Tax Structure in India

India has a well developed tax structure. Tax system in India is primarily a three-tier system, the Central, state governments and among local government organizations is based. In most cases, these local bodies including local councils and municipalities.
According to the Constitution of India, the government has the right to levy taxes on individuals and organizations. However, the Constitution says that no one except the right to levy taxes or charge law is right. Whatever has been passed by the legislature or Parliament by law to support is being charged.

Main body which is responsible for the collection of taxes the Central Board of Direct Taxes (CBDT) is. The Government of India under the Ministry of Finance is a part of the Department of Revenue. CBDT Central Board of Revenue Act of 1963, according to the functions. Usually types of direct taxes, taxes on income of the Central Government, central excise, service tax and imposes various other types of direct taxes. Direct taxes are some of the different forms:

Corporate income taxes: Income Tax Act, companies and business organizations in India, according to tax on worldwide income from their transactions are tracked. In the case of non-resident business organizations, is that their income in India or any other Indian sources imposed on business transactions have earned. Resident or domestic organizations, a tax of 35% and a 2.5% surcharge is levied in the case. Foreign corporate organizations, a basic tax rate of 40% and 2.5% surcharge is levied in terms of. Among these, the 2% education cess on the tax amount is charged. In terms of net profit is more than $ 33,333, for organizations such as property tax is paid an additional 1%.

Personal Income Tax: The Central Government levies the Personal Income Tax. It is administered and supervised by the Central Board of Direct taxes as per the provisions of the Income Tax Act. The personal income tax rates are as follows:

  • 0-100,000- No tax needed
  • 1, 00,000-1, 50,000- 10 %
  • 1, 50,000-2, 50,000- 20 %
  • 2,50,000 and above- 30 %
If the personal income becomes more than INR 8, 50,000, a surcharge of 10 % of the total tax amount is levied.

Hindi to English translation

Some adjustments to personal income tax rates have been about the recent budget. Threshold limit of Rs 10,000 INR returns by the assessee a tax relief has been increased. 1000. If a woman assessee, threshold limit of Rs 135 000 Rs.145, 000 will add to the aged and senior citizens in the case, range limits Rs.185, 000 has been increased to Rs 195.000. Rs 2,000 tax relief to the assessee. Under Section 80 D, medical insurance premium deduction ceiling has been increased to Rs 15,000 while for senior citizens, the 20, 000 has been increased to a maximum of.

Capital Gains Tax: The central government also charges tax on the capital gains that is derived from the sale of the assets. There are a number of provisions like:

The Long-term Capital Gains Tax is charged if:

  • The capital assets are kept for more than three years
  • If the securities and shares are listed under any recognized Indian stock exchange.
In the case of long-term capital gains, they are taxed at 20% of the basic rate. General corporate income tax rates apply to short-term capital gains. 10% short term capital gain is the transfer of units of mutual funds and equity shares put on events taking place.
In the case of short and long term capital losses, they further 8 consecutive years to be allowed.
Types of indirect taxes
Excise: Central Excise Act of 1944 and Central Excise Tariff Act 1985, the government levies excise duty. In most cases, approximately 16% excise duty is charged and in some cases, an additional excise duty of about 8% is also charged. Recent amendments to the budget, due to approximately 2%
Recently a number of tax in the budget has been introduced. The area have small industries, cottage industries, food processing, bio-diesel and so on is designed to create jobs trusted. Provide access to electricity and pure water, water purification technology areas of the plans and the tax-free. Excise duty on cigarettes and other tobacco products has been increased by approximately 5%.
Customs: Customs India Customs Act 1962 and Customs Tariff Act of 1975 belongs to. Typically, goods are imported to the country's customs are charged with educational cess. Industrial goods, the rate was cut to 15% is. Customs goods transaction is assessed on the value.
Under the Ministry of Finance Central Board of Excise and Customs in the country to manage the customs process.
Service: Generally, 10% have been serving various services that are provided in the country is put on. In the case of small service providers in the recent Budget in income tax exemption limit 400, 000 is Rs.800, 000 raised for. Tax relief Resident Welfare Associations whose members contribute monthly for the services of Rs 3000 for services rendered.
Types of state taxes
Central taxes, in addition to various good and services in the states to tax. Taxes are a few:
Sales Tax / VAT: In most cases, sales tax is charged on the sale of goods. States by April 1 of 2005, most in sales value have been replaced with tax (VAT) added. In the case of VAT, only the taxes levied on goods and services. VAT included four slabs:

  • 0% for essential commodities
  • 1% levied on bullion and valuable stones
  • 4% on industrial inputs and capital goods of mass consumption
  • All other items 12.5%
The VAT rates of petroleum tobacco, liquor and so on are higher and differ from state to state.

In addition, there are some other state and local taxes that are applicable. They are:

  • Octroi/entry tax
  • Stamp duty on asset transfer
  • Property/building tax
  • Agriculture income tax

Tax Tips for All New Business Owners

Are you opening a new business ?

Here are six tax tips that new new business owners should know when starting a new business
:-

1. First, you must decide what type of business entity you are going to install. Business unit which will determine the type of tax form you file. The most common type of business proprietorship, partnership, corporation and S corporation are.
2. Type of business you operate determines what taxes you pay and how will you pay them. Four common types of business income taxes, self-employment tax, employment tax and excise tax are.
3. Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. That you will need an EIN to visit IRS.gov for more information. IRS.gov You also can apply online for an EIN.
4. Good records will help ensure the successful operation of your new business. Any recordkeeping your business that clearly shows your income and expenses can choose the appropriate system. Except in some cases, the law does not require records of any particular type. However, you are in the business records you need to keep for federal tax purposes, the type of influences.
5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. Calendar year and fiscal years are the most common are.
6. Each taxpayer has a consistent accounting method, which to report income and expenses to determine a set of rules should use. The most commonly used accounting methods are cash method and accrual method. Under the cash method, you usually you get it year in year income and deduct expenses you pay them in the report. Under an accrual method, you usually earn income in the year and you can deduct expenses reported in the year you incur them.

Filing Tax Return(A legal obligation for every qualified citizen)

The most important aspect of an income tax return is filed. Over non-taxable income slab for the full fiscal year, filing tax returns with income of individuals is essential.

Cope with the latest technology and changing world, India Income Tax Department through the Internet known as e-filing returns for filing a convenient, hassle-free and fast online service is launched. These sites also provide the facilities to provide free tax filing, most of your tax return online filing, ie without any charge. This not only saves time but is more convenient. Fail to file returns within a specified period the person is allowed to file a late return. Also, free tax filing service, so through it at home or any place where internet is available to sit as individuals can file their tax returns is easy.

Income tax return form, the ITR-1 to ITR ITR -8 ranges known as. Individuals and the taxpayers who each form so that they deal annual information returns (AIR) through the post are presented in relation to all the information can include different sets of covers. Real estate and mutual fund large transactions like the user's Permanent Account Number (PAN) to help banks and many other income tax department officials are reporting. Income tax return form is divided into several categories. Individuals for an ITR ITR 4, 6 and 7 are for ITR ITR companies are fringe benefits to ITR 8. These ITR forms related websites which may be offering free tax filing can be downloaded from. However, some sites charge a nominal fee for filing the return.


Income tax return must be filed within the specified period to avoid any punishment. In addition, faulty returns within 15 days from the date of such information should be corrected. Person to keep in mind the head can see and decide which type of income of the assessee and he should choose according to the form. Personal income with the amount of all income sources should correctly refer to the Income Tax Department must submit a form or online submission form that the cyber world as the income tax department can offer free tax filing.

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