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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
Sales TaxDirect 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.
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India’s Demographic Dividend: Significance of population growth, challenges associated with demographic dividend, potential impact on the economy
According to the United
Nations data, India has surpassed China to become world's most populous
nation with 142.86 crore people.
According
to the United Nations data, India has overtaken China in population recently. India’s population
surpassed 1.4286 billion and it is slightly higher than China’s
1.425 billion. Though India’s birth rate has slowed down in recent
years, the country has a larger working-age population in absolute
numbers (1.1 billion) and proportion (75 percent of the
population) than any other major economy.
On the
other hand, China is ageing, with its population declining in 2022for the first time in
more than 60 years. Its economic growth, which had
skyrocketed at an average of nearly 10 percent a year since
1978, is now anaemic: The country’s gross domestic product
(GDP) grew just 3 percent in 2022, and even by Beijing’s own
estimates, is expected to increase by just5 percent this year.
Demographic dividend:
In this
context a term
that has become
a buzzword is “Demographic dividend”
which refers to the faith in India's huge youth population
which is expected to hoist India up with its energy and
exuberance. India with its huge population is a young country and
is bestowed with a unique demographic opportunity.
Policymakers
began viewing a growing young population in the form of the so-called
demographic dividend — when a majority of a country’s
population falls within the working ages (15-64 years) — as an engine
for further economic development.
According to
United Nations Population
Fund report, 25 percent of
India's population is in the
age group of
0-14 years, 18 per cent in the 10 to 19 age group, 26
per cent in
the age bracket
of 10 to
24 years, 68
per cent in 15 to 64
years age group,
and 7 per
cent above 65
years. A demographic dividend is said to be occurring
when the ratio of the working-age population is high and the
dependency ratio in terms of the proportion of children and
elderly people is low. This advantage can create the resources needed to
increase investments in enhancing human capabilities,
which, in turn, can have a positive influence on the growth and
development of the society and the country.
There is need to harness
this ‘demographic dividend’ for the nation’s economic growth
and youth empowerment. According to a CII report from last year, India’s
demographic dividend can boost India's GDP growth — from the
current $3 trillion to $9 trillion by 2030 and $40 trillion
by 2047. While India is likely to add 101 million people in the
working age population between 2020-30, this number will reduce to 61
million and then to 21 million for 2030-40 and 2040-50,
respectively. It is expected that India's working age population will
start declining in the decade post 2050.
From a demographic perspective, a youthful age structure ensures that the global population will continue to grow even if average fertility drops immediately to the “replacement level”, at which each generation bears the exact number of children needed to replace itself. Indeed, fully two thirds of the anticipated increase in global population between 2020 and 2050 will be driven by the momentum of growth embedded in the relatively youthful age distribution of the world’s population in 2020.A large working-age population makes India attractive, not just from the labour market perspective but because the country could act as a large market for goods and services. The Demographic dividend has already helped India’s economic growth since the 1990s and country succeeded quite well in moving people from farms to factories. This was a cultural change caused by policy interventions and helped by the demographic changes.
Challenges
associated with high population growth:
There is no denying the fact that
high population growth rates impose pressure on finite resources, human,
financial, and environmental. Evidence suggests that less than one-third of the
anticipated increase in the use of natural resources until 2050 would be the
result of population growth. Rapid population increase can exacerbate the
challenge of ensuring that future development is sustainable and inclusive.
Achieving the Sustainable
Development Goals, particularly those related to health,
education and gender equality, can contribute to slowing global population
growth.
Population growth magnifies the
harmful impact of economic processes on the environment; yet the rise in per
capita income has been more important than population growth in driving increased production
and consumption. Rapid population growth makes it more difficult
for low-income and
lower-middle-income
countries to afford
the increase in public
expenditures on a per capita basis that is needed to eradicate poverty,
end hunger and malnutrition, and ensure universal access to
health care, education and other essential services.
India
has successfully slowed down the growth of the population significantly over
the past decades without resorting to coercive practices. It has
invested strategically to tap its demographic advantage and
position itself as the provider of manpower for countries across the
world, where aging and the non-availability of workers are posing
serious challenges. Yet for that young workforce to earn and save
well, India needs enough well-paying jobs designed to serve the
modern economy. That’s increasingly proving a struggle for India. It is wrong to say
that India’s youth bulge is a double-edged sword. To gain from it,
India will need to create enough employment opportunities for the
millions who enter its workforce every year — a challenge at
which it is currently failing. For that, India needs to attract
global investments. The window of opportunity is shrinking, and
unless India moves quickly, its demographic dividend could easily
turn into an unemployment nightmare.
Sunday, August 27, 2023
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