Tax Rates

Tax rates are amount of charges levied against a citizen's personal income or on property or for some specified activity. These tax rates are charged for the support of Government. In other words tax rates are levied to earn revenue for the functioning of the Government machineries. The post economic renaissance in the history of India has witnessed some of the most drastic changes. Liberal and aggressive Indian tax policies, of the world order, were drafted to inculcate change in the much insulated Indian market. The tax policy in India and Indian tax rates witnessed a paradigm shift from its traditional outlook. A through analysis of the latest India's tax structure focuses on direct and indirect taxation in India.

The highlights of the latest Indian tax rates are as follows -

• Overall burden of Direct taxes on Companies and Corporate - India's direct tax burden today stands at over 40%
• Maximum tax slab for individual assesses - In India 30% tax rate applies over income Rs. 2.5 lakh
• Standard Deduction - In India, the concept of Standard Deduction has been discontinued for salaried employees
• Fringe Benefit Tax - Fringe Benefit Tax aims at taxing amounts, which are not income but are in the nature of expenditure. Genuine business expenditure such as Sales promotion, including publicity, Conference (including conveyance, tour and travel and hotel, boarding and lodging expenses) should be allowed deduction
• Depreciation - In India depreciation rate in case of Plant and Machinery is 15%
• Dividend Distribution Tax - Presently in India a company is required to pay Dividend Distribution Tax @ 14.025% on its distributed profits
• R&D - In India weighted deduction benefit of 150% is allowed in few sectors
• Tax Incentives - In India, tax incentives are provided for Infrastructure Sector, Research and Development and other key sectors of the economy
• Incidence of Indirect Taxes - Average total incidence on selling price in case of consumer goods is 44.11%, capital goods 43.26%, basic goods 30.28% and intermediate goods 30.06%
• Value Added Tax - VAT should be introduced in all states and union territories. Time is now ripe to do away with other levies. CST should be abolished at the earliest

The tax rates is the most powerful instrument on the part of policy makers of Indian tax structure which will direct the Indian economic system to the desired direction of overall economic growth of India. In fact the process of assigning tax rates is an arduous task and needs tremendous attention otherwise it will have negative impact on the growth of the economy. The present tax rates of India have been formulated keeping into consideration India's immediate as well as long term economic goals. The present tax rates of India are more liberal, more investor friendly and less critical than any other previously levied tax rates in India.