Taxes are how the State mobilises resources, and the Goods and Services Tax (GST) is the largest tax reform since independence. This chapter covers the vocabulary of taxation, how the Constitution divides taxing powers between the Union and the States, and how GST rewired that division in 2016-17.

What UPSC asks

Prelims: direct vs indirect, progressive vs regressive, tax buoyancy and elasticity, cess vs surcharge, Seventh Schedule tax entries, Articles 246A, 269A, 270 and 279A, the GST Council’s composition and voting, what lies outside GST.
Mains GS III: GST and cooperative federalism, compensation to States, tax-to-GDP and tax base, rate rationalisation, direct tax reform, and the effect of cesses and surcharges on the divisible pool.

Key sub-topics

Sub-topic	What to master
Tax concepts	Impact and incidence, progressivity, buoyancy, Laffer curve
Constitutional scheme	Union and State List entries; Articles 265–271
Direct taxes	Income tax, corporation tax, capital gains; CBDT
GST	101st Amendment, CGST/SGST/IGST, input tax credit, exclusions
GST Council	Composition, weighted voting, Mohit Minerals (2022)
Reforms	Corporate tax cut (2019), compensation, rate rationalisation

Start with GST and the Indian Tax Structure, then revise with the quick revision sheet and practice questions.