Taxation In India
Taxes in India are imposed by the Indian Government and the State Government. Some minor taxes can also be imposed by the Municipality (Local Authorities). Like every country Taxation in India plays a vital role. The budget and the revenue will inevitably go for a toss if there isn’t any balance between Rate of Tax and the Incentives withdrawn. In recent day emphasis were made on decreasing the Tax rate and the Incentives which are withdrawn.
Types of Taxes:
Taxes are the amount of a citizen has to pay to the Government at predefined rates and time. Taxes are the only sources of revenue generation to the Government. In return our Government provides various kinds of facilities to the tax payers. There are two types of Taxes: Direct tax and Indirect tax which are administered by Central Board of Direct Taxes and Central Board of Excise and Customs.
• Direct Taxes
Direct taxes are the personal accountability of tax payer. These are collected directly from the person on whom it is levied.
• Income Tax
It is one of the most significant type of direct tax. It is also known as TDS and whoever is earning above the tax exemption limit has to pay income tax.
• Wealth Tax
This is a tax on the income tax and is chargeable if the net wealth exceeds Rs. 30 Lakh, at the rate of 1% on the amount beyond Rs 30 Lakh.
• Property Tax/Capital Gains Tax
This is imposed on the capital profit arrived by trading property and stocks. Tax rates varies for long term and short term capital gains.
• Gift Tax/ Inheritance or Estate Tax
Amount above Rs. 50000 received without concern by an individual from any person is considered under gift tax as income under “other sources”.
• Corporate Tax
Companies operational in India are taxed according to the corporate tax percentage on their earnings.
• Indirect Tax
Tax collected on goods and services.
• Service Tax
This tax is levied on providers providing the service. Services such as leasing, internet-voice, transport, etc.
• Custom Duty
This is an indirect tax which is imposed on goods imported to or exported from India.
• Excise Duty
This tax is imposed on merchandises made in India for internal use.
• Sales Tax and VAT
Sales tax is charged by the government on sale and purchase of goods in our market.
For every business management the management of Tax has become an important part. It not only relieves from the Tax burden but also comply with the lawsuit. It involves:
• Accounts maintenance
• Advance Tax Payment
• Deduction at a timely manner.
• Return Filling.
Indian taxation system has seen drastic change since the last decade. The rates of the tax have been rationalized and tax laws have become as simple as a layman to understand. Tax payment has become very easy and tax administration in India is under much better compliance.