Fiscal Policy- Public Revenue

Introduction Public revenue is the income of government from various sources. It can be classified into tax revenue and non-tax revenue. The tax is very important source of revenue. The tax has been segregated into two types i.e. direct tax (paid by the person on whom it is legally imposed) and indirect tax (imposed on one person but paid partly or wholly by another). The sources of non-tax revenue are classified as administrative revenue, commercial revenue, loans and advances and grants-in-aid. Adam Smith has enunciated canons of taxation which includes canon of equity, canon of certainty, canon of simplicity, canon of economy and canon of convenience. Taxation can also be classified on the basis of degree of progression of tax as proportional tax, progressive tax, regressive tax and degressive tax. Sources of revenue of central government are income tax, corporate tax, wealth tax, gift tax, estate duty and expenditure tax. The sources of indirect tax include sales tax, custom duty, exercise duty, service tax and entertainment tax. Non-tax revenue for the central government includes fiscal services, dividend and profits, economic services, administrative services, receipts from interest on loans and social and community services. Tax revenue of state government includes tax on agricultural income, land tax, excise duty on alcoholic liquors and narcotics, entertainment tax and stamp duties. Non – tax revenue includes income from irrigation and forests, loans and overdrafts, income from registration and excise and estate duties and debt services. There is another type of tax that is independent of income. It is called the lump sum tax.

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