the modern tax system in India.

c. Expansions and Amendments: The Income Tax Act has undergone numerous amendments and
expansions since its enactment, introducing new provisions, exemptions, and tax rates to suit the
evolving economic and social landscape of the country.

Salient Features of the Present Income Tax Act:

The Income Tax Act, 1961, is a comprehensive legislation governing the taxation of income in India. Here
are some of its salient features:

Residential Status: The Act defines the criteria for determining the residential status of individuals and
their tax liability based on their residential status.

Income Heads: The Act classifies income into various heads, including salary, house property, business
or profession, capital gains, and other sources. Each head has specific provisions for computation and
taxation.
Tax Rates: The Act provides for different tax rates applicable to different categories of taxpayers and
income ranges. Tax rates are subject to change through amendments in the annual Finance Act.

Exemptions and Deductions: The Act allows for various exemptions, deductions, and rebates to
incentivize savings, investments, and specific expenditures. These include deductions for investments in
specified schemes, exemptions for certain types of income, and allowances for specific expenses.

Tax Planning and Anti-Avoidance Provisions: The Act includes provisions to prevent tax evasion and
abusive tax planning. This includes provisions related to transfer pricing, General Anti-Avoidance Rules
(GAAR), and Controlled Foreign Company (CFC) regulations.

Tax Administration: The Act outlines the powers and functions of tax authorities, including the Central
Board of Direct Taxes (CBDT), for the administration of income tax in India. It also prescribes procedures
for tax assessments, appeals, and dispute resolution.

Double Taxation Relief: The Act provides mechanisms for the avoidance of double taxation through tax
treaties and unilateral relief provisions.

It's important to note that the Income Tax Act is a dynamic legislation that undergoes frequent
amendments to accommodate changes in tax policy and economic conditions. Therefore, it is essential
to refer to the latest version of the Act and stay updated with subsequent amendments and
notifications.

Explain the difference between tax and fee. Can tax be imposed under the Concurrent List?

Difference between Tax and Fee:

Tax:

- Tax is a financial charge or levy imposed by the government on individuals, businesses, or entities to
generate revenue for public purposes.

- It is compulsory and non-voluntary in nature, meaning individuals are legally obligated to pay taxes.

- Taxes are generally imposed based on the ability to pay, and the revenue collected is used for public
services, infrastructure development, and welfare programs.

- The primary purpose of taxation is to raise funds for the government's general expenses rather than
providing specific services directly to the taxpayer.
Fee:

- Fee is a payment or charge imposed by the government or a public authority in exchange for a specific
service, privilege, or benefit provided to individuals or businesses.

- It is generally voluntary and individuals have the choice to avail of the service or benefit and pay the
corresponding fee.

- Fees are usually based on the cost of providing the specific service or benefit and are intended to cover
the expenses incurred in delivering that service.

- The primary purpose of charging a fee is to recover the cost associated with providing a particular
service or benefit to the taxpayer.

In summary, the key differences between tax and fee lie in their nature, purpose, and voluntary nature
of payment.

Regarding the imposition of tax under the Concurrent List:

In the Indian context, the Constitution of India divides legislative powers between the central
government and the state governments through three lists: Union List, State List, and Concurrent List.

The Union List consists of subjects on which only the central government has the power to legislate,
such as defense, foreign affairs, and income tax. The State List consists of subjects on which only the
state governments have the power to legislate, such as police, public health, and land revenue.

The Concurrent List consists of subjects on which both the central and state governments have the
power to legislate concurrently, subject to certain restrictions. Some examples of subjects in the
Concurrent List include criminal law, marriage and divorce, bankruptcy and insolvency, and education.

Taxation is primarily within the purview of the central government, and the power to impose taxes,
including income tax and goods and services tax (GST), is exclusively vested in the central government.
Therefore, tax-related matters generally fall under the Union List and can only be legislated by the
central government.

In summary, taxes cannot be imposed under the Concurrent List, as the power to impose taxes lies with
the central government under the Union List in India.

What is the procedure of distribution of tax revenues between centre and states ? Explain.
The distribution of tax revenues between the central government and state governments in India
follows a procedure outlined in the Constitution of India. The primary methods of distribution are as
follows:

1. Taxes Levied by the Centre and Collected by the Centre (Article 268):

- Taxes such as income tax, customs duties, and central excise duties are levied and collected by the
central government.

