Introduction
When it comes to taxes, there are two types of taxes in India – direct and indirect tax. Direct tax includes income tax, prize tax, capital gain tax, etc… indirect tax includes, sales tax, entertainment tax, excise duty, etc…
Tax in India: To run a country, the government must collect tax from eligible citizens. Where we live in the world, paying taxes to the local government is a part of everyone’s life. To take the country festival, the government must collect tax from eligible citizens. Where we live in the world, paying taxes to the local government is a part of everyone’s life.
What is Tax?
Tax is a mandatory fee or financial allegation imposed by any government on a person or organization. The collected treasure is used to fund different public expenditure programs. If one fails to pay taxes or refuses to contribute to them, the pre-defined law invites serious implications.
2 Types of Taxes
Whether it is a person or any business or organization, all relevant taxes must be paid in different forms. These taxes are classified as direct and indirect taxes, depending on the process of paying tax authorities.
Direct Tax
Income Tax, Corporate Tax, Securities Transaction Tax, Capital Gains Tax, and Wealth Tax.
- Direct taxpayer indicates that the government pays directly to the government
- The general examples of this type of tax in India
- In the government’s perspective, it is easy to assess tax earnings from direct taxes, as it is directly related to the income or wealth of registered taxpayers.
Indirect Tax
Sales Tax, Service Tax, Excise Duty, Custom Duty, Entertainment Tax, and Value Added Tax (VAT)
- Indirect taxes are slightly different from direct taxes, and the procurement method is also slightly different. These taxes are applied when buying and selling goods or services.
- The government receives indirect tax payments from goods or services sellers.
- The seller sends the tax to the end user, the buyer of a good or service.
- Therefore, the name of the good/service is not paid directly to the government by name indirect tax.
- Some general examples of indirect tax include sales tax, Goods and Services Tax , Value Added Tax (VAT), etc.
Recent Versions in Taxes
- In 2017, the government introduced the Goods and Services Tax (GST), which is considered the most revolutionary tax reform in independent India.
- Earlier, governments had imposed various state and central taxes to obtain various services or buy various items. The problem with previous versions is that the tax process is complex and contradictory rules allowed some people to escape taxes through loopholes in the system.
- After the GST was implemented, the majority of taxpayers were incorporated into the tax system, and the repercussions for those attempting to avoid taxes became more serious.
Income Tax Slab Rate For New Tax Regime
| Slab | New Tax Regime (Before Budget 2023 – until 31 March 2023) | New Tax Regime (After Budget 2023 – From 01 April 2023) |
|---|---|---|
| Rs. 10,00,000 to Rs. 12,00,000 | 20% | 15% |
| Rs. 12,00,000 to Rs. 12,50,000 | 20% | 20% |
| Rs. 12,50,000 to Rs. 15,00,000 | 25% | 20% |
| More than Rs. 15,00,000 | 30% | 30% |
Conclusion
In India, taxes are widely classified in two types: direct tax and indirect tax. Direct tax on public income or profits is imposed on indirect tax goods and services. You need to know each of each of them as a deception and to provide you with more information we have to read more on OpenPlot for you.
Also read: What is an e-Verified Income Tax Return?