India is a land of diversity – be it in
culture, religion, language or geography.
The Indian constitution recognises this
diversity and provides for equal
treatment of all citizens. The concept of
taxation is also based on the same
principle of equality.
India is a federal republic with 29
states and 7 union territories. The
Constitution of India gives the power to
levy taxes to both the central government
and the state governments. The taxes are
levied on individuals, businesses and
transactions.
What is taxes?
Taxation in India refers to the levying
of taxes by the government of India on
individuals and businesses. Income tax,
corporate tax, Goods and Services Tax
(GST) are some of the major taxes levied
in India.
The government of India uses taxes to
finance its operations and developmental
activities. Tax revenue forms a
significant part of the government's
revenue
Types of taxes:
The Indian taxation system can be broadly
classified into two types of taxes:
direct taxes and indirect taxes.
Direct Taxes:
Direct taxes are taxes which are levied
on the income of an individual or an
organisation. These taxes are also known
as income taxes.
The following taxes come under the
category of direct taxes: Income tax,
Corporate tax, Wealth tax, Capital gains
tax.
Indirect Taxes:
Indirect taxes are taxes which are levied
on the sale of goods and services. These
taxes are also known as consumption
taxes.
The following taxes come under the
category of indirect taxes: Sales tax,
Service tax, Value Added Tax (VAT),
Customs duty, Excise duty, Entertainment
tax, Goods and Service Tax (GST).
What is Income Tax?
Income tax is the major tax levied in
India. Individuals and businesses are
required to pay income tax on their
earnings. The profits tax quotes range
relying at the profits bracket. Corporate
tax is another major tax levied in India.
Companies are required to pay company tax
on their profits. We at DSSD offers best
possible way to file the taxes. The
corporate tax rates vary depending on the
type of business and the profitability.
what is Goods and Service Tax (GST)
GST is a value added duty levied on the
trade of goods and services. It is a
consumption tax which is levied on the
final consumption of goods and services.
GST is levied on the value of the good or
service at each stage of the force chain.
GST is a destination based tax and is
levied on the consumption of goods and
services in the state where they are
consumed.
Taxation in India
The tax structure in India is quite
complex and it keeps changing from time
to time. As a result, it is very
difficult for a layman to understand the
tax system in India.
The tax rates in India are also very
high. The income tax rate for individuals
is 30% and the corporate tax rate is 40%.
The indirect taxes are also very high.
For example, the VAT rate in Delhi is
20%.
The total tax revenue of the government
is about 12% of the GDP. This is one of
the highest in the world. The high tax
rates and the complex tax laws have led
to a situation of tax evasion and
avoidance in India. It is estimated that
only 1% of the population pays income tax
in India.
The black money or the unaccounted money
in India is estimated to be around Rs. 90
lakh crore. This is a huge amount of
money which is not contributing to the
development of the country. The
government has taken some measures to
tackle the problem of black money.
Measures to minimize black money
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The government has set up a special
task force to track down the black
money. The government has also
introduced a scheme called ‘Income
Declaration Scheme’ under which the
people can declare their undisclosed
income and pay taxes on it.
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The government has also passed the
Black Money Act to deal with the issue
of black money. Under this Act, the
people who have black money stashed
abroad will be penalised.
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The government has also introduced the
concept of ‘e-assessment’ under which
the income tax return can be filed
online. This will help in reducing the
compliance cost.
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The government has introduced the
concept of ‘minimum alternate tax’
under which the companies which have
high profits but pay low taxes will
have to pay a minimum alternate tax.
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The government has also reduced the
corporate tax rate from 30% to 25%.
This will help in attracting more
foreign investments.
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The government has also increased the
threshold limit for the payment of
income tax. The government has also
introduced various deduction and
exemption schemes to reduce the tax
burden. We at DSSD offers best finance
courses in Delhi.
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The government has also introduced the
concept of ‘carry forward and set off
of losses’. Under this concept, the
losses of a company can be carried
forward for a period of 8 years and
can be set off against the profits of
the company.