- After collection, the entire proceeds of these taxes belong to the central government. There is no
distribution of revenue in this case.

2. Taxes Levied by the Centre and Collected and Shared with the States (Article 269):

- Taxes such as service tax (prior to GST implementation) and now the Goods and Services Tax (GST)
fall under this category.

- The central government levies and collects these taxes, and a portion of the proceeds is shared with
the states.

- The GST Council, composed of the central and state finance ministers, determines the rates,
exemptions, and distribution of the GST revenue between the Centre and states through various
formulae.

3. Taxes Levied and Collected by the Centre but Assigned to the States (Article 270):

- Certain taxes, such as the income tax on agricultural income and taxes on railway fares and passenger
fares, are levied and collected by the central government.

- However, these taxes are entirely assigned to the states, meaning the central government does not
retain any portion of the revenue collected.

4. Taxes Levied and Collected by the Centre and Shared with the States (Article 272):

- Taxes such as estate duty, wealth tax (prior to its abolition), and various surcharges and cesses
imposed by the central government fall under this category.

- The central government levies and collects these taxes and shares a portion of the revenue with the
states through a mechanism prescribed by law or established by the President.

It is important to note that the specific proportions or formulas for revenue sharing may vary based on
legislative enactments, agreements, or decisions made by the GST Council or other relevant authorities.
These proportions can be amended from time to time to accommodate changing circumstances and
requirements.
The procedure for the distribution of tax revenues between the Centre and states aims to strike a
balance between the fiscal needs and responsibilities of both levels of government, taking into account
factors such as the tax base, administrative efforts, and the financial requirements of the states.

What is the procedure of distribution of tax revenues between centre and states ? Explain.

The procedure for the distribution of tax revenues between the central government and state
governments in India is outlined in the Constitution of India. The main procedure involves the following
steps:

1. Division of Taxing Powers:

- The Constitution assigns specific taxing powers to the central and state governments through three
lists: Union List, State List, and Concurrent List.

- The Union List includes subjects on which only the central government can levy and collect taxes,
such as income tax and customs duties.

- The State List includes subjects on which only the state governments can levy and collect taxes, such
as sales tax and stamp duty.

- The Concurrent List includes subjects on which both the central and state governments can levy and
collect taxes concurrently, such as goods and services tax (GST).

2. Taxes Levied and Collected by the Centre:

- Certain taxes, like income tax, are levied and collected by the central government.

- The entire proceeds of these taxes belong to the central government, and there is no distribution of
revenue with the states.

3. Taxes Levied and Collected by the Centre but Shared with the States:

- Some taxes, such as GST, are levied and collected by the central government, but a portion of the
proceeds is shared with the states.

- The sharing of GST revenue between the Centre and states is determined by the GST Council, which
consists of central and state finance ministers.

- The GST Council decides the rates, exemptions, and the mechanism for distribution of revenue
among the Centre and states.

4. Taxes Levied and Collected by the Centre but Assigned to the States:
 - Certain taxes, like income tax on agricultural income and taxes on railway fares and passenger fares,
are levied and collected by the central government.

- However, the entire proceeds of these taxes are assigned to the states, and the central government
does not retain any portion of the revenue.

5. Taxes Levied and Collected by the Centre and Shared with the States:

- Taxes such as estate duty, wealth tax (prior to its abolition), and specific surcharges and cesses
imposed by the central government fall under this category.

- The central government levies and collects these taxes and shares a portion of the revenue with the
states through mechanisms prescribed by law or established by the President.

The specific proportions or formulas for revenue sharing may be determined by legislative enactments,
agreements, or decisions made by relevant authorities. These proportions can be revised or amended
based on changing circumstances and the fiscal requirements of the Centre and states.

The distribution of tax revenues aims to maintain a balance between the financial needs of the central
government and state governments, taking into account factors such as the tax base, administrative
efforts, and the responsibilities of each level of government.

Discuss the power of Central Government for imposing tax revenues.

The Central Government in India possesses the power to impose tax revenues through various
provisions and legislation. The key powers of the Central Government for imposing tax revenues are as
follows:

1. Income Tax:

- The Central Government has exclusive authority to levy and collect income tax, which is governed by
the Income Tax Act, 1961.

- Income tax is imposed on the income earned by individuals, companies, firms, and other entities
based on specified rates and slabs.

