Tax Laws in India

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India is a developing country and it has created a complicated tax structure and formulated various tax laws. The India tax laws are formulated with regard to direct taxes as well as indirect taxes.

The direct taxes involves the central government of India directly in the collection of the funds from the tax payers but the indirect taxes are collected through a complicated network wherein the government receives the taxes against products and services offered by different private agencies. The India tax laws regarding indirect taxes are formulated in such a way that these laws serve to safeguard the interests of the tax payers and also takes care that the indirect tax collection sources are in no way disrupted. The central government has formulated separate tax laws for wealth tax, interest tax, corporate tax, income tax. Each of these taxes fall under the category of direct tax, and there are separate set of tax laws for the different heads falling under the indirect taxes category. The indirect taxes include sales tax, value added tax, excise duty, customs duty, and so on.

Different Tax Laws in India

Tax Laws in India for Value Added Tax

The central government of India has formulated tax laws with regard to the new tax head under the indirect taxes, named as the value added tax. The value added tax has been developed to give a new meaning to the sales tax structure, as the separate entities in the distribution channel apart from the producers of goods are relieved of the burden of huge sales tax. The laws relating to value added tax maintain that the individual entities in the supply chain are required to pay taxes only with regard to the value additions done by them respectively.

Tax Laws in India for Customs Duty

The indirect taxes also include customs duty. The customs duty is charged on the goods exported from India as well as goods imported from foreign countries. India tax laws have been formulated with regard to the customs duty to achieve price control and the laws has made it a point that the customs duty are paid off immediately after the manufacture of the goods. However, the customs duty is now collected at the time of the disposal of the goods. The Customs Act of 1962 contains laws related to the application of customs duty, deduction or exemptions from custom duties, on the prevention of illegal export of goods, provisions for vehicles facilitate movement of goods etc. Similarly, other significant laws formulated in relation to customs duty are:
  • Customs Tariff Act,1975
  • Central Excise Act,1944
  • Provisional Collection of Taxes
  • Foreign Trade (Regulation) Rules,1993
  • Central Excise Tariff Act,1985

Tax Laws in India for Income Tax

The government of India lays great emphasis on the income tax segment under the direct tax structure. The income tax comprises the annual tax on the income of any individual on the basis of the current tax slabs issued in the budget published in that year. The India tax laws related to the income tax segment have been jotted under The Income Tax Act which incorporates approximately 400 sections and a substantial number of schedules. Certain income tax laws deal with deductions offered in the case of contribution to certain schemes run by the Indian government like the deductions under 80 CCD(1), which talks about deductions from the income of the employee with regard to the pension scheme. The laws mention that an employee of the central or state government who has deposited money in his pension scheme will be provided deductions on his income. The Indian government has set a fixed percentage for the amount of such deposits to be submitted and the percentage comes to 10% of the total income. Other significant income tax laws for deductions include:
  • Tax law 80D deals with Deductions with regard to medical insurance premium
  • Tax law 80CCB deals with Deductions with regard to Equity Linked Savings Scheme
  • Tax law 80E deals with Deductions with regard to loan for Higher Education
  • Tax law 80 G deals with Deductions with regard to donations on charitable institutions

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Last Updated on June 13, 2015