Taxation in India


  • Direct tax
    • Corporate tax
    • Personal Income tax
    • Estate tax
    • Wealth tax
  • Indirect tax
    • Customs tax
    • Excise tax
    • Sales tax
    • Value Added Tax (VAT)
    • GST (Goods and Services Tax)
    • Consumption tax
    • Tariffs
  • Methods of taxation:
    • Proportional tax
      • Always constant. If income increases, tax remains constant
      • Tax is levied at the same rate for each individual, irrespective of their level of income
    • Progressive tax
      • "The more you earn, the more you pay"
      • As income increases, tax also increases
    • Regressive tax
      • Everyone pays the same tax rate, no matter how much they earn
      • Affects poor people more
    • Digressive Taxation
      • Tax rate initially increases with income up to a certain point, after which it either remains constant or decreases.
      • Thus, this system of taxation combines elements of both Progressive Taxation and Regressive Taxation.
  • GST (Goods and Services Tax)
    • GST is a single, indirect tax that applies to the supply of goods and services across India
    • GST Day - 1st July
    • Introduced through 101st Amendment Act, 2017
    • It has 3 types:
      • CGST: Central GST
      • SGST: State GST
      • IGST: Integrated GST (for interstate trade)
    • All together one tax instead of cascading tax
    • 5 tax slab
      • 0%
      • 5%
      • 10%
      • 15%
      • 20%
      • 25%
      • 30%
    • GST Council 
      • Chairman - Finance Minister 

  • Key Institutions:
    • Central Board of Direct Taxes (CBDT) 
      • Statutory body under the Department of Revenue, Ministry of Finance
      • It oversees the administration of direct taxes, including income tax and corporate tax, through the Income Tax Department
      • The CBDT was constituted in 1964 under the Central Board of Revenue Act, 1963
      • Chairperson (as on April 2025) - Ravi Agarwal
    • Central Board of Indirect Taxes and Customs (CBIC) 
      • Statutory body under the Department of Revenue, Government of India
      • It oversees the administration of indirect taxes, including customs duties, excise duties, and the Goods and Services Tax (GST)
      • CBIC's function also extends to prevention of smuggling, illicit financial activities, and regulation and control of narcotics through its attached/subordinate office
      • Chairperson (as on April 2025) - Sanjay Kumar Agarwal
    • Income Tax Department 
      • Government agency undertaking direct tax collection of the government of the Republic of India
      • Headed by the apex body Central Board of Direct Taxes (CBDT)
      • Enforces various direct tax laws, most important among these being the Income-tax Act, 1961, to collect revenue for the government of India. It also enforces other economic laws such as the Benami Transactions (Prohibition) Act, 1988 and the Black Money Act, 2015

  • The Income-tax Act, 1961
    • The primary objectives of the Income Tax Act 1961 are:
      • Revenue Generation
      • Equitable Distribution of Wealth
      • Economic Regulation
      • Compliance and Enforcement
  • The New Income Tax Bill was introduced in the Lok Sabha on 13th February 2025
  • The purpose of this bill is to simplify the complex Income Tax Act of 1961
  • If the bill is approved and passed then it will become an act of law and will come into force with effect from 1st April 2026


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