All You Should Know About Direct Taxes In India

Every so often, India’s working population jointly celebrates the liberty, freedom and power that come with being rewarded for a job well done. This gut-twisting warmth and excitement of achievement comes at different times through different channels for different people, but two things unite all types of earners in India – the feeling of achievement and success, and the slight pang of sadness that comes with noticing the amount isn’t really what you signed on for or expected.

So why isn’t the amount as much as it ought to be? What’s that deduction for?

It’s because of Income Tax, a type of direct tax which is levied by the Government of India on those whose income exceeds certain “slab” amounts.

Tax is a mandatory fee imposed upon individuals or corporations by the Central and the State Government to help build the economy of a country by meeting various public expenses. Taxes are broadly divided into two categories- Direct and Indirect taxes.

 

What is Direct Tax?

It is a tax levied directly on a taxpayer who pays it to the Government and cannot pass it on to someone else.

 

What are the direct taxes imposed in India?

Some of the important direct taxes imposed in India are mentioned below:

 

Income Tax

This is most important type of direct tax and almost everyone is familiar with it. TDS is its famous synonym and whosoever is earning above a minimum amount (tax exemption limit) has to pay income tax.

Estate Tax

Amount exceeding Rs. 50000 received without consideration by an individual/HUF from any person is subjected to gift tax as income under “other sources”. There are exemptions like money received from relatives is not taxable. Marriage gifts and money received through inheritance are also exempt from gift tax. Inheritance tax was earlier in practice but has been repealed by the government.

Wealth Tax

Wealth tax is imposed on the value of the property that a person possesses. This is in addition to the income tax and is levied if your net wealth exceeds Rs 30 Lakh at the rate of 1% on the amount exceeding Rs 30 Lakh.

Property Tax/Capital Gains Tax

This is levied on the capital gains arrived by selling property and stocks. Tax rates are different for long term and short term capital gains.

Corporate Tax

Companies operating in India are taxed as per the corporate tax rate on their income. This tax is one of the major sources of revenue for government.

Advantages of Direct Taxes

  • The lower income group carries a lower burden of tax
  • Self-payment of direct taxes makes one socially aware and responsible
  • The distribution of wealth is equal under direct taxatio
  • Direct tax rates can be used as an anti-inflationary tool

Disadvantages of Direct Taxes

  • Direct taxes might discourage savings and investments
  • The biggest disadvantage being it leads to tax evasion
  • It might be inconvenient to pay direct taxes as the procedure is complicated

Conclusion

Apart from the taxes above, there are various other small taxes which are paid from time to time like toll tax, dividend distribution tax, securities transaction tax, luxury tax and Octrai.

For any Legal support, we will be happy to help you. Contact BDS Legal Services now.

 

About BDS Legal Service :

BDS Legal Services is a leading national law firm in India comprising over numerous professionals, with offices in Mumbai (Headquarter) and Pune. BDS Legal Services was set up in 2012 and has since established an excellent reputation for its integrity and value based proactive, pragmatic and innovative legal advice and its ability to help clients effectively traverse the complicated legal and regulatory regime in India. The mission of the Firm is to provide outstanding legal solutions in the chosen practice areas with a strong emphasis on ethics. Clients benefit from the expertise and experience as a large firm while still enjoying the privilege of personal attention and responsiveness of a small firm. Our Practice areas are – IPR, Secretarial, Legal, Company Registration, Annual Filings, Returns and Tax

 

Get in touch for free consultation on info@bdslegalserv.com or call 022 50677213 / 022 50677219 / 022 50677212.

Leave a Reply

Your email address will not be published. Required fields are marked *

-->

HOW MAY I HELP YOU ?

close

Hello there!!! Let us know if you have any Questions.

Thank you for your message.