All About Tax
What is tax, really? It is a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions. While most of us come under the tax radar, we don’t really know what the different kinds of taxes stand for, or why they have to be paid. Here is everything about the different types of taxes, and what each one signifies.
Direct Taxes
As the name suggests, these are the taxes that you directly pay to the Union Government of India. Some of the direct taxes imposed by the Indian Government are:
- Banking Cash
- Transaction Tax
- Corporate Tax
- Capital Gains Tax
- Double Tax Avoidance Treaty
- Fringe Benefit Tax
- Securities Transaction Tax
- Personal Income Tax
- Tax Incentives
Indirect Taxes
Indirect taxes are levied on some specific services and goods. They are not levied on any particular organization or an individual. A few of these taxes include:
- Anti Dumping Duty
- Custom Duty
- Excise Duty Sales
- Tax Service Tax
- Value Added Tax or V. A. T.
Municipal Or Local Taxes
These taxes are levied by the local municipal jurisdictions on the entry of goods. They include taxes like the Entry Tax and the Octroi Tax.
Income Tax
This tax is levied on all kinds of income except agricultural income, and has to be paid to the Central Government. This income is also shared with the states. As of now, only people with an income higher than a defined threshold have to pay this tax.
Consumption Tax
Consumption Tax is applicable on the consumption of any type of goods or services. It is primarily based on consumption and not on income or labor.
Dividend Tax
Dividend Tax is an income tax, levied on the payments made as the dividend to the shareholders of the company paying the tax. Dividends are the shares of the company’s profits which are given to the shareholders.
Flat Tax, A.K.A. Flat Rate Tax
As the name suggests, the taxes on household incomes and corporate profits are set at a fixed rate. Household incomes below the set income threshold are exempted from this tax.
Fuel Tax
Fuel tax is also called petrol tax, gas tax, gasoline tax, or fuel duty. It is a tax that is imposed on the sale of any kind of fuel.
Sales Tax
Sales tax is levied when goods are sold or bought within a country or a state.
Property Tax
This tax is imposed on the yearly value of taxable assets. In case the income is rental, it will be subjected to the tax rates applicable for income from the housing property.
Wealth Tax
This tax is levied on the basis of the individual’s net wealth, which could be an individual, a company or even a Hindu Undivided Family.
