The category of taxes
Tax is a mandatory charge to be paid by individuals or other legal entity enforced by the Central and the State Government to facilitate the economy of a country by meeting various public expenses.
The taxes are broadly divided into two categories- Direct and Indirect taxes
WHAT IS DIRECT TAX?
The direct tax is a tax imposed directly on a taxpayer who directly pays it to the Government body. This tax will be not able to pass it on to someone else. The direct taxes imposed in India are mentioned below:
- Income Tax – It is imposed on an individual who falls under the different tax slab based on their income or revenue. The individual has to file an income tax return during every financial year.
- Wealth Tax – The wealth tax is imposed on the value of the property that a person owns. The wealth tax is to be paid once a year.
WHAT IS INDIRECT TAX?
The indirect tax is a tax levied by the Government organization on the goods and services provided by the legal entity. The indirect tax can be transferred from one taxpayer to another. The indirect direct taxes imposed in India are mentioned below:
- Customs Duty – This is an Import duty imposed on goods brought from outside of the country, i.e. paid by consumers and retailers who import goods in India.
- Central Excise Duty – This tax was payable by the manufacturers of goods.
- Service Tax – This was imposed on the gross or collective amount charged by the service provider
- Value Added Tax (VAT) – This was imposed on the value of a goods or services which is added at each stage of their manufacture or distribution and then finally passed on to the end customer
- Goods and Service Tax (GST) – We are witnessing the tax reforms in our India. The implementation of GST is bringing positive changes in the economic domain of India. The various taxes mandatory earlier are now omitted due to new reformed of tax structure. The GST is going to make sure there slogan “One Nation and One Tax” becomes the reality of our country.
