Tax in India may be defined as a “Enforced contribution by individuals property owners to support the Government, a payment demanded through Government enacted Legislation. In other words, a tax is forced burden on the individuals or property owners and not a voluntary payment or donation. Taxes in India are classified into direct tax or indirect tax and may be paid in money. Tax Structure in India is well developed and implemented through various Government agencies.
Types of taxes
Taxes in India are classified under two categories namely Direct and Indirect taxes. Direct taxes are paid by the individuals, organizations while indirect taxes are levied on goods and services.
Direct taxes –
Direct taxes are levied on individuals and corporate entities and cannot be transferred to others. The most common illustration of direct tax is the income tax. Income tax is just one among four different types of direct taxes imposed in India. These include income tax, wealth tax, and gift tax.
The overall control for administration of Direct Taxes lies with the Union Finance Ministry which functions through Income Tax Department with the Central Board of Direct Taxes (CBDT) as its apex body. The CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963.
- Income tax
- Wealth Tax
- Property tax
- Corporation Tax
Indirect Taxes –
India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Central Government levies taxes on income customs duties. Goods and Services tax (share with Central Government), stamp duty, land revenue and tax on professions are levied by the State Governments. Local bodies are empowered to levy tax on properties and for utilities like Electricity, water supply, drainage etc. Since 1994-95, our Indian taxation system has undergone tremendous reforms. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax payment and better enforcement.
An indirect taxes are basically the taxes where the burden of tax is shifted by the taxpayer to others. The indirect tax is a tax which is added to prices of all goods or services. An indirect tax is levied on and collected from a person or entity who manages to shift it on to some other person or persons or entity on whom the real burden of tax falls. The Indirect Taxation in India comprises various types of taxes like Goods and Services Tax, (GST), Sales Tax, Service Tax, Custom and Excise Duties, VAT and Anti-Dumping Duties, and the organizations provide services in all these related fields.
Several Types of Indirect Taxes in India. The following are some of the most applicable indirect taxes in India.
- Goods and Services Tax (GST).
- Customs Duty
- Stamp Duty
- Central Excise Duty
- Value Added Tax (VAT)
- Service Tax
- Securities Transactions Tax
- Entertainment Tax
- Luxury Tax
- Sales Tax
- Anti Dumping Duty
