Which of the following tax gives maximum revenue to the government of India?

The correct answer is Corporate Tax.

Key Points

• Corporate tax is the single largest source of income to the government of India.
• According to the Budget for 2019-20 presented in Parliament by Finance Minister Nirmala Sitharaman, Goods and Services Tax collections will contribute 19 paise in every rupee revenue.
• Corporation tax is the single largest source of income, contributing 21 paise to each rupee earned.

Important Points

• Taxes are generally an involuntary fee levied on individuals and corporations by the government to finance government activities.
• There are two types of Taxes in India- Direct Tax and Indirect Tax.
• Direct Tax
  • The tax that is levied by the government directly on the individuals or corporations is called Direct Taxes.
  • Income Tax, Corporation/Municipal Tax and Wealth Tax are some of the examples of Direct Tax.
  • They are progressive in nature.
• Indirect Tax
  • The tax that is levied by the government on one entity (Manufacturer of goods), but is passed on to the final customer by the manufacturer.
  • VAT, Service tax, GST, Excise duty, entertainment tax and Customs Duty are some of the examples of Indirect Tax.
  • They are regressive in nature.
• Corporate tax is the single largest source of revenue for the government of India. In the year 2023-24, the Indian government is estimated to receive ₹2.5 trillion in revenue from corporate tax, which accounts for about 40% of total tax revenue. Corporate tax rates vary depending on the amount of income and profits made by companies.