Union Budget: What are the income sources of government

NEW DELHI: Government's primary source of earning money is from taxes and non-tax revenues. Taxes are collected in the form of direct and indirect ways. Direct taxes include income tax, real property tax, personal property tax, or taxes on assets; while some of the indirect tax modes include GST, customs duty and tax deducted at source (TDS).


On the other hand, non-tax revenue is the recurring income earned by the government from sources other than taxes. The top receipts under this are interest and dividends and profits received from public sector companies.

Goods and services tax or GST did a complete makeover in the manner in which indirect taxes were collected.

Direct taxes (personal income tax and corporate tax) accounted for 51.3% of total revenues in 2016-17 and the rest came from indirect taxes. In 2020-21, the figure stood at 56.4%, corporate tax at 28.1% and personal income tax at 28.3%.

After the new indirect tax regime was introduced in 2017, the Centre’s major source of indirect tax collection changed to GST. GST subsumed more than a dozen of state levies and overhauled the indirect taxes (with the exception of customs duties). The taxes are now decided by the GST Council and not the government.

In 2020-21, 28.5% of the revenue came from GST followed by corporate tax and personal income tax, 28.1% and 28.3% respectively.

Here's a look at how Centre earns money from taxes:

The gross GST revenue collected in the month of December 2020 rose to Rs 1,15,174 crore, an all-time monthly high since the implementation of the new tax regime, according to the finance ministry.

The December figures, which are 12% higher than the GST revenues in the same month last year, are in line with the recent trend of recovery in the GST revenues, the ministry added.



The December 2020 revenues are significantly higher than last month’s revenues of Rs 1,04.963 crore.

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