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    Tax in India

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    sachin vyas
    This document discusses taxation in India. It begins by explaining that taxes are mandatory fees collected by governments from individuals and organizations to fund public programs. It then describes the main types of taxes in India as direct taxes, like income tax, which are paid directly to the government, and indirect taxes, like GST, which are paid to sellers who pass the tax to the government. The document also notes a major tax reform in 2017 with the introduction of GST and discusses income tax in more detail, including who pays it, the slab system for determining tax rates, and deductions that can lower taxes owed.

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    Tax in India

    Uploaded by

    sachin vyas
    13 views4 pages
    This document discusses taxation in India. It begins by explaining that taxes are mandatory fees collected by governments from individuals and organizations to fund public programs. It then describes the main types of taxes in India as direct taxes, like income tax, which are paid directly to the government, and indirect taxes, like GST, which are paid to sellers who pass the tax to the government. The document also notes a major tax reform in 2017 with the introduction of GST and discusses income tax in more detail, including who pays it, the slab system for determining tax rates, and deductions that can lower taxes owed.

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    This document discusses taxation in India. It begins by explaining that taxes are mandatory fees collected by governments from individuals and organizations to fund public programs. It then describes the main types of taxes in India as direct taxes, like income tax, which are paid directly to the government, and indirect taxes, like GST, which are paid to sellers who pass the tax to the government. The document also notes a major tax reform in 2017 with the introduction of GST and discusses income tax in more detail, including who pays it, the slab system for determining tax rates, and deductions that can lower taxes owed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views4 pages

    Tax in India

    Uploaded by

    sachin vyas
    This document discusses taxation in India. It begins by explaining that taxes are mandatory fees collected by governments from individuals and organizations to fund public programs. It then describes the main types of taxes in India as direct taxes, like income tax, which are paid directly to the government, and indirect taxes, like GST, which are paid to sellers who pass the tax to the government. The document also notes a major tax reform in 2017 with the introduction of GST and discusses income tax in more detail, including who pays it, the slab system for determining tax rates, and deductions that can lower taxes owed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Tax in India

    To run a nation judiciously, the government needs to collect tax from the eligible citizens;

    paying taxes to the local government is an integral part of everyone’s life, no matter where we

    live in the world. Now, taxes can be collected in any form such as state taxes, central

    government taxes, direct taxes, indirect taxes, and much more. For your ease, let’s divided the

    types of taxation in India into two categories, viz. direct taxes and indirect taxes. This

    segregation is based on how the tax is being paid to the government.

    What are tax and its types?


    A tax is a mandatory fee or financial charge levied by any government on an individual or an

    organization to collect revenue for public works providing the best facilities and

    infrastructure. The collected fund is then used to fund different public expenditure programs.

    If one fails to pay the taxes or refuse to contribute towards it will invite serious implications

    under the pre-defined law.

    Types of Taxes
    Be it an individual or any business/organization, all have to pay the respective taxes in various

    forms. These taxes are further subcategorized into direct and indirect taxes depending on the

    manner in which they are paid to the taxation authorities. Let us delve deeper into both types

    of tax in detail:

    Direct Tax
     The definition of direct tax is hidden in its name which implies that this tax is paid directly

    to the government by the taxpayer

     The general examples of this type of tax in India are Income Tax and Wealth Tax.

     From the government’s perspective, estimating tax earnings from direct taxes is relatively

    easy as it bears a direct correlation to the income or wealth of the registered taxpayers.
    Indirect Tax
     Indirect taxes are slightly different from direct taxes and the collection method is also a bit

    different. These taxes are consumption-based that are applied to goods or services when

    they are bought and sold.

     The indirect tax payment is received by the government from the seller of goods/services.

     The seller, in turn, passes the tax on to the end-user i.e. buyer of the good/service.

     Thus the name indirect tax as the end-user of the good/service does not pay the tax directly

    to the government.

     Some general examples of indirect tax include sales tax, Goods and Services Tax (GST),

    Value Added Tax (VAT), etc.

    Recent Reforms in Taxes

    In the year 2017, the government introduced Goods and Services Tax (GST) which is

    considered as the most revolutionary tax reform in independent India to date. Earlier also,

    governments levied various state and central taxes for availing various services or buying

    different goods. The problem with the earlier reforms was the taxation process was complex

    and the contradicting rules enabled some people to evade taxes through loopholes in the

    system. After the introduction of GST, a higher percentage of assesses was brought under the

    taxation umbrella and it took a toll on evaders as escaping from paying taxes became tougher.

    What is Income Tax?


    The most common type of tax that eligible citizens have to pay to the government. A part of

    your income is paid to the government every year and the government uses this money to fund

    support the growth and development activities across the country.


    Income Tax Assesses
    Any individual who is liable to file taxes and fall in the payable income tax slab is an income

    tax assesses. An individual who is having a regular income is exempted from paying tax if

    his/her include annual income is below the threshold level determined by the government

    from time to time or income from exempted sources such as agriculture.

    Income Tax Slabs


    As mentioned earlier, not all individuals shall pay the same amount of tax; the general rule is

    – the higher your income, the higher amount of tax you will have to pay. In order to ensure
    that tax rates and rules are fair rather than uniform, the government uses income tax slabs to

    determine the rate at which each individual tax assessee is liable to pay income tax.

    Income Tax Deductions


    Citizens having taxable income in excess of Rs. ₹ 2.5 lakhs are liable to pay income tax as per

    their applicable slab. However, there are a few tax savings options such as ELSS, Mutual

    Funds, PPF, EPF, tax saver fixed deposits , and others that can be used to reduce the income

    tax payable by the individual. A majority of these tax saving schemes are available

    under sections 80C and 80D of the Income Tax Act, 1961.
    Tax Deducted at Source
    TDS, short for Tax Deducted at Source is considered as one of the most common ways of

    deducting tax by the government from any salaried individual. Other cases of TDS can be

    seen in the case of interest provided on fixed deposits. However, in this case, also, the tax

    assesses can get a refund after filing the Income Tax Return (ITR).

    Tax Evasion Laws and Implications


    Various acts related to taxation have been framed by the Government of India and every

    citizen is liable to comply with these rules, failing which strict actions may be taken against
    them. Some of the sections of the taxation laws and penalties imposed for non-compliance

    are:

    Section 140A (1): If an assesses fails to pay the taxes, be it partially or wholly on principle

    amount of interest, he will be considered as a defaulter. The assessing officer can levy a fine

    equal to the arrear as per section 221 (1)

    Section 271 (C): In case an assesses doesn’t reveal the actual income or earning, a fine of

    100% to 300% can be imposed on the defaulter in this section.


    Section 142 (1) and 143 (2): Under these sections, an income tax notice is sent to the

    defaulter and if he/she does not respond to it, the assessing officer can ask the assesses to file

    the return or furnish all details of assets and liabilities in writing.

    On a closing note

    Paying taxes is an integral part of all the citizens’ life and it helps in the upliftment of every

    section of the country by providing proper services and provisions. There are many other

    types of taxes such as GST, value-added tax (VAT), property tax, service tax, sales tax,

    entertainment tax and so on, that also constitutes government funding.

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