is a financial charge assessed and imposed on taxpayer by a government for public expenditures.
Types of Taxes
Direct Tax: Which we pay directly to the central government.
- Income Tax - On the income of individuals, firms other than companies.
- Corporate Tax - Levied on the income of companies.
- Wealth Tax - On specific assets owned by certain persons including individuals and companies.
- Gift/Inheritance/Estate Tax: On receiving gift from someone. Applicable if it exceeds Rs.50000 in a year.
- Property/Capital Gains Tax
Indirect Tax: Which we pay indirectly to the central department.
- Global Service Tax (GST)
- Service Tax - On service transactions.
- Custom Duty - On goods due to transporting across international borders.
- Excise Duty - On manufactured goods.
- Security Transaction Tax (STT) - On every transaction at stock exchange (buy or sell) (Introduced due to avoiding capital gain tax).
- Sales Tax and Value Added Tax(VAT) - Major source of revenue of state government on sale of goods.
- Anti Dumping Duty - Goods exported from other countries at lower price. Imposed not exceed the margin of dumping as per the goods.
Sources of Income
- House Property
- Capital Gain
- Business or Profession
# Key Points
- There are 2 boards under government. 1) Central Board of Direct Taxes CBDT 2) Central Board of Excise and Customs (CBEC).
- Central Value Added Tax (CENVAT) goes to central government where as VAT goes to state government.
- State government earns from VAT, Entertainment Tax, Toll Tax and Professional Tax etc.
- Tax Deducted at Source (TDS) deducted by the person who is making payment. Final Tax Payable = Tax Payable on Total Taxable Income - TDS already Deducted.
- Section 80C can take of INR 1,50,000 from Gross Income through Public Provident Fund (PPF), Fixed Deposit (FD) and Mutual Funds or (Equity Linked Savings Scheme) ELSS.