1. Introduction to Taxation Tax is defined as a compulsory levy payable by an economic unit to the government without any corresponding right to receive a defined and direct counterpart from the government. It is perceived as a general requirement on one or more criteria for individuals, groups of individuals or other legal entities. The tax is even levied in the market sphere, under the name of corrective tax, to correct the market failure by internalizing the externality by forcing the seller of the product to pay a fee equal to the marginal external cost per unit of production sold. Bhatia (2006) explains that funds are collected by the government to finance its activities from various sources of public revenue. Few important sources include taxes, money income, market borrowing, sale of public assets, income from public enterprises, royalties, fines, gifts and donations, etc. However, governments are in the habit of dividing revenues into two: revenues which include current revenues and earned revenues. items such as tax receipts, donations, grants, fees and fines, etc. ; and capital receipts which cover items that are not repetitive and non-routine. In accordance with the revenue questions, they are further divided into tax and non-tax revenue. Regarding tax revenue, it has three sections: a. Income and expenditure taxes: levied on receipts of income and expenditure, such as corporate tax, income tax, expenditure tax, interest tax and other taxes similar, if any, in force.b. Taxes on real estate and capital transactions: levied on specific forms of wealth and its transfers such as inheritance tax, wealth tax, housing tax, property income and stamp duties and recording, etc.c. Goods and services taxes: levied on...... middle of paper ......versity Press. Bhatia, H.L. (2006). Public finances. Delhi: Vikas Publishing House Pvt. Ltd.Characteristics of an efficient tax system. (nd). Retrieved April 10, 2014 from okpolicy.org: http://okpolicy.org/resources/online-budget-guide/revenues/an-overview-of-our-tax-Deller, S. (2004). Qualities of a desirable tax system. Community Economy Newsletter, 1.Department of Revenue and Customs (2013). National Income Report 2012-2013. Thimphu: Ministry of Finance. Ministry of Finance (nd). Tax system. Retrieved April 10, 2014 from www.mof.gov.bt: http://www.mof.gov.bt/content/pageContent.php?id=34Myrsky, M. (2003). What does a good tax system require? Finland: Eastern University of Finland. Tax Deduction at Source (TDS) (nd). Ministry of Finance. Tax reforms. (2008). Retrieved April 10, 2014 from www.bhutan2008.bt: http://www.bhutan2008.bt/en/node/60