Tax system in India - A Brief insight
TAXES-
Taxes
are the amount of money government impose on an individual
or corporates directly or indirectly so as to generate revenue or to
keep in check any black money activities in India.
THERE ARE TWO CATEGORIES OF TAXES IN INDIA, THESE ARE –
DIRECT TAXES-
· These taxes are levied directly on the presons.
· These contributes major chunk of the total taxes collected in India.
Some of the direct taxes are-
INCOME TAX-
This
is a type of tax levied on the individuals whose income falls under the
taxable category (2.5 lakhs per annum). The Indian Income Tax
Department is governed by CBDT and is part of the Department of Revenue
under the Ministry of Finance, Govt. of India. Income tax is a key
source of funds that the government uses to fund its activities and
serve the public.
Corporate Income Tax –
This
is the tax levied on the profits a corporate house earned in a year. In
India, the Corporate Income tax rate is a tax collected from companies.
Its amount is based on the net income companies obtain while exercising
their business activity, normally during one business year.
Securities Transaction Tax-
Introduced
in 2004, STT is levied on the sale and purchase of equities. more
clearly, The income a individual generate through the securities market
be it through reseling of shares or through debentures is taxed by the
government of India and the same tax is called as Securities Transaction
Tax.
Banking Cash Transaction Tax -
A
bank transaction tax is a tax levied on debit (and/or credit) entries
on bank accounts. It can be automatically collected by a central
counterparty in the clearing or settlement process.
INDIRECT TAXES-
You
go to a super market to buy goods or to a restaurant to have a mouthful
there at the time of billing you often see yourself robbed by some more
amount than what you enjoyed of , these extra amounts are indirect
taxes, which are collected by the intermediaries and when govt tax the
income of the intermediaries this extra amount goes in to government’s
kitty, hence as the name suggests these are levied indirectly on common
people.
Some examples of Indirect Taxes are-
Value Added Tax-
When
we pay an extra amount of price for the goods and services we consume
or buy, that extra amount of money is called as VAT. This taxes is about
to be replaced by Goods and Services Tax.
Current rate-
On agricultural goods-4%
On luxury items- 20%
Customs Duty –
Customs
Duty is a type of indirect tax levied on goods imported into India as
well as on goods exported from India. In India, the basic law for levy
and collection of customs duty is Customs Act, 1962. It provides for
levy and collection of duty on imports and exports.
Excise Duty –
An
excise or excise tax is an inland tax on the sale, or production for
sale, of specific goods or a tax on a good produced for sale, or sold,
within a country or licenses for specific activities. Excises are
distinguished from customs duties, which are taxes on import.
Service Tax-
Service
Tax is a tax imposed by Government of India on services provided in
India. The service provider collects the tax and pays the same to the
government. It is charged on all services except the services in the
negative list of services.
Current rate- 12.36%
Acronyms Corners-
CBDT- Central Board of Direct Taxes
CBEC- Central Board of Excise and Customs
FBT- Fringe Benefits Tax
STT- Securities Transaction Tax
GST- Goods and Services Tax
VAT- Value Added Tax
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