India has a well-developed tax structure with clearly defined authority between Centraland state governments and local authorities. The central government levies taxes on income(with the exception of the tax on agricultural income, which can be levied by state governments), customs duties,central taxes and service charges.
Tax on VAT (VAT), (VAT in states where VAT is not yet valid), stamp duty,
State Excise, land revenue and tax on occupations are levied by state governments.
Local authorities have the power to levy taxes on property, patents and utilities such as waterdelivery, drainage etc.In the last 10-15 years, the Indian tax system has undergone major reforms. Tax ratesare rationalized and tax laws are simplified, resulting in better compliance, convenienceof tax payment and better enforcement. The process of rationalization of tax administrationis continuously in India. Since April 1, 2005, most state governments in India have replaced the sales tax byVAT.