The development of any countries economy largely depends on the tax structure. India has a well developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Indian Taxation system has undergone tremendous reforms during the last decade. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax and better reinforcement. The power to levy taxes and duties is distributed among the three tier government- centre, state and local. This paper also discusses GST impact on economy and how the introduction of goods and services tax in India is now on horizon.