Income Tax – Direct Tax & Indirect Tax

Income Tax – Direct Tax & Indirect Tax Tuition, Coaching Classes in Baltana, Zirakpur, Panchkula

Direct and indirect taxes are levied on the central and state governments. A tax is a fee charged and charged by the government to pay for goods and services it provides, including schools, infrastructure, law enforcement, and military production. A tax arises when a sale of a product or service owned by an asset occurs, or when winnings are won. The amount of tax paid by a legal entity or an individual largely depends on its income and expenses.

Types of Taxes in India

Taxes are usually divided into two categories: direct and indirect taxes.

What is Direct tax?

Direct taxes are levied directly on taxpayers. They depend on the income and well-being of a person or entity.

What is an Indirect tax?

Indirect taxes are included in the prices of purchased goods and services. Indirect taxes apply to the production or sale of goods and services. In the end, governments collect direct and indirect taxes.

Collecting direct and indirect taxes in India

Tax collection depends on the nature of taxes. Direct taxes, which include income tax, property tax and corporate tax, are collected and collected by the central government. The Ministry of Income Tax is responsible for controlling the payment of income tax. Therefore, when the obligation to pay the tax and the burden of tax falls on the same person, this is called a direct tax. Individuals pay indirect taxes when they buy goods or use services. Indirect taxes are levied on intermediaries by a person who bears the main economic tax burden.

Types of direct taxes in India

Direct taxes cover the following:

Income tax: levied by the central government on the income of individuals and legal entities. Income tax forms are formulated according to different income groups.
Corporate tax: this is a fixed rate levied on local corporations for profit for a certain period.

The advantages of direct taxes

• Low income group bears lower tax burden
• Independent payment of direct taxes makes society conscious and responsible
• Wealth distribution equals direct taxation.
• Direct tax rates can be used as an anti-inflation tool.

Disadvantages of direct taxes

• Direct taxes can impede savings and investment
• The biggest drawback is that it leads to tax evasion
• It may be inconvenient to pay direct taxes, because the procedure is complicated

Types of indirect taxes in India

Indirect taxes cover the following:

• Goods and Services Tax: The GST law which was implemented on 1st July 2017 has subsumed 17 indirect taxes.
  • At the state level, it covers central excise duty, additional excise duty, service tax, countervailing duty and special additional duties of custom.
  • At the central level, it covers sales tax, entertainment tax, central sales tax, octroi and entry tax, purchase tax, luxury tax, taxes on lottery gambling and betting.
• Taxes on products not covered under GST: Taxes on item containing alcohol and taxes on petroleum products.