TAX
- indiataxosoni
- Aug 4
- 3 min read
Understanding Taxes
Taxes play an important role in the infrastructural development and in providing essential services by the government. It is an important source of money collected by the government to work towards public services. In this blog, we will learn the definition, purpose of taxes to understand taxes comprehensively.
What is Tax?
A tax is an amount imposed by the government on businesses, public or an organisation which they are required to pay on the basis of income and the consumption of goods and services. The government uses the amount collected by tax in order to support public services and developmental activities, such as infrastructure, healthcare, education and defence.
A tax can be said to be a charge which is usually monetary in nature imposed on persons or property for public services.[1]
Some key Definitions of Tax and its Nature
Payment to defray expenses: Tax is an amount of money collected from the members of an organization to defray expenses.[2]
A payment against income or the cost of goods and services: Tax is the payment of an amount of money against the income or the cost of goods or services you have bought to the government.[3]
A sum of money demanded by Government for various services: “a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc”.[4]
An amount of money for public services: “Tax is an amount of money that you have to pay to the government so that it can pay for public services”.[5]
Calculated charges: “Taxes are an amount of money calculated by the government according to the income, the value of the property, etc., of an individual, organisation, businesses and are used in the nation’s development by the government”.[6]
Mandatory charge: “A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities”.[7]
Historical Roots of Tax
The historical roots of the word ‘tax’ is traced from a Latin word “Taxare” which means to value or estimate. It is a payment mandated by a statute which is required to be paid by the public and collected by the government. Although the word tax is not defined under the constitution of India but Article 366 (28) of Indian Constitution provides that taxation includes “taxation includes the imposition of any tax or impost, whether general, local, or special and tax shall be construed accordingly”. Prof. Adams Defines Tax as, “from the stand point of the state, a tax is source of derivatives revenue, from the angle of citizen, a tax is a coerced payment, from the administrative point of view; it is a demand for money by state in conformity to establish rules from the point of a theory a tax is a contribution from individuals for common expenditures.”[8]
The word “Tax” is originated from “Taxation” meaning an estimate. The taxes were levied on the commodities or goods or livestock that were bought and sold in business. These taxes were collected in an arbitrary manner from time to time. Nearly 2000 years ago, Ceaser Augustus passed a decree that whole world should be taxed.[9]
[1] What is Tax? Understanding the Concept of Taxation in India, available at:https://www.iciciprulife.com/insurance-library/income-tax/what-is-tax.html#:~:text=Tax*%20is%20an%20amount%20that,%2C%20healthcare%2C%20education%20and%20defence , last visited:23/07/2025
[2] https://www.merriam-webster.com/dictionary/tax , last visited:23/07/2025
[3] https://dictionary.cambridge.org/dictionary/english/tax , last visited:23/07/2025
[4] https://www.dictionary.com/browse/tax , last visited:23/07/2025
[5] https://www.collinsdictionary.com/dictionary/english/tax , last visited:23/07/2025
[6] https://www.britannica.com/dictionary/tax , last visited:23/07/2025
[7] https://taxfoundation.org/taxedu/glossary/tax/ , last visited:23/07/2025
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