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Sources of Revenue

Comprehensive explanation of Sources of Revenue in India - Tax Revenue, Non-Tax Revenue, Central and State Taxes, Direct and Indirect Taxes.

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💰 Sources of Revenue - Sources of Revenue

Income received to meet government expenditure

📊 Revenue Sources Overview - SVG
💰 Government Revenue Sources Government revenue Government Revenue tax revenue Tax Revenue ~70% of Total Revenue Tax free income Non-Tax Revenue ~30% of Total Revenue direct line Direct Tax • Income Tax • Corporate Tax • Capital Gains Tax • Wealth Tax* *Discontinued in 2015 indirect tax Indirect Tax • GST (Goods and Services Tax) • Customs Duty • Excise Duty • Service Tax* *Incorporated into GST Types of non-taxable income • Interest Income • Dividends Fees & Fines • Professional services • PSU profitability 🎯 Key Difference - Direct vs Indirect Tax Direct Tax: Tax Incidence cannot be shifted Indirect Tax: Taxpayer ≠ Taxpayer (Tax Incidence can be shifted) 📊 2023-24 Budget - Revenue sharing Direct Tax: 54% Indirect Tax: 46% Total: ₹33.6 Lakh Cr
💵 Tax Revenue
Direct Tax:
  • Income Tax
  • Corporate Tax
  • Capital Gains Tax
Indirect Tax:
  • GST – Goods and Services Tax
  • Customs Duty
  • Central Excise
📦 Non-Tax Revenue
  • Interest income- On credit
  • Dividends- RBI, PSUs
  • Charges- License, Fees
  • Penalties- Fines, Penalties
  • Foreign Subsidy- Grants
  • Disinvestment- Stock sale

🏛️ Central Government vs State Government Taxes

Apportionment of taxes as per 7th Schedule of the Constitution

📊 Central vs State Taxes - SVG
🏛️ Central vs State Taxes (7th Schedule) 🇮🇳 Central Government Taxes (Union List) Direct Lines: • Income Tax • Corporate Tax • Wealth Tax - Cessation Indirect Taxes: • CGST (Central GST) • IGST (Integrated GST) • Customs Duty • Central Excise • Service Tax – Merger with GST Article 246 - List I (97 Items) 🏠 State Government Taxes (State List) Key lines: • SGST (State GST) • State Excise - Liquor • Stamp Duty Land Revenue Motor Vehicle Tax • Electricity Duty Entertainment Tax • Property Tax - Local • Agri Income Tax Article 246 - List II (61 Items) 🤝 Concurrent List • Stamp Duties (Central Law, State Collection) • Both Central + State can legislate • In case of conflict – Central law will prevail 🔥 GST - Dual Model (101st Amendment, 2016) CGST Central GST To the Central Govt SGST State GST To the State Govt IGST Integrated GST Inter-State - Sharing
📊 Central vs State Taxes - Comparison
feature Central Government Taxes State Government Taxes
Constitution List I (Union List) List II (State List)
The main line Income Tax, Corporate Tax State Excise, Stamp Duty
GST CGST, IGST SGST
customs duty Customs Duty ✅ ❌ No
Liquor tax ❌ No State Excise ✅
Agricultural income ❌ No tax Can be taxed (nobody imposes)

