Taxes are the fees or charge levied by the Central government of a country (in India by the Government of India and also by state governments) which is added to the revenue of the government. These taxes are important for the government as because this is the only source of income to the government for operation and to bring in the development in economy and infrastructure. These are the payments which one do to pay up the salary of all the defence and government officials.
There are various kinds of taxes in India. Few of which are common and few may be the first time you would encounter.
Direct Taxes :-
Direct taxes are imposition made directly by the government of India and paid to them directly. Some of which are:-
- Income Tax
One can’t say if he hasn’t heard this ever in his life. This is the most common type of tax paid by the individuals whose income exceeds a certain limit fixed by the government. The present maximum no taxable income is up to Rs. 2, 50,000. If it’s a rupee above the person has to pay a tax of 10% of the income until Rs. 5,00,000 beyond which the rate changes.
- Capital Gains Tax
Capital Gains Tax as name says is the tax on the capital gained by the sale of shares property etc. whichever earns profit to you. Here the capital gain is the profit you earned which is calculated by subtracting the amount of money which you received by sale of the asset and the amount you paid to buy the asset previously. It is further categorised into short term capital gains and long term capital gains.
- Securities Tax
This is a tax which is not deniable. This tax applies to all the transactions of buying or selling of equity shares and derivatives, equity oriented Mutual Funds. This tax gets included in the price at the stock exchange so it is quiet undeniable and cannot be saved by people by showing wrong data to the people. The tax applied is so minimal that it is seldom noticed.
Indirect Tax :-
Apart from these taxes there are few other indirect ones too. Some of them are below :-
- Sales Tax
These are taxes charged by the government on the sale of mobile goods. Those commodities sold on interstate basis are taxed by the Union government and those intrastate sales are taxed by the state government (which we know as VAT).
- Custom duty
This is a type of indirect taxes payable during import of goods, generally at the entry on the port whether its airport or seaport. The taxes vary on the type of commodity imported.
- Excise Duty
This is just the opposite of Custom duty where one has to pay the tax for importing goods in the country. This tax is imposed on domestic goods sold or exported out of the country.
Other Taxes :-
The taxes discussed above are quiet familiar. Though the following are some taxes may be you wouldn’t have heard.
- Professional Tax
This tax is payable by people working professionally under private organizations. The employer deducts the amount of tax before crediting it into the account of the employee and is then paid by the employer to the government. This is just as inevitable as Income Tax.
- Entertainment Tax
As the name suggests it is a tax on the entertainment related transactions like movie tickets, DTH recharges, sport events etc.
- Surcharge or Education cess
This tax is a tax applicable on taxes like Income tax, excise duty and service tax. This tax is used for the education of the poor in India.
Surcharge is the extra tax applicable on the tax already applied on the calculated tax amount.
- Wealth Tax
Wealth tax is a tax applied on the net wealth of the person where net wealth is the total asset minus the liabilities. Previously the wealth tax was 1% of the total value of net asset above Rs. 30 Lakhs. However the wealth tax has been dropped right now but surcharge of 12% is applicable on individuals earning 1 crore and above.
- Dividend Distribution Tax
This is the tax applicable to the Companies which is applicable on the dividend paid to the investor of the company, though the dividend received by the investor is tax free.
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