1. Conceptual Foundation

Meaning and Purpose

Taxation is the primary sovereign mechanism through which the state mobilizes financial resources from individuals and corporate entities to fund public goods, social welfare, infrastructure, and national security. Under Article 265 of the Constitution of India, "No tax shall be levied or collected except by authority of law". Beyond revenue generation, taxation serves as an "economic glue" binding citizens to the state in a social contract—enabling fiscal redistribution, narrowing wealth disparities, and regulating economic externalities. Unit 7.6 examines direct and indirect tax structures, anti-evasion frameworks, and landmark modern tax reforms—including the Income-Tax Act, 2025, the GST Appellate Tribunal (GSTAT), and the GST 2.0 rate rationalization architecture.

Importance

In civil services examinations (TGPSC / UPSC), Unit 7.6 is a top-tier, high-yield topic. Questions regularly evaluate:

1. Constitutional basis and division of taxing powers between Union and States (Article 265, Entry List 97, Article 270, Article 271).
2. Direct vs. Indirect Tax mechanics (Impact vs. Incidence, progressivity vs. regressivity).
3. Specific direct tax tools (Corporation Tax, MAT, AMT, STT, Capital Gains Tax, Equalisation Levy).
4. The structural framework of the Goods and Services Tax (GST) (101st Constitutional Amendment Act, Article 246A, Article 279A).
5. Next-generation reforms: The Income-Tax Act, 2025 (replacing the 1961 Act), GSTAT setup, and GST 2.0 two-slab restructuring.
6. Anti-avoidance rules (GAAR, BEPS, Transfer Pricing, DTAA, Place of Effective Management - POEM).

How Concepts Connect

1. Tax Authority & Classification: Constitutional laws grant the State power to levy compulsory taxes. Taxes are classified based on burden transferability into Direct Taxes (non-shiftable, progressive) and Indirect Taxes (shiftable, regressive).
2. Direct Taxation Architecture: Direct taxes target income and wealth. Tools like MAT and AMT prevent corporate tax evasion, while STT and Capital Gains Tax capture financial asset profits.
3. Indirect Tax & Value Addition: Indirect taxes target consumption and production. GST replaced a fragmented multi-tax regime (excise, VAT, service tax) with a single destination-based, multi-stage tax with an Input Tax Credit (ITC) mechanism to eliminate cascading "tax-on-tax" effects.
4. Institutional Governance & Reforms: The GST Council (Article 279A) manages rate harmonization. Dispute resolution is institutionalized via the GST Appellate Tribunal (GSTAT). Meanwhile, direct taxes are streamlined under the Income-Tax Act, 2025, and indirect taxes are simplified under GST 2.0.

Key Terms

1. Impact of Tax: The initial point of contact where the legal tax liability is formally imposed by the state (falls on the entity filing the tax).
2. Incidence of Tax: The ultimate resting point where the economic burden of the tax is finally borne (cannot be shifted further).
3. Progressive Tax: A tax structure where the tax rate increases as the tax base/income increases, placing a higher relative burden on the wealthy (e.g., Personal Income Tax).
4. Regressive Tax: A tax structure where the effective tax burden falls disproportionately on lower-income individuals because the tax rate is identical regardless of income (e.g., GST on basic goods).
5. Cascading Effect: The economic distortion where tax is levied on a value that already includes previously paid taxes ("tax on tax"), artificially inflating final retail prices.
6. Input Tax Credit (ITC): The mechanism allowing a business to deduct the tax already paid on input purchases from the tax liability due on output sales.
7. Minimum Alternate Tax (MAT): A statutory tax under Section 115JB of the Income Tax Act levied on "zero-tax companies" at 15% of their book profits to ensure profit-making firms pay a baseline tax.
8. Equalisation Levy ("Google Tax"): A direct tax introduced to tax digital revenue earned by non-resident tech multinationals operating in India without a physical permanent establishment.
9. GST Appellate Tribunal (GSTAT): A quasi-judicial body constituted under Section 109 of the CGST Act, 2017 to resolve second-tier tax disputes between taxpayers and tax authorities.
10. Tax Year: A unified 12-month period beginning April 1, introduced under the Income-Tax Act, 2025 to replace the legacy dual concepts of "Previous Year" and "Assessment Year".

