Income Tax in India
An understanding of the tax structure in India, mainly classified into Direct Tax and Indirect Tax. Further bifurcation of Direct and Indirect tax laws.
Indian tax system is well developed. The authority to levy taxes is clearly divided into three tiers-
- Union Government
- State Government
- Local bodies
Taxation in India has incurred many changes in past years, and it is an ongoing process. The tax laws have become simpler ensuring ease in tax payments and improved compliance.
Tax structure in India can be mainly bifurcated into two parts:
Taxes levied on the assessee for their income or wealth is known as the direct tax. It cannot be transferred to another person. It is mainly classified into the following:
- Income Tax
- Corporation Tax
- Property Tax
- Gift Tax
- Wealth Tax
Note: Wealth tax is abolished. Gift Tax Act is also abolished, but tax on gifts is included in the heads of income under Income from Other Sources.
A tax that is levied and paid indirectly by a person who has consumed goods and services is known as indirect tax. The tax burden can be shifted to the end users. It mainly comprises of the following:
- Excise Duty
- Custom Duty
- Value Added Tax
- Sales Tax
- Service Tax
Note: With the implementation of GST, the above mentioned indirect taxes will abolish, and only single indirect tax rate will prevail.