Public expenditure and revenue

Community expenditure

Alms are for the poor and the needy, and those employed to administer the (funds); for those whose hearts have been (recently) reconciled (to truth); for those in bondage and in debt; in the cause of Allah; and for the wayfarer: (thus is it) ordained by Allah, and Allah is full of knowledge and wisdom. [Al Quran 9:60 = R163(1)]

Expenditure allowed for a community responsible for dispensing justice and maintaining peace the expenditure as follows:

1.     The poor – those without sufficient means of living.

2.     The needy – those in hardship but not openly begging.

3.     Those appointed to administer and distribute the funds – collectors, managers, and workers engaged in the process.

4.     Those whose hearts are to be reconciled – individuals recently inclined toward truth or needing moral, social, or political support.

5.     Those in bondage – people enslaved, trapped, or seeking emancipation.

6.     Those in debt – individuals burdened with debts they cannot repay.

7.     In the cause of Allah – religious, social, or charitable causes furthering divine purposes.

8.     The wayfarer – travellers stranded or in need of assistance.

Thus, the tax collected by a community may be expended on the above categories of expenditure.

Public expenditures

With the growth of community, the nation arises and the community expenditure takes the shape of public expenditure. The public expenditure as enunciated in the seventh Schedule to the Constitution of India are as follows.

1. Defence

Defence, National Security & Strategic Affairs including Defence services (Army, Navy, Air Force, other armed forces); Defence works, cantonments, military industries, ordnance; Intelligence, investigations, preventive detention (security-related); Atomic energy & strategic minerals; War, peace, demobilisation.

2. External Affairs

Foreign Affairs & International Relations including Diplomacy, consulates, embassies; Treaties, international organisations (UN, IMF, World Bank bodies); International conferences, foreign jurisdiction; Passport, visa, immigration & emigration; Foreign trade policy relating to international borders.

3. Police

Public Safety, Internal Administration & Disaster Management including Police, public order, prisons, reformatories; Preventive detention (state security), vagrancy; Criminal law & procedure, evidence & oaths; All-India Services, UPSC & State PSCs; State public services & administration; State police, railway/village police; Fire services, disaster response; Migration control, quarantine.

4. Courts

Justice, Courts & Legal Affairs including Supreme Court, High Courts, subordinate courts; Criminal & civil procedure; Administration of justice; contempt jurisdiction; Court fees, legal profession, arbitration.

5. Fiscal Services

Fiscal Services, Public Debt & Financial Regulation including Currency, coinage, RBI, foreign exchange; Public debt; Banking, insurance, stock markets, futures markets; National Savings, Post Office Savings Bank; Financial corporations & regulatory bodies; Stamp duties.

6. General Administration

General Administration, Elections & Audit including Parliament & State legislatures (salaries/privileges); President, Governors, Ministers of Union & States; CAG (audit), census, surveys, statistics; Elections (ECI + State ECs); Administrative buildings & establishments

7. Transport

Transport & Infrastructure including Railways, national highways, state roads, bridges; Ports (major & minor), lighthouses, maritime services; National waterways & inland water transport; Airways, aerodromes, air traffic control;

8. Communications

Communication including Posts, telegraphs, telephones, broadcasting, wireless; Internet & telecommunication infrastructure

9. Energy & Minerals

Energy, Natural Resources & Mineral Development including Mines & minerals (Union-controlled + State-regulated); Oilfields, petroleum products; Electricity (generation + transmission + distribution); Gas works & pipelines; Forests (Concurrent); Wildlife protection & environmental conservation

10. Agriculture

Agriculture, Rural Development & Land Management including Agriculture, research, education; Irrigation, water storage, canals; Land revenue, land records; Agricultural loans, indebtedness relief; Animal husbandry, veterinary services; Rural roads, local government institutions (Panchayats)

11. Industry

Industry, Trade & Commerce including Industries (Union-controlled + State-regulated); Trade & commerce (inter-State + intra-State); Production, supply & distribution of goods; Weights & measures, quality standards; Industrial disputes & labour regulation

12. Education

Education, Scientific Research & Cultural Affairs including Universities (Central + State + National importance); Technical, medical & higher education; Scientific research institutions & surveys (Geological, Botanical, etc.); Museums, libraries, archaeological sites; Monuments of national or state importance

13. Health

Health, Family Welfare & Social Protection including Public health, sanitation, hospitals, dispensaries; Medical & paramedical services; Drugs & poisons regulation; Mental health institutions; Family planning, population control; Social security, employment, unemployment benefits.

14. Labour

Labour Welfare, Social Justice & Human Development including Labour conditions, safety, welfare; Provident funds, pensions, maternity benefits; Welfare of disabled & unemployable; Relief & rehabilitation (including displaced persons); Protection of women, children & weaker sections.

15. Housing

Housing, Urban Development & Municipal Services including Local government institutions (municipalities, improvement trusts); Urban planning, markets, fairs; Housing, land improvement; Water supply, drainage, waste management

16. Entertainment

Culture, Sports & Recreation including Theatres, cinemas, entertainment, Sports & amusements, Charitable & religious institutions, Cultural festivals & heritage promotion

17. Miscellaneous

Miscellaneous & Residual Functions including Lotteries; Treasuries; Any matter not enumerated in Lists.

Public Revenue

To meet the aforesaid public expenditure the Constitution of India allows following kinds of taxes.

1. Taxes on Income & Wealth

• Income tax (non-agricultural) 

• Corporate tax

• Agricultural income tax 

• Capital value tax on assets (non-agricultural)

• Wealth-related taxes

• Profession tax

2. Taxes on Property & Capital Transactions

• Estate duty (non-agricultural land) 

• Estate duty (agricultural land) 

• Succession duty (non-agricultural land) 

• Succession to agricultural land 

• Stamp duty on instruments 

• Land revenue

• Taxes on lands & buildings 

3. Taxes on Goods & Services (Indirect Taxes)

• Customs (import/export duties)

• Union excise duties (except alcohol/opium)

• GST on inter-State supplies (IGST)

• GST on services

• Excise on alcoholic liquor for human consumption

• GST on intra-State supplies (SGST)

• Entry tax (local area)

• Taxes on consumption/sale of electricity

• Entertainment & luxury taxes (subject to GST subsumption)

4. Taxes on Trade, Commerce & Transactions

• Taxes on inter-State trade (IGST)

• Taxes on intra-State sale of goods

• Taxes on stock exchange transactions (non-stamp duties)

• Betting & gambling taxes

• Tolls

• Market fees (non-tax), cess on produce

5. Transportation & Mobility Taxes

• Terminal taxes (rail, sea, air)

• Passenger & freight taxes (rail, sea, air)

• Vehicle taxes

• Taxes on animals, boats

• Taxes on goods/passengers by road/inland waterways

• Taxes on Consignments

6. Miscellaneous Revenue

• Taxes on advertisements (other than newspapers)

• Newspaper sales tax

• Lotteries

• Capitation taxes

• Court fees

• Fees relating to subjects in each list (non-court fees)