Short Timeline of Taxation Reforms in India

1. 1961: Enactment of the legacy Income Tax Act, 1961.
2. 1986: Introduction of MODVAT (Modified VAT) in Central Excise based on the L.K. Jha Committee recommendations.
3. 1991 (Raja Chelliah Committee): Landmark tax structural reforms—lowering peak marginal tax rates and rationalizing customs duties.
4. 1994: Introduction of Service Tax in India (initially on 3 services: telephone, general insurance, stockbroking).
5. 2002 (Vijay Kelkar Task Force): Recommended a comprehensive, dual-rate national Goods and Services Tax (GST).
6. 2003–2005: Introduction of VAT (Value Added Tax) at the state level (Haryana was first in 2003; most states adopted in 2005).
7. 2004: Introduction of Securities Transaction Tax (STT) to curb capital gains tax evasion.
8. 2016 (101st Constitutional Amendment Act): Passage of the GST constitutional framework, creating Article 246A and Article 279A.
9. 2017 (July 1): Rollout of GST (One Nation, One Tax, One Market); implementation of GAAR (General Anti-Avoidance Rule) on April 1.
10. 2024–2025:
    • Launch of the GST Appellate Tribunal (GSTAT) Principal Bench in New Delhi.
    • Passage of the Income-Tax Act, 2025 (replacing the 1961 Act w.e.f. April 1, 2026).
    • Implementation of GST 2.0 (Sept 22, 2025), rationalizing tax rates into a broad 2-slab structure (5% and 18%) alongside a 40% demerit slab.

2. Complete Core Notes

A. Taxation Fundamentals: Principles & Classification

1. Constitutional Authority & Canon of Taxation

• Article 265: Prohibits tax collection without legislative enactment ("No tax shall be levied or collected except by authority of law").
• 7th Schedule Distribution:
  • Union List (List I): Income Tax (non-agri), Corporation Tax, Customs Duty, Central Excise (petroleum/tobacco), STT, GST (Inter-State - IGST).
  • State List (List II): Agricultural Income Tax, Land Revenue, Stamp Duty, State Excise (alcohol for human consumption), Property Tax, Professional Tax (capped at Rs 2,500/year).
• Canons of Taxation (Adam Smith): Equality (fairness/progressivity), Certainty (clear liability), Convenience (easy payment modes), and Economy (low collection cost).

2. Direct Taxes vs. Indirect Taxes

1. Direct Taxes:

   • Core Rule: Imposed directly on an individual's or firm's income, profits, or net wealth.
   • Burden: Non-shiftable. Impact and incidence fall on the same person.
   • Nature: Progressive. Higher income earners pay a higher percentage of tax, reducing income inequality.
   • Nodal Body: Central Board of Direct Taxes (CBDT) under the Department of Revenue, Ministry of Finance.
   • Key Examples: Personal Income Tax, Corporation Tax, Capital Gains Tax, STT, MAT, AMT.

2. Indirect Taxes:

   • Core Rule: Imposed on the production, sale, or consumption of goods and services.
   • Burden: Shiftable. Collected by an intermediary (retailer/manufacturer), but the economic burden is passed to the final consumer.
   • Nature: Regressive. Everyone pays the same tax rate on a product regardless of their personal income level.
   • Nodal Body: Central Board of Indirect Taxes and Customs (CBIC).
   • Key Examples: Goods and Services Tax (GST), Customs Duty, Central Excise on petroleum/tobacco.

