India’s tax collection structure is well partitioned and responsible for central, state and local governments. Union governments levy income taxes, central excise and service taxes, while state governments levy taxes on basic income, VAT, stamp duty, etc. The local corporations are responsible for water taxes, oktroi and many other taxes.
There are three broad categories of taxes, namely ad valorem and specific taxes, indirect and direct taxes, and progressive and regressive taxes. An ad valorem tax means that the tax is levied based on the total value of the goods while the specific tax is the tax levied based on weight, quantity, size, width and breadth.
Direct taxes are imposed on someone and their burden is not shifted to someone else and borne by the person himself, e.g. B. Income tax, corporation tax. Indirect taxes are imposed on someone, but the burden of which can be shifted to someone else, e.g. B. Excise duties, sales taxes and customs duties.
A progressive tax is one where as income increases, the tax rate increases, so those with higher incomes end up paying more. A proportional tax is one where, regardless of the level of income, the tax rate remains the same, so the differences between higher and lower incomes are the same before tax as after tax.
Every citizen should follow proper tax planning practices. This means that he should pay his taxes as well as invest properly and choose the right tax saving tools. The tax to be paid depends on the income generated and the type of investments made. There are many tax exemptions for investments made based on income source. Investors should have proper tax planning in place to take advantage of these benefits.
Income tax can be calculated using the income tax calculator. It calculates taxable income by combining income based on salary, allowances and incentives, capital gains, and other sources of income. For the 2007-08 tax year, income up to Rs 1,10,000 per annum is exempt from this tax. There are different plates for income above this amount. The additional fee of 10 per cent is charged if income exceeds Rs 8,50,000. There is also an education tax of 2 percent.
In India, indirect taxes were very high compared to direct taxes. In 1991, before the tax reform, only 19 percent of taxes came from direct taxes, while the percentage was 81 percent from indirect taxes.
The fact that indirect taxes outweigh direct taxes in a country suggests that the tax burden falls more heavily on the poor, since indirect taxes are taxes on goods.
But following tax reform based on the recommendations of the Chelliah and Kelkar Committees, many of these characteristics have been addressed to make the tax structure simple and broad based, reduce the multitude of taxes, reduce tax complexity and even curb tax evasion.