Tax is a financial charge assessed and imposed on taxpayer by a government for public expenditures.
economy tax
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
  • Salary
  • 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.