B. Direct Taxes: Key Instruments & Modern Structural Reforms

1. Major Direct Tax Instruments

1. Personal Income Tax:

   • Levied under the Income Tax Act on total income earned by individuals, HUFs, firms, and trusts.
   • Residency Basis: Residents pay tax on global income; non-residents pay tax only on income accrued/received in India.
   • Regime: Features progressive tax slabs with higher rates for higher income brackets.

2. Corporation Tax:

   • Levied on the net profits earned by domestic and foreign companies.
   • Rates: Domestic firms pay 25% (if turnover up to Rs 400 crore) or 30% (turnover > Rs 400 crore); new manufacturing firms opting out of exemptions pay 15%; foreign firms pay 35%.

3. Minimum Alternate Tax (MAT) & Alternate Minimum Tax (AMT):

   • MAT (Section 115JB): Applied to "zero-tax companies" that utilize exemptions to show zero taxable income despite reporting high book profits. MAT is charged at 15% of book profits.
   • AMT (Section 115JC): Applies to non-corporate entities (individuals, LLPs, partnerships) at 18.5%.

4. Capital Gains Tax:

   • Tax on profits arising from the sale of capital assets (land, buildings, shares, gold).
   • Short-Term Capital Gains (STCG): Shares held < 12 months (taxed at 20%); immovable assets held < 24 months.
   • Long-Term Capital Gains (LTCG): Shares held > 12 months (taxed at 12.5% above Rs 1.25 lakh threshold); immovable assets held > 24 months.

5. Securities Transaction Tax (STT):

   • Introduced in 2004 under the STT Act; direct tax collected at source by stock exchanges on purchase/sale of listed equity shares, derivatives, and mutual funds.

6. Equalisation Levy ("Google Tax"):

   • EL 1.0 (2016): 6% tax on online advertising payments (> Rs 1 lakh/year) made to foreign tech firms without a permanent establishment (PE) in India.
   • EL 2.0 (2020): 2% tax on non-resident e-commerce operators with turnover > Rs 2 crore.
   • Status: Digital ad Equalisation Levy was abolished effective April 1, 2025.

2. Income-Tax Act, 2025 (New Structural Framework)

Passed by Parliament to replace the six-decade-old Income Tax Act, 1961 (enforced April 1, 2026):

1. Concept of "Tax Year": Replaces the dual system of "Previous Year" and "Assessment Year" with a single, unified Tax Year defined as the 12-month period beginning April 1.
2. Extended Return Correction: Allows taxpayers to update tax returns up to four years from the end of the tax year without penalty.
3. Reduced Assessment Reopening: Cuts the assessment reopening window from 10 years to five years, limiting prolonged tax uncertainty.
4. Expanded Virtual Digital Space: Broadens coverage to include digital investment accounts, email servers, and cryptographic ledger assets (cryptocurrencies/VDAs).
5. Technical Separation: Establishes distinct, dedicated sub-sections for MAT and AMT.

C. Indirect Taxes & Goods and Services Tax (GST) Architecture

1. Concept and Mechanism of GST

• Definition: GST is a comprehensive, multi-stage, destination-based value-added consumption tax on the supply of goods and services across India.
• Core Features:
  1. Destination-Based: Tax revenues accrue to the consuming state where consumption occurs, not the manufacturing state.
  2. Value-Addition Focus: Tax is levied only on incremental value added at each stage of the supply chain.
  3. Elimination of Cascading: Input Tax Credit (ITC) allows businesses to set off input taxes paid against output tax liability.

2. The 101st Constitutional Amendment Act, 2016

• Article 246A: Empowers both Parliament and State Legislatures to make laws with respect to GST. Gives the Union exclusive power to levy IGST on inter-state trade and imports.
• Article 279A: Established the GST Council as a constitutional body.

3. Four-Tier Structure of GST in India

1. Central GST (CGST): Levied and collected by the Union Government on intra-state supplies.
2. State GST (SGST) / UTGST: Levied and collected by State Governments / UTs without legislature on intra-state supplies.
3. Integrated GST (IGST): Levied and collected by the Centre on inter-state trade and imports, with the tax revenue subsequently divided between the Centre and the destination State.
4. GST Compensation Cess: Imposed on "sin" and demerit goods (tobacco, aerated drinks, luxury cars) to compensate States for GST implementation revenue losses (extended to service debt incurred during COVID-19 up to March 2026).

