APPSC MATERIAL: September 2023

Friday, September 29, 2023

Women's Reservation Bill

Thursday, September 28, 2023

Types of Indirect Taxes in India

Sales Tax

The tax that levies on the sales of goods. Union Government imposes the sales tax on the Inter-State sale, while the sale tax on Intra-state sale is levied by the State Government.

This tax is divided into three segments as Inter-State Sale, Sale during import/export and Intra-State sale.

Service Tax

This tax is an indirect tax that taxpayers have to pay service tax on paid services. Paid services are the telephone, tour operator, architect, interior decorator, advertising, health center, banking and financial service, event management, maintenance service, consultancy service.

The Interest on the service tax is 15%.

Value Added Tax

This type of tax is collected by the state government. For an example, if we purchase a good then we must pay an additional tax as Value Added Tax to the government.

VAT rate is decided based on nature of item and state.

Custom Duty and Octroi Tax

This tax is levied on those goods that are imported into India from outside.

The Custom Duty tax is paid at the port of entry in the country as the airport. This tax rate also varies over the nature of goods.

While the Octroi tax is charged on the goods entering the municipality.

Excise Duty

The is also an indirect tax that levies on the goods which, are produced within the country.

This tax is not related to the Custom Duty.

Excise Duty is also known as Central Value Added Tax

Direct Taxes in India

These types of taxes are directly paid to the government of India by individual/entity

Types of Direct Taxes in India

A. Income Tax

This tax is well known in India. This tax is paid by the taxpayer whose income exceeds the taxable limit. The taxpayers have to pay tax on applicable rates. As per income tax rate for F.Y 2018-19, we do not have to pay income tax if your income is up to INR 2,50,000. But if your earning exceeds 2.5 lakhs then you have to pay 5% tax as income tax up to INR 5 lakhs of Income. Rebate of 2500/- is available for total income up to 3.5 lacs.

B.Capital Gains Tax

Capital gain tax is the tax that has to be borne by the individual/entity at the time of sale of any capital asset for instance property, shares, bonds and valuable material etc . It is levied on the difference between sale price and purchase cost (or indexed cost).

Capital gain can be long term or short term on the basis of holding period of the capital assets. For instance, for immovable property, if holding period is greater than 24 months then it will be treated as long term capital gain.

Tax rate for short term and long term capital gain differs based on their nature.

C. Securities Transaction Tax

Securities transaction tax (STT) was introduced in the 2004 Union Budget and came into effect from 1 October 2004.The basic motive behind introduction of Securities transaction tax (STT) was to curb curb evading of taxes on profits from capital gains earned by transacting in securities. This tax is levied at the time of purchase and sale of securities listed on stock exchanges in India. The rate of STT differs based on the type of security traded and whether the transaction is a purchase or a sale.

D. Fringe Benefit Tax

Tax paid on fringe benefits provided by the company to employees. This is separate to income tax and is calculated on the taxable value of the fringe benefits provided.

E. Corporate Tax

Corporate tax also called corporation tax is levied on the income of corporate bodies of our country. In India, the taxation companies are divided into international and domestic companies.