2. Goods and Services Tax (GST):

- The Central Government has the power to levy and collect GST, a comprehensive indirect tax on the
supply of goods and services across the country.

- GST subsumes various central and state taxes, unifying them into a single tax system.
3. Customs Duty:

- The Central Government has the power to impose customs duties on goods imported into or
exported out of India.

- Customs duties are levied to regulate imports and exports, protect domestic industries, and generate
revenue.

4. Central Excise Duty:

- The Central Government has the power to levy and collect central excise duty, which is imposed on
the manufacture of goods in India.

- Central excise duty is primarily applicable to goods produced within the country.

5. Service Tax (prior to GST):

- Before the implementation of GST, the Central Government had the power to levy and collect service
tax.

- Service tax was imposed on specified services provided by service providers.

6. Central Sales Tax (prior to GST):

- Prior to the implementation of GST, the Central Government had the power to levy and collect
central sales tax.

- Central sales tax was imposed on the sale of goods in inter-state trade or commerce.

7. Other Taxes and Levies:

- The Central Government has the authority to impose various other taxes, levies, surcharges, and
cesses on specific goods, activities, or transactions, as provided by law.

The Central Government's power to impose tax revenues is derived from the legislative powers granted
to it under the Constitution of India, specifically through the Union List. The power to impose taxes
allows the Central Government to generate revenue to meet the expenses of governance, provide public
services, and fulfill its fiscal responsibilities.

It is important to note that the Central Government's power to impose taxes is subject to constitutional
limitations, legal provisions, and any specific restrictions imposed by the Constitution or legislative
enactments. The exercise of this power is also subject to judicial review to ensure its conformity with
constitutional principles and the rule of law.

Describe and differentiate between Direct and Indirect tax.

Direct Tax:

- Direct tax is a tax imposed directly on individuals or entities based on their income, profits, or wealth.

- The burden of direct tax cannot be shifted to someone else, as it is levied on the person or entity that is
liable to pay it.

- Direct taxes are progressive in nature, meaning the tax rate increases as the taxable income or wealth
increases.

- Examples of direct taxes in India include income tax, wealth tax (abolished from 2015), and capital
gains tax.

Indirect Tax:

- Indirect tax is a tax levied on the production, sale, or consumption of goods and services.

- The burden of indirect tax can be shifted from the original taxpayer to others, such as consumers or
buyers, as it is ultimately passed on in the form of higher prices.

- Indirect taxes are regressive in nature, as they tend to impose a higher burden on individuals with
lower incomes.

- Examples of indirect taxes in India include Goods and Services Tax (GST), customs duties, excise duties,
and sales tax.

Difference between Direct and Indirect Tax:

1. Nature of Taxation:

- Direct tax is imposed on individuals or entities directly based on their income, profits, or wealth.

- Indirect tax is levied on goods and services at various stages of production, sale, or consumption.

2. Burden:

- In direct tax, the burden of tax cannot be shifted to someone else and is borne by the taxpayer.

- In indirect tax, the burden can be shifted to others, such as consumers or buyers, as it is embedded in
the price of goods and services.
3. Progressivity/Regressivity:

- Direct taxes are progressive, meaning the tax rate increases as the taxable income or wealth
increases.

- Indirect taxes are regressive, as they tend to impose a higher burden on individuals with lower
incomes.

4. Collection Point:

- Direct taxes are usually collected at the source (e.g., deducted from salaries) or paid directly by the
taxpayer to the tax authorities.

- Indirect taxes are collected at various stages of production, sale, or consumption, and the burden is
passed on to the final consumer.

5. Impact on Behavior:

- Direct taxes have a more direct impact on the behavior and decisions of individuals or entities, as
they are based on income or wealth.

- Indirect taxes may influence consumption patterns and purchasing decisions due to changes in the
prices of goods and services.

6. Administration and Compliance:

- Direct taxes generally involve a more complex and detailed process of administration and
compliance, as they require accurate reporting of income, deductions, and calculations.

- Indirect taxes are usually collected through mechanisms such as point-of-sale taxation or self-
assessment and involve less complexity in administration.

It is essential to note that both direct and indirect taxes play a crucial role in generating revenue for the
government and contribute to the overall tax system of a country. The combination of these taxes helps
the government fund public services, infrastructure development, and welfare programs.