4. Taxes Subsumed vs. Taxes OUTSIDE GST

• Taxes Subsumed: Central Excise Duty, Service Tax, Countervailing Duty (CVD), Special Additional Duty (SAD), State VAT/Sales Tax, Central Sales Tax (CST), Purchase Tax, Entry Tax, Luxury Tax, Entertainment Tax (except local body).
• Taxes OUTSIDE GST:
  1. Five Petroleum Products: Crude oil, petrol (motor spirit), diesel (high-speed diesel), natural gas, aviation turbine fuel (ATF) — GST Council to decide inclusion date; currently taxed via Central Excise and State VAT.
  2. Alcohol for Human Consumption: Kept strictly outside GST under Article 246A; taxed via State Excise Duty.
  3. Electricity Duty: Taxed by State Governments.
  4. Stamp Duty & Property Tax: Taxed by State Governments and local bodies.
  5. Entertainment Tax by Local Bodies: Retained by municipalities/Panchayats.
  • Note on Tobacco: Included under GST, BUT the Centre retains the power to levy an additional Central Excise Duty on tobacco products.

D. Institutional Governance & GST 2.0 Reforms

1. GST Council (Article 279A)

• Composition:
  • Chairperson: Union Finance Minister.
  • Members: Union Minister of State for Finance + Finance/Taxation Ministers of all States and UTs.
• Quorum: At least 50% of total members must be present.
• Voting Mechanism:
  • Centre's vote weightage = 1/3rd (33.33%).
  • All States' combined vote weightage = 2/3rd (66.67%).
  • Decision threshold = 75% (3/4th) weighted majority of members present and voting.

2. GST Appellate Tribunal (GSTAT)

• Legal Framework: Established under Section 109 of the CGST Act, 2017 as a quasi-judicial body.
• Jurisdictional Role: Serves as the first common forum for resolving Centre-State GST disputes and the second-tier appellate body for taxpayer appeals against First Appellate Authority orders.
• Structure:
  • Principal Bench: Located in New Delhi; headed by the President (former Supreme Court Judge or High Court Chief Justice) to hear place-of-supply disputes.
  • State Benches: 31 State Benches across 45 cities consisting of 2 Judicial Members and 2 Technical Members (1 Centre, 1 State).

3. GST 2.0 Reform Architecture (Next-Gen GST)

Rolled out on September 22, 2025 (decided at the 56th GST Council meeting) to simplify the tax structure, boost household consumption, and resolve inverted duty issues:

1. Rate Rationalization (Two-Slab System):
   • Replaces the old 12% and 28% slabs with two primary slabs: 5% (Merit Rate) and 18% (Standard Rate).
   • Shifts 99% of items from the old 12% slab down to 5%. Shifts 90% of items from 28% down to 18%.
2. New Demerit / Sin Rate (40%):
   • Introduced a 40% rate for sin, luxury, and hazardous items (tobacco, pan masala, gutkha, aerated drinks, private aircraft, luxury yachts).
3. Special Item Rates:
   • 0.25%: Rough diamonds.
   • 1.5%: Cut and polished diamonds.
   • 3.0%: Gold, silver, pearls, precious metals.
   • 0.0% (Nil Rate): Unprocessed food and essential staples.
4. Correction of Inverted Duty Structure (IDS):
   • Aligns input and output tax slabs in sectors like textiles, chemicals, and construction to prevent tax refund lockups. Automates 90% provisional refunds in pending IDS cases.

