I have a query regarding the premise of Taxation-
When we earn like from salary, PGBP, other sources etc. we pay Direct Taxes to the govt.
Now when we spend this income on which we already paid direct taxes, on goods and services then also we pay indirect taxes like service tax, sales tax, VAT etc. to the govt.
Isn't this a situation of Double taxation as we pay the tax on earning as well as spending ????
Any reasons ???
Nice question Pratibha...
Double taxation is a concept only when same income/expense is charged to the same type/nature of tax... for example, profit of a company is chargeable to tax, it is also chargeable to dividend distribution tax, when the same is distributed as dividend... so when the nature of tax is different, one must never call it as double taxation...
You must look at it in the light of the following:
The govt, for revenue income, imposes taxes based on diff criteria... each criterion is based on a principle... simply speaking, the govt cannot have 1 criterion to tax everyone on 1 basis (eg. income, sales, etc.). But all sections of the society must proportionately contribute to the revenue... so thr r diff types of taxes... its not doubly taxed, but is actually govt revenue, split in different names...
CAclubindia
