Indian Tax system - A Brief Structure |Direct Indirect |Bank GK

Tax system in India - A Brief insight

TAXES- 

Taxes are the amount of money government impose on an individual or corporates directly or indirectly so as to generate revenue or to keep in check any black money activities in India.

THERE ARE TWO CATEGORIES OF TAXES IN INDIA, THESE ARE –

DIRECT TAXES-

·         These taxes are levied directly on the presons.

·         These contributes major chunk of the total taxes collected in India.

Some of the direct taxes are-

INCOME TAX-

This is a type of tax levied on the individuals whose income falls under the taxable category (2.5 lakhs per annum). The Indian Income Tax Department is governed by CBDT and is part of the Department of Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

Corporate Income Tax –

This is the tax levied on the profits a corporate house earned in a year. In India, the Corporate Income tax rate is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year.

Securities Transaction Tax-

Introduced in 2004, STT is levied on the sale and purchase of equities. more clearly, The income a individual generate through the securities market be it through reseling of shares or through debentures is taxed by the government of India and the same tax is called as Securities Transaction Tax.

Banking Cash Transaction Tax -

A bank transaction tax is a tax levied on debit (and/or credit) entries on bank accounts. It can be automatically collected by a central counterparty in the clearing or settlement process.

INDIRECT TAXES-

You go to a super market to buy goods or to a restaurant to have a mouthful there at the time of billing you often see yourself robbed by some more amount than what you enjoyed of , these extra amounts are indirect taxes, which are collected by the intermediaries and when govt tax the income of the intermediaries this extra amount goes in to government’s kitty, hence as the name suggests these are levied indirectly on common people.

Some examples of Indirect Taxes are-

Value Added Tax-

When we pay an extra amount of price for the goods and services we consume or buy, that extra amount of money is called as VAT. This taxes is about to be replaced by Goods and Services Tax.

Current rate-

On agricultural goods-4%

On luxury items- 20%        

Customs Duty –

Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. In India, the basic law for levy and collection of customs duty is Customs Act, 1962. It provides for levy and collection of duty on imports and exports.

Excise Duty –

An excise or excise tax is an inland tax on the sale, or production for sale, of specific goods or a tax on a good produced for sale, or sold, within a country or licenses for specific activities. Excises are distinguished from customs duties, which are taxes on import.

Service Tax-

Service Tax is a tax imposed by Government of India on services provided in India. The service provider collects the tax and pays the same to the government. It is charged on all services except the services in the negative list of services.

Current rate- 12.36%

Acronyms Corners-

CBDT- Central Board of Direct Taxes

CBEC- Central Board of Excise and Customs

FBT-   Fringe Benefits Tax

STT-   Securities Transaction Tax

GST-  Goods and Services Tax

VAT-   Value Added Tax

Source:- Bankersadda