E. Anti-Avoidance, International Tax & Concepts

1. Inverted Duty Structure (IDS): Occurs when the tax rate on raw material inputs is higher than the tax rate on the finished output good (e.g., 10% duty on raw rubber vs. 5% on rubber tires), creating refund lockups and hurting domestic manufacturing competitiveness.
2. General Anti-Avoidance Rule (GAAR): Effective April 1, 2017 under the Income Tax Act, empowering tax authorities to declare any business arrangement an "impermissible avoidance arrangement" if its sole objective is tax avoidance.
3. Base Erosion and Profit Shifting (BEPS): Tax avoidance strategies used by multinational enterprises (MNEs) that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.
4. Global Minimum Corporate Tax (GMT): OECD/G20 framework establishing a global minimum corporate tax rate of 15% to curb the international "race to the bottom".
5. Place of Effective Management (POEM): Statutory rule under the Income Tax Act to determine the residential status of foreign companies based on where key commercial decisions are made in substance.
6. Laffer Curve: An inverted U-shaped economic curve developed by Arthur Laffer illustrating that tax revenue is zero at 0% and 100% tax rates, reaching maximum revenue at an optimal intermediate tax rate.

3. Key Concepts & Distinctions

Table 1: Direct Taxes vs. Indirect Taxes

Table 2: Comparison of Tax Evasion vs. Tax Avoidance vs. Tax Planning

Table 3: Comparison of Cess vs. Surcharge

Table 4: Legacy GST (1.0) vs. Modern GST 2.0 Reform

4. Important One-Liners

1. Article 265 mandates that no tax shall be levied or collected except by authority of law.
2. Direct taxes have their impact and incidence on the same person, making the burden non-shiftable.
3. Indirect taxes have their impact on the seller and incidence on the buyer, making the burden shiftable.
4. Direct taxes are generally progressive, whereas indirect taxes are generally regressive.
5. The Central Board of Direct Taxes (CBDT) administers direct taxes, and the Central Board of Indirect Taxes and Customs (CBIC) administers indirect taxes.
6. Corporation Tax is levied on the net profits of incorporated companies.
7. The Minimum Alternate Tax (MAT) is levied under Section 115JB at 15% of book profits on "zero-tax companies".
8. The Alternate Minimum Tax (AMT) is levied under Section 115JC at 18.5% on non-corporate taxpayers.
9. Securities Transaction Tax (STT) was introduced in 2004 under the STT Act to curb capital gains tax evasion on stock exchanges.
10. The Equalisation Levy 1.0 was introduced in 2016 as a 6% direct tax on online advertising payments to non-resident tech firms.
11. The digital advertisement Equalisation Levy was abolished effective April 1, 2025.
12. The Income-Tax Act, 2025 replaces the legacy Income Tax Act, 1961 w.e.f. April 1, 2026.
13. The Income-Tax Act, 2025 introduces the concept of "Tax Year" (12-month period starting April 1) to replace "Assessment Year" and "Previous Year".
14. The Income-Tax Act, 2025 extends the tax return update window to four years and reduces assessment reopening to five years.
15. GST was introduced via the 101st Constitutional Amendment Act, 2016 and came into effect on July 1, 2017.
16. Article 246A grants concurrent tax powers to Parliament and State Legislatures for GST, and exclusive Union power over IGST.
17. The GST Council is a constitutional body established under Article 279A.
18. In the GST Council, the Centre holds 1/3rd voting weightage and all States combined hold 2/3rd voting weightage.
19. Any decision in the GST Council requires a 75% (3/4th) weighted majority of members present and voting.
20. Five petroleum products (crude oil, petrol, diesel, natural gas, ATF) and alcohol for human consumption are outside GST.
21. Tobacco is covered under GST, but the Centre retains the power to levy an additional Central Excise Duty on it.
22. GSTAT was established under Section 109 of the CGST Act, 2017 as a quasi-judicial appellate forum.
23. The GSTAT Principal Bench is in New Delhi, supported by 31 State Benches across 45 cities.
24. GST 2.0 (rolled out Sept 22, 2025) restructured GST rates into two broad primary slabs: 5% (Merit) and 18% (Standard).
25. GST 2.0 introduced a 40% demerit rate for sin and luxury goods.
26. Cess (Article 270) and Surcharge (Article 271) proceeds are excluded from the central divisible tax pool shared with States.
27. GAAR (General Anti-Avoidance Rule) came into effect on April 1, 2017 under the Income Tax Act to check aggressive tax avoidance.
28. The OECD/G20 Global Minimum Corporate Tax (GMT) sets a baseline tax rate of 15%.
29. An Inverted Duty Structure (IDS) occurs when the tax rate on raw material inputs is higher than on the finished output good.
30. The Laffer Curve demonstrates an inverted U-shaped relationship between tax rates and total tax revenues.