⚖️ Direct Tax vs Indirect Tax - Full Comparison

📊 Direct vs Indirect Tax - SVG
⚖️ Direct vs Indirect Tax 💵 Direct Tax 📌 Definition: Taxpayer = Taxpayer Tax Burden cannot be shifted 📋 Categories: • Income Tax • Corporate Tax • Capital Gains Tax • Gift Tax – Cessation • Wealth Tax - Cessation ✅ Features: • Progressive – Higher the income, higher the tax • Equality – Richer tax more • Tax Evasion is possible 🏷️ Indirect Tax 📌 Definition: Taxpayer ≠ Taxpayer Tax Burden can be shifted to consumer 📋 Categories: • GST (CGST, SGST, IGST) • Customs Duty • Excise Duty • Linkage in VAT – GST • Service Tax – Linkage in GST ✅ Features: • Easy collection - Point of Sale • Tax Evasion is difficult • Regressive – affecting the poor 🎯 Impact / load change (Incidence) Direct: Impact = Incidence Indirect: Impact ≠ Incidence 📊 Budget 2023-24 - Tax Collection Direct Tax: ₹18.23 Lakh Cr (54%) Indirect Tax: ₹15.38 Lakh Cr (46%)
📊 Detailed comparison chart
# feature direct line indirect tax
1 definition Payer = bearer Payer ≠ Bearer
2 load shift ❌ Can't be changed ✅ Transferable to consumers
3 Character Progressive Regressive
4 example Income Tax, Corporate Tax GST, Customs Duty
5 Collection Difficult - Assessment required Simple - Point of Sale
6 Tax Evasion more likely Less likely
7 Inflation Effect less More - price increase
8 Equality More equality Inequality
🔥 Progressive vs Regressive Tax
Progressive Tax:
Increase in income → increase in tax rate
Eg: Income Tax Slabs
Upto ₹3L - 0%, ₹3-6L - 5%, ₹6-9L - 10%...
Regressive Tax:
Same rate for all - the poor are more affected
Eg: GST 18%
₹100 Item – All ₹18 Tax

🎯 TNPSC Shortcuts - Sources of Income!

🧠 Memory Tricks - SVG
🧠 TNPSC Memory Tricks - Sources of Income 📌 Direct vs Indirect Trick "DICE vs GSC" Direct = Income, Corporate, Estate (Wealth) Indirect = GST, Service, Customs 🇮🇳 Central Line Trick "ICCE GST" I = Income Tax, C = Corporate Tax C = Customs, E = Excise, GST 🏠 State Tax Trick "SLAVES" S = Stamp Duty, L = Land Revenue, A = Agricultural Income V = Vehicle Tax, E = Entertainment, S = State Excise (Liquor) 🔥 GST Rates Trick "0-5-12-18-28" 0% = Essential 5% = general goods, 28% = luxury 💰 Tax vs Non-Tax "The 70-30 Rule" Tax Revenue = ~70% of Total Non-Tax Revenue = ~30% of Total 📜 Article Numbers "265-266-267" 265 = No collection without tax law 266 = Consolidated Fund, 267 = Contingency Fund 🔥 Quick Facts - Frequently asked • Introduction of GST: 1 July 2017 (101st Amendment) • GST Council Chairman: Union Finance Minister • Agricultural income: No tax (Art. 10(1)) • Cessation of Wealth Tax: 2015 • Income Tax Max: 30% + Surcharge • GST Outside: Petrol, Liquor, Electricity
📝 TNPSC One-Liners
1 When will GST be introduced? 1 July 2017
2 What is GST Amendment? 101st Constitutional Amendment, 2016
3 Chairman of GST Council? Finance Minister
4 Goods not covered by GST? Petrol, Diesel, Liquor, Electricity, Real Estate
5 What is Article 265? Tax should not be levied without law
6 Tax on agricultural income? ❌ No – Constitutional exemption
7 Year of Wealth Tax Cessation? 2015 (Budget 2015-16)
8 Who collects Customs Duty? Central Govt only
9 Who collects liquor tax? State Excise only
10 Direct Tax Board? CBDT - Central Board of Direct Taxes
🔥 FAQ - Frequently Asked Questions
Q1:What is Progressive Tax?
A: Tax rate increases to increase income - Example of Income Tax
Q2:What type of tax is GST?
A: Indirect Tax + Destination Based + Value Added Tax
Q3:Impact vs Incidence of Tax?
A: Impact = who pays first, Incidence = who bears the burden in the end
Q4:When will IGST be levied?
A: Inter-State Trade (Between States) – Later Partition
🎯 Quick Revision Chart
Line type Central Govt State Govt
Income Tax ✅ ❌
Corporate Tax ✅ ❌
Customs Duty ✅ ❌
CGST ✅ ❌
SGST ❌ ✅
Stamp Duty ❌ ✅
State Excise ❌ ✅
Vehicle Tax ❌ ✅
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