What is Tax ?

A tax is a mandatory fee or financial charge levied by any government on an individual or an

organization to collect revenue for public works providing the best facilities and
infrastructure. The collected fund is then used to fund different public expenditure programs.

In India, the Government imposes taxes of two types- Direct taxes and Indirect taxes. Such
classification in the taxation system is based on the method of collection of taxes from the
taxpayer.
A tax is derived from the latin word 'Taxo’ it is a compulsory charge under this Act.

It's primary aim is to raise revenue to fund governance of nations.

What is Income Tax Slab?

Slab system means different tax rates are prescribed for different ranges of income. It
means the tax rates keep increasing with an increase in the income of the taxpayer.

Income Tax Slabs in India are announced by the finance minister every year

The finance minister Nirmala Sitharaman has announced the Union Budget for 2023 on 1
February 2023
In India, the Government imposes taxes of two types- Direct taxes and Indirect taxes. Such
classification in the taxation system is based on the method of collection of taxes from the
taxpayer.
What is Direct Tax ?

The definition of direct tax is hidden in it's name which implies that this tax is paid directly to
the government by the taxpayer

Direct taxes are one type of taxes an individual pays that are paid straight or directly to the
government, such as income tax, poll tax, land tax, and personal property tax. Such direct
taxes are computed based on the ability of the taxpayer to pay, which means that the higher
their capability of paying is, the higher their taxes are.

Direct tax is progressive in nature it means tax is increases if one's income is increases and
it is directly levied on individuals.

General examples of this type of tax in India are income tax and wealth tax

Types of Direct Taxes

Income Tax: Income tax is a tax charged on the annual income earned by an individual. The
amount of tax paid will depend on how much money you earn as income over a financial
year. Various tax slabs are determined by the Government of India which determines the
amount of Income Tax that must be paid.

Provision of income tax contains 298 section and 14 schedule.

Section 295 of income tax give empowerment to frame rules.

Income tax contains only 1 Act Income tax act 1961.

The taxpayer must file Income Tax Returns (ITR) on a yearly basis. Individuals may receive a
refund or might have to pay a tax depending on their ITR. Huge penalties are levied in case
individuals do not file ITR.

Wealth Tax : The tax must be paid on a yearly basis and depends on the ownership of
properties and the market value of the property. In case an individual owns a property,
wealth tax must be paid and does not depend on whether the property generates an income
or not. Corporate taxpayers, Hindu Undivided Families (HUFs), and individuals must pay
wealth tax depending on their residential status. Payment of wealth tax is exempt for assets
like gold deposit bonds, stock holdings, house property, commercial property that have been
rented for more than 300 days, and if the house property is owned for business and
professional use.

DEPARTMENT OF DIRECT TAX :- CBDT(Central board of direct tax)

What is Indirect Tax?

Indirect tax is the tax levied on a person upon consumption of goods and services. Indirect
tax is not directly levied on the income of a person. He needs to pay the tax in addition to the
actual price of goods or services purchased by the seller. Indirect is a tax that is passed on
to another person. Generally, indirect tax is levied on sellers who pass it on to the final
consumer.

Indirect tax is regressive in nature means fixed in nature. These are not linked with paying
capacity. No concept of A. Y year and P. Y.

Illustration Indirect tax

Suppose you go out for dinner. In the bill, you may see your total amount plus the GST
(Indirect tax). Let’s say the bill was Rs 2000 and the GST rate is 5%. Then you will have to
pay 2000+100=2100. This Rs 100 is the indirect tax that is passed on to you by the service
provider.
DEPARTMENT OF INDIRECT TAX:- CBIC( Central board of indirect tax and custom)

Different types of indirect taxes in India

Earlier, different types of indirect taxes were imposed as follows:

Service tax: This is charged on the services availed by the customer. For example, if the
person books a hotel accommodation, service tax is charged on the hotel booking amount.

Excise duty: This is paid for the manufacturing of goods. For example, if a person
manufactures cars, he is liable to pay excise duty on manufactured cars.

Value Added Tax (VAT): This is paid on the value addition in price during the sale of goods.
For example, when the wholesaler sells goods to a retailer.

Custom duty: This is paid on the goods imported from outside India.

Stamp duty: This is paid on the sale of immovable property. Also, stamp duty is mandatory
on all types of legal documents.

Entertainment tax: This is levied on every transaction related to entertainment. For example,
movie tickets, video game arcades, stage shows, exhibitions, amusement parks, and sports-
related activities.

Goods and Service Tax (GST)

From July 01,2017,Goods and Service Tax (GST) was implemented in place of major indirect
taxes. The various types of indirect taxes which were paid to various tax authorities were
now under the purview of one tax. In simple words, GST is an indirect tax levied on the
supply of goods and services.

G. S. T is a value added tax.

GST is majorly divided into four types: Central Goods and Service Tax (CGST), State Goods
and Service Tax (SGST), Integrated Goods and Services Tax (IGST) and Union Territory
Goods and Services Tax (UGST).

Article 279(A) deals with formation of G. S. T council and consists a total no. Of member is
33. In which 31 from the state and 2 from the central government.

MODEL OF GST : There is a four models of G. S. T -

* Australian model
* Kelkar shah model

* Canadian model

* Bagchi poddar model

But Indian G. S. T based on Canadian model

GST. N is a portal of GST

GST contains total 35 Act and custom contains 2 Act.

The GST council has prescribed different rates from 0%, 5%, 12%, 18% and 28% for different
goods and services. Certain goods have been exempted from the purview of GST taxability.