5. PYQ-Based Bits

• GST Implementation Date & Structure (UPSC 2017, 2018):
  • GST was implemented on 1st July 2017.
  • Created a unified indirect tax regime under the motto "One Nation, One Tax, One Market".
  • Replaced multiple central and state indirect taxes (excise, service tax, VAT, CST, entry tax).
• Items Exempted or Excluded under GST (UPSC 2018):
  • Uncooked/hulled cereal grains and eggs are exempted (0% nil rate).
  • Processed/canned fish and cooked eggs attract GST.
  • Alcohol for human consumption, 5 petroleum products, electricity, and stamp duty are excluded from GST.
• Equalisation Levy Features (UPSC 2018):
  • Introduced via the Finance Act (outside tax treaties) on non-resident digital ad service providers.
  • Foreign entities paying Equalisation Levy cannot claim a tax credit in their home country under Double Taxation Avoidance Agreements (DTAA).
• Base Erosion and Profit Shifting - BEPS (UPSC 2016):
  • Refers to tax avoidance strategies used by multinational companies to shift profits artificially to low or no-tax locations.
• Opportunity Cost of Free Public Goods (UPSC 2018):
  • If a good is provided free to the public by the Government, its opportunity cost is transferred from the consumers of the product to the tax-paying public.
• Cess & Surcharge Sharing Rules (UPSC / State PSCs):
  • Proceeds from Cesses (Article 270) and Surcharges (Article 271) flow to the Central Government and are NOT part of the divisible pool shared with States.

6. analysis.pdf Exam Analysis

• Priority: HIGH (Unit 7.6 is a core pillar evaluated across civil services economics and governance papers).
• Frequently Tested Subtopics:
  1. Direct vs. Indirect Taxes: Classification, progressivity, impact vs. incidence, CBDT vs. CBIC.
  2. GST Architecture: 101st Amendment, Article 246A, Article 279A, GST Council voting rules (1/3rd Centre, 2/3rd States, 75% majority).
  3. Taxes Subsumed vs. Excluded under GST (Petroleum, Alcohol, Electricity).
  4. Modern Tax Reforms: Income-Tax Act, 2025 ("Tax Year", 4-year correction), GSTAT setup, and GST 2.0 two-slab restructuring.
  5. Anti-Tax Evasion Concepts: MAT (15%), GAAR, BEPS, Equalisation Levy, Inverted Duty Structure, Laffer Curve.
• Common Question Patterns: Multi-statement MCQs testing item-level inclusion/exclusion in GST, voting weightage in the GST Council, features of the Equalisation Levy/GAAR, and direct vs. indirect tax definitions.
• Factual / Conceptual / Numerical / Statement Tendency: Heavily Statement-Based Conceptual paired with Exact Percentages & Articles (75% GST Council threshold, Article 265/279A/246A, 15% MAT rate, 5%/18%/40% GST 2.0 slabs).
• Simple Frequency Terms: GST Subsumed/Excluded Taxes & GST Council (Very Frequent); Direct vs Indirect Taxes & Progressivity (Very Frequent); Equalisation Levy & GAAR (Frequent); GSTAT & GST 2.0 Reforms (Frequent).

