Q.Distinguish between Tax Revenue and Non-Tax Revenue, with two examples of each.

GST is an indirect tax on sales/supply and is equivalent to the old sales tax, so the answer is (b).

In the public revenue topic of the Tamil Nadu HSC Commerce syllabus, taxes are classified as direct and indirect. The Goods and Services Tax (GST), introduced on 1 July 2017, is an indirect tax levied on the supply of goods and services.

GST replaced a host of earlier indirect taxes such as sales tax / VAT, excise duty and service tax, unifying them into a single tax under 'One Nation, One Tax'. Because it is charged on the sale/supply of goods and services, GST is the equivalent of the former sales tax, not of income tax or corporate tax, which are direct taxes on income.

Income tax is a direct tax — option (a).

In the Tamil Nadu HSC Class-12 Economics (Fiscal Economics) syllabus, taxes are classified as direct or indirect by whether the burden can be shifted:

• Direct tax — the impact and incidence fall on the same person; the burden cannot be shifted (e.g. income tax, corporation tax, wealth tax).
• Indirect tax — levied on goods and services, and the burden is shifted to the final consumer (e.g. excise duty, service tax, customs duty, GST).

Among the options, income tax is paid directly by the earner and cannot be passed on, so it is a direct tax. Excise duty, service tax and customs duty are all indirect taxes.

GST (Goods and Services Tax) is an indirect tax on the supply of goods and services, so it is the equivalent of the earlier sales tax.

Taxes are broadly of two kinds. A direct tax (income tax, corporation tax) is paid directly by the person on whom it is imposed and its burden cannot be shifted. An indirect tax is levied on goods and services and its burden is shifted to the final consumer through the price.

GST is an indirect tax introduced in India from 1 July 2017. It subsumed a whole set of earlier indirect taxes such as central excise, service tax and, most importantly, the state sales tax / VAT. Because it is charged on the sale/supply of goods and services and finally borne by the consumer, GST is in nature and effect the equivalent of sales tax. Income tax and corporation tax are direct taxes on income, and "local tax" is a municipal levy — none of these matches the indirect, sales-based character of GST.

Fees are non-tax revenue.

Public revenue is classified as:

• Tax revenue — compulsory payments with no direct quid pro quo, e.g. income tax, and add-ons on taxes such as surcharge and cess.
• Non-tax revenue — income received for a service or from government activity, e.g. fees, fines and penalties, special assessments, and profits of public enterprises.

A fee is charged in return for a specific service (licence, registration, etc.), so it is non-tax revenue. Income tax, surcharge and cess are all forms of tax revenue.