Direct Taxes - Explanation •A direct tax is a tax which is sent directly to the government by the taxpayer, with the taxpayer bearing sole responsibility for paying the tax. •A direct tax is one that cannot be shifted by the tax payer to someone else. •Direct Taxes are the taxes that are levied on the income of individuals or organisations. •It is charged directly on the tax payer. e.g. property tax and income tax. •In other words direct tax is that tax that is deducted from ones salary. •Direct taxation in India is taken care by the Central Board of Direct Taxes (CBDT); it is a division of Department of revenue under Ministry of Finance. •CBDT is governed by the revenue act 1963.CBDT is given the authority to create and control direct taxes in India. •The tax structure in India is divided amongst the central government and state government. •The some important direct taxes imposed in India are as under: 1)Income tax 2)Corporation tax 3)Property tax 4)Inheritance (estate) tax & 5)Gift tax Income Tax •This is the tax that is charged to common people like you and us on the income earned in India. •Income Tax Act, 1961 imposes tax on the income of the individuals or Hindu undivided families or firms or co-operative societies (other tan companies) and trusts (identified as bodies of individuals associations of persons) or every artificial juridical person. •Income taxes are the primary source of revenue for the federal government and many states. •The tax is based on your gross earned income plus unearned income less deductions, exemptions or credits. •Both businesses and individuals are subject to income taxes. •All residents are taxable for all their income, including income outside India. •Non residents are taxable only for the income received in India or Income accrued in India. •Tax levied on individual income from various sources like salaries, investments, interest etc. •To determine your taxable income, your earnings will fall under any of the following heads. •Income from Salary •Income from business or profession •Income from house or property •Income from Capital Gain •Income from other sources. Corporate Tax •Corporate tax is the tax paid by companies or firms on the incomes they earn. •Corporate tax or company tax refers to a tax imposed on entities that are taxed at the entity level in a particular jurisdiction. •A corporation is deemed to be resident in India if it is incorporated in India or if it’s control and management is situated entirely in India. •The companies and business organizations in India are taxed on the income from their worldwide transactions under the provision of Income Tax Act, 1961. •In case of non resident corporations, tax is levied on the income which is earned from their business transactions in India or any other Indian sources depending on bilateral agreement of that country. Property Tax •Property tax or house tax is a local tax on buildings, along with land, and imposed on owners. •The tax base is the annual ratable value (ARV) or areabased rating. •Vacant land is generally exempted from the assessment. •The properties lying under control of Central are exempted from the taxation. •Properties of foreign missions also enjoy tax exemption without an insistence for reciprocity. Inheritance (Estate) Tax •An inheritance tax (also known as an estate tax or death duty) is a tax which arises on the death of an individual. •It is a tax on the estate, or total value of the money and property, of a person who has died. •India enforced estate duty from 1953 to 1985. •Estate Duty (Amendment) Act, 1985. Wealth Tax •A wealth tax is usually conceived of as a levy based on the aggregate value of all household holdings purchasing power stock, including housing. •cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and unincorporated businesses; and corporate stock, financial securities, and personal trusts. Gift Tax •Gift tax in India is regulated by the Gift Tax Act which was constituted on 1st April, 1958. •Gifts received by any individual or Hindu Undivided Family (HUF) in excess of Rs. 50,000 in a year would be taxable.
Posted on: Sun, 16 Mar 2014 11:47:49 +0000
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