Why taxes are required? Any Government needs resources to
run the administration of the nation. Taxes are levied since the history
of the administration began with the rule of kings. It's a system for
collection and distribution of the surplus held by the rich to the poor
in the society. It also aims at the development of the infrastructure
and investment in the welfare of the citizens. However, a country' s
progress can be gauged by the efficient and effective administration
rather than by the quantum of taxes collected from its constituents.
There are countries that levy the taxes in all the possible ways but
spend them unproductively for populist schemes keeping the vote banks
alone in the focus and a part drained through corruption. No tax shall
be levied or collected except by the authority of the law of the
country.
Types of Taxes: Based on who
levies them, taxes are classified as Central, State and Local government
taxes. Depending on the timing, they can be Retrospective, Immediate,
and Prospective taxes. Again looking at the method of taxation, they can
be grouped as the direct and indirect taxes. The one affecting a person
directly like the Income tax and Sales tax is known as the direct tax.
When the tax produces an in