List of All Taxes in India

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List of All Taxes in India

 

There are lot of taxes in India – Direct Tax, Service Tax, Income Tax…. The so on. Are you Confused about the taxes you pay every year? Don’t worry! Tax is one of the most complex topics of the Indian financial system.

Taxes represent the  money that  we pay to the government. This is the basic source of income for our government. This money is Utilized  for the development of the country by improving services across sectors ( Infra, medical, security and other.

Their are broadly two type of Taxes

  • Direct Taxes
  • Indirect Taxes

What are Direct Taxes?

Direct taxes are those that we all directly paid to our government . It is your responsibility to pay these taxes.

Thinking of skipping paying your taxes? Bad idea.

Non-payment or evasion of these taxes can incur a heavy penalty. Income tax, wealth tax, and corporate tax are some of the direct taxes we pay.

Here is a list of the different direct taxes that we pay.

Income Tax:

Income tax is imposed on the Annual income of an individual, whether he/she is a resident of the country or not. The income earned in the Year from 1st April to 31st March (basically called financial year) is taken into account to calculate the income tax.  Incomes are classified under 5 heads –

  • Income from salary head
  • Income from  house property
  • Income from business and profession
  • Income from  capital gains
  • Income from  others sources

Income tax rates on different income slabs FY 16-17

Income (For individuals below 60 years of age) Income (For individuals above 60 years of age)  

IT %

Up to Rs. 2,50,000 Up to Rs. 3,00,000 NA
Rs. 2,50,001 to Rs. 5,00,000 Rs. 3,00,001 to Rs. 5,00,000 10
Rs. 5,00,001 to Rs. 10,00,000 Rs. 5,00,001 to Rs. 10,00,000 20
More than Rs. 10,00,000 More than Rs. 10,00,000 30

Let’s say, Sahil earns 6 lacs per annually.  For Sahil, this is how income tax is calculated:

  • No tax is levied on the first 2.5 lakhs
  • 10% tax is levied on the income from 2.5 lakhs to 5 lakhs
  • 20% tax is levied on the income from 5 lakhs to 6 lakhs.

Property Tax:

A property tax, applied as per state rules, is paid on the value of your property. The tax amount depends on the size of the property, kind of property (commercial or residential), age of the property and is accompanied by a number of service taxes, like water tax, lighting tax, sanitation tax etc. all using the same tax base. It is levied on the owner of the property and he/she is liable to pay this tax every year.

 

Professional Tax:

Professional Tax is a part of income tax which is charged by some state governments in India. If you earn an income from a salary or if you are a professional such as a chartered accountant, lawyer, doctor etc, then you are required to pay this professional tax. Check your salary slip. You’ll see the amount deducted as ‘professional tax’.

Corporate tax:

One of the major income sources for the government, corporate tax is the tax paid by companies or firms on the incomes they earn. These are taxes against profits earned by businesses during a given taxable period.

Gift Tax:

Mainly charged under Income Tax under the head other sources, Gifts exceeding Rs. 50,000 are taxable unless they are received from a blood relative , or on the occasion of marriage, or by inheritance( Wil) . The gift value is added to your income under the head ‘income from other sources’ and is taxable.

Stamp Duty and Registration:

At the time of purchase of a property, you need to pay stamp duty and registration fees to the state government. Stamp duty is a tax levied for the transaction performed by way of a document like Sale Deed, Conveyance Deed etc. The payment of proper stamp duty on the transfer documents confers legality on them. Once the stamp duty is paid, the document has to be registered under the Indian Registration Act. The registration fee is paid over and above the stamp duty and it varies from state to state.

Dividend Distribution Tax:

This is a type of direct corporate tax which is paid by companies on any amount declared, distributed or paid by way of dividend to its shareholders. The dividend distribution tax is 15% and is the final tax in respect of the dividend declared. The shareholders are not required to pay further tax on their dividend income.

If you hold shares of any Indian company and receive dividends, your dividend income is tax free. The dividend declared by Indian companies is not taxable in the hands of the shareholders because tax on distributed profits have already been borne by the company.

What are Indirect Taxes?

This will be replaced by GST soon. Indirect taxes are those paid by an intermediary who usually collects it from his costumer/ client . Have you seen the VAT or Service Tax  in your restaurant bills? This is an example of indirect tax. Though you pay this tax from your pocket, the government collects this tax from the restaurant. With indirect taxes, you don’t really feel the pinch as much as direct taxes but truth is that you end up paying more indirect tax as compared to direct taxes

Here is a list of the different indirect taxes we pay.

Value Added Tax (VAT):

(VAT) is a multi-point tax which is applied at each stage of the sale of a product and the final tax is paid by the last consumer. VAT is paid at each production stage by the manufacturer and then the entire amount is collected from the end consumer. VAT rates differ between states.

Service Tax:

Service tax is a main  indirect tax applied on services (such as professional, beverages, travel, etc.) by the provider. Service tax is not levied on services provided by Government.

 Also Read :All you need to know About Service tax Return Filling

Excise Duty:

Excise duty is levied and collected by the government on any good or commodity while it is being manufactured. This tax is usually borne by the manufacturer, but eventually the consumer pays it back while buying the product. For the Indian Government, the excise duty levied on goods is one of the biggest revenue sources.

 

Customs Duty:

Customs Duty is the charge levied when goods are imported into the country or exported out of the country. It is paid by the importer or exporter. If you’re traveling to India, then you’re allowed to carry goods worth up to Rs. 25,000 without paying customs duty. If the value of goods is above that, then you have to pay customs according to the duty rate of the products.

Entertainment Tax:

This tax is imposed by state government on all the financial transactions related to entertainment like cinema, stage shows, entertainment events, amusement parks and sports events. Different tax rates are applicable for these services in various states. This explains why Bangalore moviegoers are unhappier than Chennai cinema buffs – the latter enjoy a very low entertainment tax.

Security Transaction Tax (STT):

Securities transaction tax is levied on all transactions done on a stock exchange. STT is applicable on purchase or sale of equity shares, derivatives, equity-oriented funds and equity-oriented Mutual Funds. STT was introduced to curb tax evasion on capital gains.

Tax Jurisdictions

In India, taxes fall under three jurisdictions – Central Government, State Government and Local Government.

Central Government Taxes – Income tax, Excise duty, Service tax, Customs

State Government Taxes – Sales tax, VAT, Entertainment tax, Toll tax, Professional tax, Octrai duty, Stamp duty, Luxury tax and Capital Gains tax.

Local Government Taxes – Property tax, MC Tax etc..

 

If you think we miss out some than do comment Below 🙂

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