Taxation
The Income-tax Act, 1961 is that the charging Statute of tax in India. It provides for levy, administration, collection and recovery of tax . the govt of India brought a draft statute called the "Direct Taxes Code" intended to exchange the tax Act,1961 and therefore the Wealth Tax Act, 1957
Tax is imposing financial charges on individual or company by central government or government . Collected Tax amount is employed for building nation (infrastructure & other development), to extend arms and ammunition for defense of country and for other welfare related work. That’s why it's said that “Taxes are paid nation are made”.
Direct Taxes:-
These sorts of taxes are directly imposed & paid to Government of India. There has been a gentle rise within the net tax collections in India over the years, which is healthy signal. Direct taxes, which are imposed by the govt of India, are:
- Income Tax:-
Income tax, this tax is usually known to everyone. Every individual whose total income exceeds taxable limit has got to pay tax supported prevailing rates applicable time to time. By doing investment in certain scheme you'll save tax. - Capital Gains Tax:-
Capital Gain tax as name suggests it's tax on gain in capital. If you sale property, shares, bonds & precious material etc. and earn profit thereon within predefined time-frame you're alleged to pay financial gain tax. The financial gain is that the difference between the cash received from selling the asset and therefore the price purchased it.
Capital gain tax is categorized into short-term gains and long-term gains. The Long-term Capital Gains Tax is charged if the capital assets are kept for quite certain period 1 year just in case "> just in case of share and three years in case of property. Short-term Capital Gains Tax is applicable if these assets are held for fewer than the above-mentioned period.
Rate at which this tax is applied varies supported investment class.
Example:-
If you buy share at say 1000 Rs/- (per share) and after two months this price increased to 1200 Rs/-(per share) you opt to sale this stock and earn profit of 200 Rs/- per share. If you are doing so you've got to pay Short term CGT (capital gain tax) @ 10% +Education cess on profit because it is brief term financial gain . If you hold same share for 1 year or above it's considered as future financial gain and you would like to not pay financial gain tax.it is considered as tax free.
Similarly if you buy property after two year if you discover that property price during which you invested has increased and you opt to sale it you would like to pay short term financial gain tax. For property it's considered as future financial gain if you hold property for 3 years or above. - Securities Transaction Tax:-
A lot of individuals don't declare their profit and avoid paying financial gain tax, as government can only tax those profits, which are declared by people. To fight with this example Government has introduced STT (Securities Transaction Tax ) which is applicable on every transaction done at stock market . meaning if you purchase or sell equity shares, derivative instruments, equity oriented Mutual Funds this tax is applicable.
This tax is added to the worth of security during the transaction itself, hence you can't avoid (save) it. As this tax amount is extremely low people don't notice it much. - Perquisite Tax:-
Earlier to Perquisite Tax we had tax called FBT (Fringe Benefit Tax) which was abolished in 2009, this tax is on benefit given by employer to employee. E.g If your company provides you non-monetary benefits like car with driver, club membership, ESOP etc. All this benefit is taxable under perquisite Tax.
In case of ESOP the worker will need to pay tax on the difference between the Fair market price (FMV) of the shares on the date of exercise and therefore the price paid by him/her. - Corporate Tax:-
Corporate Taxes are annual taxes payable on the income of a company operating in India. For the aim of taxation companies in India are broadly classified into domestic companies and foreign companies.
Indirect Taxes:-
- Sales Tax :-
Sales tax charged on the sales of movable goods. Sale tax on Inter State sale is charged by Union Government, while nuisance tax on intra-State sale (sale within State) (now termed as VAT) is charged by government.
Sales are often broadly classified in three categories. (a) Inter-State Sale (b) Sale during import/export (c) Intra-State (i.e. within the State) sale. government can impose nuisance tax only on sale within the State.
CST is payable on inter-State sales is @ 2%, if C form is obtained. albeit CST is charged by Union Government, the revenue goes to government . State from which movement of products commences gets revenue. CST Act is run by government. - Service Tax:-
Most of the paid services you're taking you've got to pay service tax on those services. This tax is named service tax. Over the past few years, service tax been expanded to hide new services.
Few of the main service which comes under vicinity of service tax are telephone, tour operator, architect, interior designer , advertising, salon , clinic , banking and financial service, event management, maintenance service, consultancy service
Current rate of interest on service tax is 14.5%. This tax is passed on to us by service provider. - Value Added Tax:-
The nuisance tax is that the most vital source of revenue of the state governments; every state has their respective nuisance tax Act. The tax rates also are different for respective states.
Tax imposed by Central government on sale of products is named as nuisance tax same is named as Value added tax by government .VAT is additional to the worth of products and passed on to us as buyer (end user). Around 220+ Items are covered with VAT.VAT rates vary supported nature of item and state.
Government is getting to merge service tax and nuisance tax in sort of Goods service tax (GST). - Custom duty & Octroi (On Goods):-
Custom Duty may be a sort of tax charged on goods imported into India. One has got to pay this duty , on goods that are imported from a far off country into India. This duty is usually payable at the port of entry (like the airport). This duty rate varies supported nature of things.
Octroi is tax applicable on goods entering in to municipality or the other jurisdiction to be used , consumption or sale. In simple terms one can call it as Entry Tax. - Excise Duty:-
An excise or excise duty may be a sort of tax charged on goods produced within the country. this is often opposite to custom duty which is charged on bringing goods from outside of country. Another name of this tax is CENVAT (Central Value Added Tax).
