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TAX Collections

The Government of India's tax receipts for the fiscal year 2023-24 reached approximately Rs. 32.61 lakh crores, reflecting significant growth due to robust economic performance and enhanced tax compliance measures. Direct taxes accounted for 58.4% of total tax revenue, underscoring the increasing reliance on income and corporate tax collections to fund social and developmental initiatives.

Reasons for Increased Tax Collections:

  1. Strong Economic Growth: The Indian economy has grown at an average annual rate of 7% over the past decade.
  2. Rising Incomes: Higher disposable incomes have resulted in greater direct tax contributions.
  3. Improved Compliance: Simplified tax procedures, such as e-filing, have enhanced compliance rates.
  4. Technological Integration: Advanced analytics and AI-based systems are used for efficient tax administration and to identify tax evasion.
  5. Broadening the Tax Base: Continuous efforts to bring more individuals and businesses into the tax net.

NCERT Summary: Stock Markets in India- 3 | Indian Economy for UPSC CSE

Direct Taxes

Direct taxes remain a key contributor to government revenues.

  • Corporate Tax: Growth in corporate tax collections has been consistent due to the stabilization of the global economy post-pandemic and incentives for startups and MSMEs.
  • Personal Income Tax: Revised tax slabs in recent budgets have increased collections while making compliance easier for taxpayers.

Recent reforms include:

Updated Tax Slabs (2025):

  • 0% for income up to Rs. 3 lakh
  • 5% for income between Rs. 3 lakh and Rs. 7.5 lakh
  • 10% for income between Rs. 7.5 lakh and Rs. 15 lakh
  • 20% for income above Rs. 15 lakh
  • 30% surcharge on ultra-high incomes exceeding Rs. 2 crore
  • E-Initiatives: Implementation of real-time monitoring and faceless assessment systems to reduce human intervention.

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Indirect Taxes

Goods and Services Tax (GST):Introduced in 2017, GST has emerged as a game-changer in indirect taxation by replacing multiple taxes like VAT, excise duty, and service tax. The GST structure in 2025 includes:

  • Rates: Four-tier rate structure — 5%, 12%, 18%, and 28%.
  • Collections: GST revenues have grown steadily, crossing Rs. 1.6 lakh crore monthly on average in 2024-25.

GST Benefits:

  • Simplifies tax compliance for businesses.
  • Reduces cascading tax effects.
  • Enhances ease of doing business.

Challenges:

  • Bringing petroleum products, alcohol, and electricity under GST remains a point of contention.
  • Rationalizing tax slabs to achieve a uniform rate is ongoing.

Service Tax and its Transition

Service tax, a precursor to GST, has been subsumed into the GST regime. However, certain legacy disputes related to service tax collection prior to 2017 are still being addressed through dedicated tribunals.

Technology and Tax Administration
The Income Tax Department and GST Network (GSTN) rely on advanced technologies to enhance efficiency. Key initiatives include:

  1. E-Invoicing: Mandated for businesses with annual turnover exceeding Rs. 5 crore.
  2. Automated Refund Systems: Expedited refund processing for exporters and MSMEs.
  3. Artificial Intelligence: Identifying non-compliant taxpayers and fraud detection.

Goods and Services Tax Council and Reforms
The GST Council plays a pivotal role in ensuring harmonious tax implementation across the nation. Recent reforms include:

  • Reduction of Tax Rates: Certain goods and services moved to lower tax brackets to stimulate demand.
  • Expansion of Composition Scheme: Small businesses with turnover up to Rs. 2 crore now benefit from simplified GST compliance.

GST and Constitutional Framework

GST, governed under Article 246A, empowers both the Centre and states to levy and collect GST. Petroleum products and alcohol remain outside the GST ambit, while efforts to bring them under the regime continue.

