Hello friends, after reading this article you will be able what is the meaning of tax and types of tax in India. We know very well about the important of “Tax”. Tax is a liability which is charge from the Taxpayer during the each financial year from a person in direct or indirect way.
Taxes represent the amount of money which we pay to the Government at predefined rates and periodicity. Taxes are the basic source of revenue to the Government using which it provides various kinds of services to the tax payers. There are mainly two types of Taxes, direct tax and indirect tax which are governed by two different boards, Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC).
Meaning of Tax and Types of 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 Tax in India
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 Tax in India
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.
Must Read: Service Tax in Tally
Direct taxes are the personal liability of tax payer. These are collected directly from the tax payers and they have to be paid by the persons on whom it is imposed. To name a few of the direct taxes, which are imposed by the India Government are:
Banking Cash Transaction Tax
Capital Gains Tax
Double Tax Avoidance Treaty
Fringe Benefit Tax
Securities Transaction Tax
Personal Income Tax
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.
Impact and incidence of indirect Taxes fall on different persons as opposed to direct taxes where impact and incidence is on the same person. These taxes are recovered from different groups of people but the liability remains with the person who collects it. Tax payer recovers the indirect taxes paid from their consumers and clients and finally pays it to government. For example, when we purchase any product we pay VAT, when we eat in restaurants we pay service tax which are ultimately deposited in government’s kitty by the service providers..
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
Value Added Tax or V. A. T.
Other Tax 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:
Flat Tax, which is even known as the Flat Rate 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
Must Read: How to File Online Income Tax Return
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 in India.
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