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