Taxation & Public Finance
📊 High-Yield Data & Statistical Fact Sheet
| Consolidated Fund (Art 266(1)) | - Receives all government revenues, loans, and recoveries. Requires prior Parliamentary approval (Appropriation Bill) for withdrawals. |
| Contingency Fund (Art 267) | - Set at ₹30,000 crore. Managed by Finance Secretary on behalf of President for unforeseen expenditures. |
| Public Account (Art 266(2)) | - Holds provident funds, small savings, judicial deposits. Operates like a banking transaction (no prior Parliamentary approval). |
| Income Tax Act, 2025 | - Replaced 1961 Act with streamlined deductions and independent MAT/AMT sub-sections. |
| 16th FC Devolution Period | - 2026-2031 award period under Arvind Panagariya. |
| 16th FC Vertical Devolution | - Retained at 41.0% of central divisible pool. |
| 16th FC Horizontal Criteria | - Income Distance (42.5%), Population 2011 (17.5%), Area (10%), Forest & Ecology (10%), Demographic Performance (10%), GDP Contribution (10% - NEW). |
| Debt-to-GDP Target | - Peaked at 61.38% (2020-21); target <56% by 2030-31. |
| Fiscal Deficit Target | - Budgeted <4.5% of GDP for FY 2025-26. |
| Unrealized Revenue Gap | - CAG reported ₹21.30 Lakh Crore in uncollected central taxes. |
1. DIRECT & INDIRECT TAX ARCHITECTURE
| Minimum Alternate Tax (MAT) | - Levied on "zero-tax" corporations whose actual tax is below threshold book profit percentage (set at 15%). |
| Equalisation Levy (Google Tax) | - 6% on digital ad services and 2% on foreign e-commerce considerations. |
| Benami Act 2016 | - Empowers state confiscation of properties held under fictitious names. |
| GST Art 246A | - Grants concurrent power to Parliament and State Legislatures to levy GST. |
| GST Art 269A | - Governs levy and collection of Integrated GST (IGST) on interstate trade. |
| GST Art 279A (GST Council) | - Chair: Union FM. Voting: Union 1/3rd, States 2/3rd. Decision threshold: 3/4th weighted majority. |
| GST Exclusions | - Crude oil, petrol, diesel, ATF, natural gas, alcohol for human consumption. |
| Input Tax Credit (ITC) | - Tax paid on inputs deducted from tax payable on output. |
| Inverted Duty Structure | - Tax rate on raw inputs is higher than tax rate on finished output goods. |
| Reverse Charge Mechanism (RCM) | - Tax liability shifts from supplier of goods/services to recipient/buyer. |
2. THE LOGIC OF PUBLIC FINANCE & TAXES
| Laffer Curve | - Inverted U-shaped curve showing tax revenue declines beyond an optimal tax rate. |
| Tax Buoyancy | - $$\text{Tax Buoyancy} = \frac{\%\text{ Change in Tax Revenue}}{\%\text{ Change in Nominal GDP}}$$ Responsiveness of tax growth relative to GDP (>1.0 indicates revenue outpaces GDP). |
| Cess Definition | - Levied for a specific earmarked purpose (cannot be diverted). Non-shareable with States. |
| Surcharge Definition | - Additional tax levied on tax for general government expenditure. Non-shareable with States. |
| Angel Tax | - Levied on unlisted startup capital raised above Fair Market Value. |
| Safe Harbour Provision | - Tax certainty threshold raised to ₹300 crore for tech/EV exporters. |
| Transfer Pricing | - Pricing between related entities adhering to the Arm's Length Principle. |