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Contents
Introduction
Definition
Purpose and Effects
Types of Taxes
Types of Direct Taxes
Types of Indirect Taxes
Additional Taxes under Direct & Indirect Taxes
Introduction
A tax is a financial charge or other levy
Income Tax
Definition
According to Black's Law Dictionary, a tax is
Background :
10
Tax Revenue
Indirect Tax
Direct Tax
Income Tax ,
Wealth Tax
Tax Payer
Governmen
t
Income Tax
Service Tax ;
VAT ; Excise
Tax Payer
Manufacturer
/ Dealer
Governmen
t
Types of Taxes
There are basically 2 types of Taxes.
Income Tax:Income Tax Act, 1961 imposes tax on the income of the
individuals or Hindu undivided families or firms or cooperative societies (other tan companies) and trusts
(identified as bodies of individuals associations of persons)
or every artificial juridical person. The inclusion of a
particular income in the total incomes of a person for
income-tax in India is based on his residential status.
There are three residential status, viz., (i) Resident &
Ordinarily Residents (Residents) (ii) Resident but not
Ordinarily Residents and (iii) Non Residents. There are
several steps involved in determining the residential status
of a person.
VAT can be computed by using any of the three methods: (a) Subtraction
method: The tax rate is applied to the difference between the value of
output and the cost of input. (b) The Addition method: The value added is
computed by adding all the payments that is payable to the factors of
production (viz., wages, salaries, interest payments etc). (c) Tax credit
method: This entails set-off of the tax paid on inputs from tax collected on
sales.
Applicability :- Indirect
Tax
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Value Added Tax : Applicable on Dealer above Turnover of Rs.5.00 lacs
At the rate provided in Act (from 5% to 12%)
Central Excise Duty : Applicable on Manufacturer above Turnover of Rs.1.5 Cr
At the rate provided in Act as per commodity
Service Tax : Applicable on Service provider above service charges of Rs.10.00 lacs
At the rate provided in Act (12%)
Income Tax
Additional Taxes Under Direct & Indirect Taxes:1. Negative Income Tax:- In economics, a negative
income tax (abbreviated NIT) is a progressive
income tax system where people earning below a
certain amount receive supplemental pay from the
government instead of paying taxes to the
government.