As we know that the major source of revenue of Government is taxes. These taxes are divided in two parts; one is direct taxes and other one is called indirect taxes. Direct taxes can be classified as income tax, wealth tax and expenditure tax etc. and indirect taxes are excise duty, sales tax, service tax and custom duty etc.

In budget, the direct taxes plays very important part because people are directly affected these rates. The popularity of government also depends on rate of direct taxes, declared in budget. Indirect taxes also affect the people only but not like direct taxes.

The amount of income tax is shared by Central Government and the State Governments. Some time the Surcharge is also levied on tax payers to meet some specific purpose. After that purpose is solved the surcharge is withdrawn by the Central Government.

In brief all the central taxes are decided by the Parliament of India.