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Tax Structure for Business in India

Updated on August 29, 2011

Tax Structure in India

If you earn money, you need to pay tax. Every country has its own tax structure and you pay tax depending on the source of your income, whether you are salaried, self-employed or running a business. Some countries follow quite simple tax rules and some has very complicated rules. In India, if you are a salaried person, basic taxes you have to pay are Professional Tax, Income Tax along with educational, additional educational & surcharge on all the Central government taxes. To calculate income tax, there are several rules and income tax slabs you should be aware of.

But if you own a business, then you should study the tax rules and laws carefully and may also need to appoint CA (Chartered Accountant) to help you file and pay taxes properly.

Taxes for Business in India

In India, there are different taxes that you need to pay depending on the nature of your business. Below are some of the basic taxes you have to pay to run any business in India legally:

  • If you are running any business, you have to pay ‘PROFESSIONAL TAX’
  • If you sell Goods / Products – Pay ‘SALES TAX’
  • If you are getting goods and products from other state/abroad – Pay ‘CENTRAL SALES TAX, CUSTOM DUTY & OCTROI’
  • If you manufacture goods in Factory – Pay ‘EXCISE DUTY’
  • So you have some Factory / Office – Pay ‘MUNICIPAL & FIRE TAX’
  • If you have Staff / Workers – Pay ‘STAFF PROFESSIONAL TAX’
  • If you go on Business Trips – Pay ‘FRINGE BENEFIT TAX’
  • If you provide service(s) – Pay ‘SERVICE TAX’
  • Now you are getting Profit – Pay ‘INCOME TAX’
  • If you pay Dividends – Pay ‘DIVIDEND DISTRIBUTION TAX’
  • If you are doing business in Millions – Pay ‘TURNOVER TAX’
  • Ok, you do not have much Turn-Over – Pay ‘MINIMUM ALTERNATE TAX’

Other Regular Taxes

Now you must have got some idea about Tax structure in India to run a business. There are some more taxes that every resident has to pay as per their needs and requirements.

  • If you are taking out bulk cash from Bank – Pay ‘CASH HANDLING TAX’
  • If you are going to a Restaurant or Movie Hall – Pay ‘PAY FOOD & ENTERTAINMENT TAX’
  • If you are taking any Service – Pay ‘SERVICE TAX’
  • If you have House – Pay ‘HOUSE TAX’
  • If you have excess wealth – Pay ‘WEALTH TAX’
  • If you receive some precious gift or cash worth more than Rs 25,000/- - Pay ‘GIFT TAX’
  • If you own any Vehicle – Pay ‘ROAD TAX’
  • No Vehicle, travel by Bus / Air – Pay ‘SURCHARGE’
  • Other additional taxes - Pay EDUCATIONAL, ADDITIONAL EDUCATIONAL & SURCHARGE on all the central government's tax

If you forget or delayed paying any tax – Pay ‘Interest and Penalty’

This article covers only the basic tax laws in India; you may find more taxes when you will actually start your business. If you will find or already know some other taxes, please add them in the comments section. I’ll add them in this article to help those who are not aware of all the taxes that they need to pay to legally run their business. By paying your taxes regularly, you help government in the development of nation.

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