Ramesh Singh: Public Finance - UPSC

Union taxes are given in the list of 7th schedule in the constitution.

Central government has exclusive power to impose tax which is not mentioned in state or concurrent list.

The constitution also provides for transferring certain tax revenues from union list to states list.

It is based on the principle of ability to pay. The tax levied by the union government on income of individuals is known as income tax.

The tax on net income of companies is corporate tax. Tax rates are uniform for all categories of companies.

Wealth tax is collected from unproductive assets only. Estate duty was abolished in 1985.

Interest tax was withdrawn in 2000-01, estate duty abolished in 1985 and gift tax in 1998-99.

Sales tax is the tax on sale of goods and is influenced by the value added tax system.

The tax levied on the interstate trade of goods is the central sales tax.

The 14th finance commission was appointed in 2013. It is headed by Y V Reddy.

Revenue deficit= revenue expenditure –revenue receipts.

Effective revenue deficit= revenue deficit-grants for creation of capital assets.

Budget deficit= total expenditure-total receipts.

Fiscal deficit= total expenditure-total receipts except loans and other liabilities.

Primary deficit= fiscal deficit-interest payments.

Capital account is classified into 3 parts in India- private, banking and official capital.

A double entry system of record of all economic transactions between the residents of a country and rest of the world is called balance of payments. All transactions related to goods, services or income are classified as current account.

The investment in productive assets and participation in management as stake holders in business enterprises is foreign direct investment.

The portfolio investment by foreign institutional investors is called foreign institutional investment.

Liberalized Exchange Rate Management System was a dual exchange rate system in which 40% of forex earnings were converted at official exchange rate and 60% at market determined exchange rate.