Taxes in India are levied by the Central Government and the State Governments by virtue of powers conferred to them from Constitution of India. Some minor taxes are also levied by the local authorities such as the Municipality.
The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Center and the States. An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law". Therefore, each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature. Nonetheless, tax evasion is a massive problem in India, ultimately catalyzing various negative effects on the country. In 2019–20, the Direct tax collections reported by CBDT were approximately INR 12.33 trillion.