Emerging Challenges and Solutions

  1. Integration of New Sectors: Efforts are underway to include emerging sectors like cryptocurrencies under the GST framework.
  2. Taxpayer Education: Increasing awareness about compliance requirements.
  3. State-Centre Coordination: Addressing revenue-sharing concerns effectively.
  4. Simplifying Tax Rates: Ongoing efforts to converge tax slabs for better efficiency.

Impact of GST on India’s Economy

  • Enhanced Tax-to-GDP Ratio: Increased from 11.8% in 2011-12 to 13.7% in 2024-25.
  • Boost to Exports: Exporters benefit from zero-rating under GST, making Indian goods globally competitive.
  • Economic Growth: Lower compliance costs and simplified procedures have encouraged investments.

[Intext Question]

Future Outlook

India’s tax ecosystem is poised for greater advancements with the integration of technology, policy simplifications, and enhanced taxpayer services. The focus remains on creating a fair, transparent, and growth-oriented taxation system that meets the demands of a rapidly evolving economy.

The document NCERT Summary: Stock Markets in India- 3 | Indian Economy for UPSC CSE is a part of the UPSC Course Indian Economy for UPSC CSE.
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FAQs on NCERT Summary: Stock Markets in India- 3 - Indian Economy for UPSC CSE

1. भारतीय शेयर बाजार क्या है और यह कैसे कार्य करता है?
Ans. भारतीय शेयर बाजार एक ऐसा मंच है जहां कंपनियों के शेयरों का व्यापार किया जाता है। इसमें निवेशक शेयर खरीदते और बेचते हैं, जिससे कंपनियों को पूंजी जुटाने में मदद मिलती है। शेयर बाजार में दो मुख्य हिस्से होते हैं: प्राथमिक बाजार, जहां नए शेयर जारी होते हैं, और द्वितीयक बाजार, जहां पहले से जारी शेयरों का व्यापार होता है।
2. शेयर बाजार में निवेश करने के क्या लाभ हैं?
Ans. शेयर बाजार में निवेश करने के कई लाभ हैं, जैसे कि उच्च रिटर्न की संभावनाएं, पूंजी वृद्धि, और मुद्रास्फीति के खिलाफ सुरक्षा। इसके अलावा, निवेशक डिविडेंड प्राप्त कर सकते हैं और शेयरों की बिक्री पर लाभ कमा सकते हैं।
3. भारतीय शेयर बाजार के प्रमुख सूचकांक कौन से हैं?
Ans. भारतीय शेयर बाजार के प्रमुख सूचकांक में BSE Sensex और NSE Nifty शामिल हैं। Sensex बॉम्बे स्टॉक एक्सचेंज का सूचकांक है, जबकि Nifty नेशनल स्टॉक एक्सचेंज का सूचकांक है। ये सूचकांक बाजार की स्थिति और कंपनियों के प्रदर्शन को दर्शाते हैं।
4. शेयर बाजार में निवेश करने के लिए क्या रणनीतियाँ अपनाई जानी चाहिए?
Ans. शेयर बाजार में सफलतापूर्वक निवेश करने के लिए कुछ रणनीतियाँ हैं: दीर्घकालिक निवेश, विविधीकरण, और तकनीकी एवं मौलिक विश्लेषण का उपयोग करना। निवेशकों को बाजार के रुझानों को समझने और समय के साथ अपने पोर्टफोलियो को समायोजित करने की आवश्यकता होती है।
5. भारतीय शेयर बाजार में जोखिमों को कैसे प्रबंधित किया जा सकता है?
Ans. भारतीय शेयर बाजार में जोखिमों को प्रबंधित करने के लिए निवेशकों को विविधीकरण, स्टॉप-लॉस आदेशों का उपयोग, और नियमित रूप से अपने निवेश की समीक्षा करने की सलाह दी जाती है। इसके अलावा, निवेशकों को अपनी जोखिम सहिष्णुता के अनुसार निवेश करना चाहिए और बाजार की अस्थिरता के बारे में जागरूक रहना चाहिए।
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