7. Exam Traps

• Confusion: Believing that the GST Council decisions pass by a simple majority of member States. → Correct understanding: Decisions in the GST Council require a weighted majority of at least 75% (3/4th) of members present and voting. The Centre holds 1/3rd (33.33%) weightage and all States combined hold 2/3rd (66.67%) weightage.

• Confusion: Assuming that alcohol for human consumption can be brought under GST by a decision of the GST Council. → Correct understanding: Alcohol for human consumption is constitutionally excluded from GST under Article 246A. Bringing it under GST requires a Constitutional Amendment. Petroleum products, however, are legally under GST and only require a GST Council notification date.

• Confusion: Believing that Equalisation Levy allows foreign tech firms to claim tax credits in their home country under DTAA treaties. → Correct understanding: Equalisation Levy is a separate tax created via Finance Acts outside the Income Tax Act DTAA scope, meaning foreign firms cannot claim tax credit under DTAA in their home country.

• Confusion: Assuming that Cesses and Surcharges are distributed among States as part of the Finance Commission divisible pool. → Correct understanding: Under Articles 270 and 271, Cesses and Surcharges are explicitly EXCLUDED from the divisible pool and are retained 100% by the Central Government.

• Confusion: Believing that the new Income-Tax Act, 2025 retains the "Assessment Year" and "Previous Year" terminology. → Correct understanding: The Income-Tax Act, 2025 abolished the dual Previous Year / Assessment Year terms, replacing them with a single, unified "Tax Year" defined as the 12-month period beginning April 1.

8. Rapid Revision

1. Taxation Authority (Art. 265): No tax can be levied or collected except by authority of law.
2. Direct Tax Burden: Non-shiftable; impact and incidence fall on the same person.
3. Indirect Tax Burden: Shiftable; collected by intermediary, incidence falls on final consumer.
4. Tax Progressivity: Direct taxes are progressive (reduce inequality); indirect taxes are regressive.
5. CBDT vs CBIC: CBDT administers direct taxes; CBIC administers indirect taxes.
6. MAT Rate (Sec 115JB): 15% of book profits on "zero-tax companies".
7. AMT Rate (Sec 115JC): 18.5% on non-corporate taxpayers.
8. STT (2004): Direct tax collected at source on stock exchange security transactions.
9. Equalisation Levy Sunset: Digital ad Equalisation Levy abolished effective April 1, 2025.
10. Income-Tax Act, 2025: Replaces 1961 Act w.e.f. April 1, 2026; introduces unified "Tax Year".
11. Tax Year Correction: 4-year return update window; 5-year assessment reopening limit.
12. 101st Amendment Act (2016): Introduced GST under Article 246A and GST Council under Article 279A.
13. GST Rollout: July 1, 2017 ("One Nation, One Tax, One Market").
14. GST Council Voting: Centre = 1/3rd weightage, States = 2/3rd weightage; Decision threshold = 75% weighted majority.
15. GST Council Quorum: Minimum 50% of total members present.
16. Excluded from GST: Alcohol for human consumption, 5 petroleum products, electricity, stamp duty.
17. Tobacco GST Rule: Taxed under GST + Centre can levy additional Central Excise Duty.
18. GSTAT Framework: Section 109 CGST Act; Principal Bench in New Delhi + 31 State Benches.
19. GST 2.0 Slabs: Restructured into two primary slabs: 5% (Merit) and 18% (Standard).
20. GST 2.0 Demerit Rate: 40% on sin/luxury goods (tobacco, pan masala, luxury cars).
21. Cess vs Surcharge: Cess (Art. 270, specific purpose); Surcharge (Art. 271, tax on tax for Centre); both excluded from divisible pool.
22. GAAR Enforcement: Effective April 1, 2017 to check impermissible tax avoidance arrangements.
23. OECD Global Minimum Tax: Sets a baseline corporate tax rate of 15%.
24. Inverted Duty Structure: Input tax > Output tax; automated 90% provisional refunds under GST 2.0.
25. Laffer Curve: Inverted U-curve showing revenue maximization at an optimal tax rate.