It is with the help of taxes that a government earns part of the money required to run a nation.
The revenue that the government generates comprises both tax and non-tax revenues.
Tax revenue is that revenue which the government generates on by applying a tax rate or tax slab on an income an individual or an entity earns.
There are two types of tax revenues:
Direct tax: Tax an individual pays directly to the authority that imposes it. Income tax, wealth tax are a few examples.
Indirect tax: Tax on the value of transaction of goods and services an individual or a company makes use of. GST is the best example.
Then, what is non-tax revenue?
Tax that is charged against services which the government provides is non-tax revenue. You pay non-tax revenue if and only if you consume the services the government offers.
Some of the most simple examples of non-tax revenue include the interest the government earns as it gives amounts to states during calamities like floods, the fees paid for getting rights to start petroleum-related exploration in a particular region (royalties), fees the Central Electricity Authority earns for the supply of electricity, use of roads, bridges, interalia.
Incidentally, non-tax revenue is the greatest contributor to the government’s money box.
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