If you're producer / manufacturer of products otherwise you hire labor to manufacture goods you're susceptible to pay excise duty. - Anti Dumping Duty:-
Dumping is claimed to occur when the products are exported by a rustic to a different country at a price less than its normal value. this is often an unfair trade practice which may have a distortive effect on international trade. so as to rectify this example Central Govt. imposes an anti dumping duty not exceeding the margin of dumping in reference to such goods.
Other Taxes:-
- Professional Tax :-
If you are earning professional you need to pay professional tax. Professional tax is imposed by respective Municipal Corporations. Most of the States in India charge this tax.
This tax is paid by every employee working in Private organizations. The tax is deducted by the Employer every month and remitted to the Municipal Corporation and it is mandatory like income tax.
The rate on which this tax is applicable is not same in all states. - Dividend distribution Tax:-
Dividend distribution tax is the tax imposed by the Indian Government on companies according to the dividend paid to a company’s investors. Dividend amount to investor is tax free. At present dividend distribution tax is 15%. - Municipal Tax:-
Municipal Corporation in every city imposed tax in terms of property tax. Owner of every property has to pay this tax. This tax rate varies in every city. - Entertainment Tax:-
Tax is also applicable on Entertainment; this tax is imposed by state government on every financial transaction that is related to entertainment such as movie tickets, major commercial shows exhibition, broadcasting service, DTH service and cable service. - Stamp Duty, Registration Fees, Transfer Tax:-
If you decide to purchase property than in addition to cost paid to seller. You must consider additional cost to transfer that property on your name.
That cost include registration fees, stamp duty and transfer tax. This is required for preparing legal document of property.
In simple sense this tax is imposed on the handing over of the title of property ownership by one person to another. It incorporates a legal transaction fee & stamp duty. This amount varies from property to property based on cost. - Education Cess , Surcharge:-
Education cess is deducted and used for Education of poor people in INDIA. All taxes in India are subject to an education cess, which is 3% of the total tax payable. The education cess is mainly applicable on Income tax, excise duty and service tax.
Surcharge is an extra tax or fees that added to your existing tax calculation. This tax is applied on tax amount. - Gift Tax:-
If you receive gift from someone it is clubbed with your income and you need to pay tax on it. This tax is called as gift tax. Gift tax is not applicable if Gift is received from relatives.
This tax is applicable if gift amount or value is more than 50000 Rs/- in a year. - Wealth Tax:-
Wealth tax is a direct tax, which is charged on the net wealth of the assessee. Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.Net wealth means all assets less loans taken to acquire those assets. Wealth tax is 1% on net wealth exceeding 30 Lakhs (Rs 3,000,000). So if you have more money, assets you are liable to pay tax.
Note:- Wealth tax is abolished by government in budget 2015.Now onwards surcharge of 12% is applicable on individual earning 1 crore and above. - Toll Tax:-
At some of places you need to pay tax in order to use infrastructure (road, bridge etc.) build from your money given to government as Tax. This tax is called as toll tax. This tax amount is very small amount but, to be paid for maintenance work and good up keeping. - Swachh Bharat Cess:-
Swacch Bharat Cess is recently being imposed by the government of India. This tax is applicable on all taxable services from 15thNovemeber, 2015. The effective rate of Swachh Bharat Cess is 0.5%. After this tax we need to pay 14.5% service tax. - Krishi Kalyan Cess:-
In budget 2016 finance minister has introduced new tax namely Krishi Kalyan Cess. This cess is introduced in order to extend welfare to the farmers. The effective rate of Krishi Kalyan Cess is 0.5%. This tax will be imposed on all taxable services. Krishi Kalyan Cess would come in force with effect from June, 1, 2016. Once this cess is applied we need to pay service tax @ 15%. - Dividend Tax:-
In budget 2016 finance minister has introduced a new tax on the dividend amount. It is proposed that 10% additional tax will be imposed on dividend income above 10 Lac from 1st April 2016 onwards. - Infrastructure Cess:-
New Infrastructure cess on car and utility vehicle imposed recently in budget 2016. 1% infrastructure cess is applicable on petrol/LPG/CNG-driven motor vehicles of length not exceeding 4 meters and engine capacity not exceeding 1200cc. 2.5% cess on diesel motor vehicles of length not exceeding 4 meters and engine capacity not exceeding 1500cc and 4% cess is applicable on big sedans and SUVs. - Entry Tax:-
This entry tax is imposed by Gujarat, Madhya Pradesh, Assam, Delhi and Uttarakhand state government recently. The tax rate is variable 5.5-10% depending upon the state. All items entering in the state boundaries ordered via E-commerce are under this tax boundary. - GST:-
By Introduction of GST on 1st July,2017 all indirect taxes are subsumed in GST. Total 15 different taxes are abolished by introduction of single tax GST (Goods and Service Tax). Taxes removed by introduction of GST are Central Excise Duty, Service Tax, Value Added Tax,Countervailing duty,Custom Duty, Entertainment Tax,Luxury Tax,Lottery Tax,State Surcharge, Sales Tax, Antidumping duty, Swacch Bharat Cess, Krishi Kalyan Cess,Infrastrcutre Cess & Education Cess. - LTCG:-
LTCG tax on the stock market and mutual fund investment in reintroduced in budget 2018. As per new rule any person who sells shares after April 1, 2018, will pay a long-term capital gains tax at the rate of 10 percent on gains of more than Rs 1 lakh. For such shares, the cost of acquisition will be price as on Jan. 31, 2018. If a person who has held shares for more than one year sells them before March 31, 2018, there will be no long-term capital gains tax. No changes are made in short-term capital gain tax. Short-term capital gain would be taxed @15%.
Income Tax of India
Income Tax of India
Income Tax of India