Taxation in India

By
Abhinav A. Goswami
• What government needs to collect Taxes ?
• What are types of Taxes ?
– Direct and
– Indirect.

• Direct Taxes.
-Direct Taxes collected by Central Board of Direct
Taxes ( CBDT ) which is a part of Department of
Revenue in Ministry of Finance.
• Income Tax is part of Direct Tax.
For India, Income tax rates are quite high overall.
• Mainly charged under the following categories:

• INCOME TAX
• Mainly under 5 categories

1. Income from house and property

2. Income from business and profession
3. Income from salaries
4. Income in the form of Capital gains
5. Income from other sources
Country Corporate Individual
China 25% 5-45%
India 30.9% 0-33%
Japan 40.69% 5-50%
Malaysia 35% 0-26%
Singapore 17% 3.5-20%
 Service Tax
• Service tax
• Part of Central Excise levied on services
provided in India, except J&K.
• Collected by : CBEC ( Central Board of Excise
and Customs )
• Current rate is 10.3% in India.
 Value Added Tax
• A value added tax (VAT) is a form of
consumption tax. From the perspective of the
buyer, it is a tax on the purchase price. From
that of the seller, it is a tax only on the "value
added" to a product, material or service, from
an accounting view, by his stage of its
manufacture or distribution.
 Excise Duty
• Paid on finished product.
• Eg. Cars sold.
 Goods and Services Tax ( GST )
• The Goods and Services Tax (GST) is a value
added tax, which is to be implemented in
India by April 2012. The GST will replace all
indirect taxes levied on goods and services by
the Indian Central and State governments.

• Petroleum products will mostly be kept

outside GST.
 Tax-GDP Ratio
• TAX to GDP Ratio :
Tax to GDP Ratio =Total government tax
collections divided by the country's GDP.

• Lower Tax-GDP ratio indicates that

government is not having sufficient money.
 Year Tax:GDP
1990-91 10.1%
1995-96 9.4%
2001-02 8.2%
2004-05 9.8%
2005-06 10.1%
2007-08 12%
Thanks.