Basics of Indian Taxation- Overview of Taxes in India
Overall Understanding of Taxes In India
Every governments need fund for operation. Starting from the construction and maintenance of roads till the remuneration for the officials, government needs fund. Where do these funds come from? As they are keep on spending on one thing or the other, the government treasuries could not have any never ending treasures with them. So we, the citizen of our country need to contribute for funds for the proper functioning of our government. And we are directly and indirectly contributing to these funds even if we are aware or not. We pay taxes. These taxes form the funds for governments. In fact, its like a cycle. The government spends funds for our convienience and well being, and we pay back the funds as several kinds of taxes to government to spend further.
Why Taxes Are Needed
The word tax means a levy on something. This something could be income, wealth, sales or some other thing. And it could be imposed on individuals or organisations. Whatever it is, the core point is that a tax is a levy that is imposed by some statutes in the country. The laws in a country establishes from whom and from what a tax is ought to be collected.
Income Tax 2011
Different Types of Taxes in India
A tax could be a direct tax or an indirect tax. A tax could be said to as a direct tax when it is paid directly by the person on whom the tax is imposed. The word person indicates the meaning as is defined in a country’s law. The tax which is not a direct tax is indirect tax.
To make it more clear, consider the tax that should be paid
on one’s income. The same should be paid to the government directly
by the person on whose income the tax is levied. At the same time,
in the case Sales Tax, tax on the goods being sold is collected by the
sellers and then transferred to the government which makes it indirect.
Sometimes, the term ‘duty’ is being used to express the same meaning
as in the case excise duty, customs duty etc. Duty as in this
context, denotes something that is required to pay out of legal obligation.
Types of Taxes in India
In India, there
are many kinds of taxes are being levied and some of them are:
- Income Tax
- Wealth Tax
- Sales Tax
- Value Added Tax
- Service Tax
- Secutities Transaction Tax
- Divident Tax
Income Tax in India
Tax is the most important tax in the above list and is leviable on the
income earned by a person (as defined by the law, and is different
from the dictionary meaning of the term) and to be paid by the same
to the government and is charged as per the Income Tax Act and Rules
prevailing in the country, during the period in which the income is
Tax in India
Wealth Tax as the name indicates, is taxed upon a person’s overall wealth assessed as per the prevailing laws in the country and just like incometax, it also provides for some basic expemptions.
Sales Tax in India
The Sales Tax is something most of the people in the country pays as it is the tax charged on the goods being sold out and is collected by the seller at the time of sales and there after paid to the government.
Value Added Tax in India
Added Tax is the tax paid by the original producer on the consumption
of the goods upon transfer of the goods to the ultimate consumer.
The ultimate consumer is paying the actual cost of the goods plus the
value added as tax.
Tax Deduction Tips : Types of Medical Expense Tax Deductions
Security Transaction Tax in India
Security Transaction Tax is the tax levied on all the transactions done in the stock exchanges of India
Tax in India
Tax is the tax that should be collected by the corporate entities at
the time of paying dividend to its share holders so that the dividend
amount will not be taxable in the hands of shareholders.
There are a few more types of taxes, all of them effected by some laws and rules in the country, with proper legal frameworks. And it is always a good idea to be aware of these tax assessments and rates and be better citizens. The better awareness, the better well being.
How to fill Income Tax Return Form 1 (ITR1) - Part 1
How to fill Income Tax Return Form 1 (ITR1) - Part 2
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