Types of Tax in India

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About Tax in India

Tax, in general, is the imposition of financial charges upon an individual or a company by the Government of India or their respective state or similar other functional equivalents in a state. The computation and imposition of the varied taxes prevalent in
the country are carried on by the Ministry of Finance’s Department of Revenue. During the last financial year of 2010 – 2011, the gross collection of tax amounted to around INR. 7.92 trillion, where the direct tax has got 56 % contribution and the indirect tax has got 44 % contribution.

Type of Taxes

Prevalence of various kinds of taxes is found in the nation. Taxes in this nation can be either of direct or indirect ones. However, the types of taxes even depend on whether a particular tax is being levied by the central or the state government or any other municipalities. Following are some of the major Indian taxes, which are categorized below:

Direct Taxes

This kind of tax is named so as such a tax is directly paid to the Union Government of India. As per a survey, the Republic of India has witnessed a consistent rise in the collection of such taxes over a period of the past years. The visible growth in these tax collections as well as the rate of taxes reflects a healthy economical growth of India. Besides that, it even portrays the compliance of high tax along with better administration of taxation. To name a few of the direct taxes, which are imposed by the India 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

As opposed to the direct taxes, such a tax in the nation is generally levied on some specified services or some particular goods. An indirect tax is not levied on any particular organisation or an individual. Almost all the activities, which fall within the periphery of the indirect taxation, are included in the range starting from manufacturing goods and delivery of services to those that are meant for consumption. Apart from these, the varied activities and services, which are related to import, trading etc. are even included within this range. This wide range results in the involvement as well as implementation of some or other indirect tax in all lines of business.

Usually, the indirect taxation in the Indian Republic is a complex procedure that involves laws and regulations, which are interconnected to each other. These taxation regulations even include some laws that are specific to some of the states of the country. The regime of indirect taxation encompasses different kinds of taxes. The organizations offer services in all or most of the related fields, some of which are as follows:

  • Anti Dumping Duty
  • Custom Duty
  • Excise Duty
  • Sales Tax
  • Service Tax
  • Value Added Tax or V. A. T.

Other Taxes in India

Besides the taxes, the names of which are mentioned earlier, the nation has got the prevalence of many other taxes. Listed below are some of those Indian taxes:
  • Consumption Tax
  • Death Tax
  • Dividend Tax
  • Endowment Tax
  • Estate Tax
  • Flat Tax, which is even known as the Flat Rate Tax
  • Fuel Tax
  • Gift Tax
  • Inheritance Tax
  • Sales Tax (Solely on goods that do not include payment of sales tax on services)
  • S. E. T. or Self Employment Tax
  • Social Security Tax
  • Transfer Tax
  • Payroll Tax
  • Poll Tax
  • Property Tax
  • Wealth Tax

Municipal or Local Taxes in India

The most known tax, which is levied by the local municipal jurisdictions on the entry of goods, is known as the Entry Tax or the Octori Tax.

Last Updated on 2/16/2012

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