10 taxes you should know about
Through this article, we will try to figure out different types of taxes levied in Indian financial system and their effects
Apr 15, 2014
Source : Business Standard


HYDERABAD: Taxes, along with taxation rules are one of the most complex and confusing topics of any financial system. This complexity arises because of different types of taxes with different tax rates and continuous amendments in the taxation rules which are retrospective and prospective at times. Through this article, we will try to figure out different types of taxes levied in Indian financial system and their effects.

Types of Taxes

Taxes represent the amount of money we pay to the Government at predefined rates and periodicity. Taxes are the basic source of revenue to the Government using which it provides various kinds of services to the tax payers. There are mainly two types of Taxes, direct tax and indirect tax which are governed by two different boards, Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC).

Let’s discuss the two types of taxes in detail.

Direct Taxes

Direct taxes are the personal liability of tax payer. These are collected directly from the tax payers and they have to be paid by the persons on whom it is imposed. Important direct taxes are listed below:

Income Tax

This is most important type of direct tax and almost everyone is familiar with it. TDS is its famous synonym and whosoever is earning above a minimum amount (tax exemption limit) has to pay income tax.

Wealth Tax

This is in addition to the income tax and is levied if your net wealth exceeds Rs 30 Lakh at the rate of 1% on the amount exceeding Rs 30 Lakh.

*Note – In Budget 2013-2014 Finance Minister Mr P. Chidambaram introduced a surcharge of 10 percent on taxpayers with an annual taxable income of more than 1 crore (10 million) rupees.

Property Tax/Capital Gains Tax

This is levied on the capital gains arrived by selling property and stocks. Tax rates are different for long term and short term capital gains.

Gift Tax/ Inheritance or Estate Tax

Amount exceeding Rs. 50000 received without consideration by an individual/HUF from any person is subjected to gift tax as income under “other sources”. There are exemptions like money received from relatives is not taxable. Marriage gifts and money received through inheritance are also exempt from gift tax. Inheritance tax was earlier in practice but has been repealed by the government.

Corporate Tax

Companies operating in India are taxed as per the corporate tax rate on their income. This tax is one of the major sources of revenue for government.

Indirect Tax

Impact and incidence of indirect Taxes fall on different persons as opposed to direct taxes where impact and incidence is on the same person. These taxes are recovered from different groups of people but the liability remains with the person who collects it. Tax payer recovers the indirect taxes paid from their consumers and clients and finally pays it to government.

For example, when we purchase any product we pay VAT, when we eat in restaurants we pay service tax which are ultimately deposited in government’s kitty by the service providers. Brief about various types of indirect taxes is given below:

Service Tax

Service providers in India are subject to service tax, which is charged on the aggregate amount received by the service provider. Services like leasing, internet/voice, transport, etc are subject to service tax.

Custom Duty

Custom duties are indirect taxes which are levied on goods imported to/exported from India. There are different rules for different types of goods and sectors. Government keeps on changing these rates so as to promote import/export of specific goods.

Excise Duty

Excise duties are indirect taxes which are levied on goods manufactured in India for domestic consumption. Like custom duty, there are a number of rules which keep on changing as per government discretion.

Sales Tax and VAT

Sales tax is levied by the government on sale and purchase of products in Indian market. As customers, whatever you buy from the market, you pay sales tax on it. Now, sales tax is supplemented with new Value Added Tax so as to make it uniform across country.

Security Transaction Tax (STT)

STT is levied on transactions (sale/purchase) done through the stock exchanges. STT is applicable on purchase or sale of various financial products like stocks, derivatives, mutual funds etc.

Finding Information

I have intentionally not presented details of various tax rates and tax slabs as they keep on changing at regular frequency. For details regarding correct rates and slabs it’s recommended to visit government’s income tax website.



Latest Realty News

Capturing opportunities in the complex real estate terrain of India
Apr 15, 2014
HYDERABAD: Real estate is an asset class that demands specialised skills and the complexity surrounding this sector, increases in the Indian context. Compared to the mature real estate markets in the developed nations, buyers in India need a higher degree of diligence before entering into property agreements. Issues pertain to ownership rights of the property, understanding the difference between usable area and saleable area in the absence of standardised definitions, completion of the project
Realty sector creating avenues of employment in Hyderabad
Apr 15, 2014
HYDERABAD: Infrastructure growth has been playing a vital role in providing employment in both organised and unorganised sectors in India and Hyderabad in particular. In fact after agriculture, real estate sector is the second largest creator of employment. In Hyderabad several large scale housing projects have come up in the last five to ten years and there are many more projects which are in the pipeline. Several supporting infrastructure need to be built for these projects such as water suppl
Cyrus Mistry's family owned company accuses its attorney of fraud, illegal land sales
Apr 12, 2014
HYDERABAD: A company owned by the family of Tata Sons chairman, Cyrus P Mistry, has accused the attorney it hired to take care of issues related to properties it bought from the Hyderabad Nizams of fraudulently selling them.
Draw Policy for Assets Deal: RBI
Apr 11, 2014
HYDERABAD: The Reserve Bank of India urged banks with offices abroad to formulate a policy for overseas real-estate transactions.
New age homes in Hyderabad
Apr 11, 2014
HYDERABAD: Most of the builders in Hyderabad are of the opinion that today’s house buyer is smart and wants value for money. When a consumer comes to a property exhibition he is fully prepared and ready with his research, and he knows what he is looking for in a house. Today the expectation of a regular buyer is much more than what it used to be five to ten years ago.
5 ways to earn a good return on property investment
Apr 09, 2014
HYDERABAD: If someone is looking for low – risk and secured investment which offers good potential in the long run, then property investment would be the right choice. Investment in real estate tends to be less volatile than other investment avenues. Monetary triumph is achievable to quite an extent by investing in real estate sector.
CREDAI demands reduction in interest rates
Apr 09, 2014
HYDERABAD: The Confederation of Real Estate Developers’ Associations of India (CREDAI), the apex body for private real estate developers in India, seeks a pro-growth stance on the policy rates. It also demands a reduction in interest rates to put growth and demand on the fast track, and develop the housing sector in the economy which has been completely ignored by the successive governments.
Kompally: The developing area of Hyderabad
Apr 07, 2014
HYDERABAD: From being a village on the outskirts of Hyderabad, known for its grape orchards and farm houses, Kompally has come a long way. It is now being included in the list of favourable destinations for residential villa developments in Hyderabad.
Credai favours lower interest rate regime to boost housing sector
Apr 02, 2014
HYDERABAD: The Confederation of Real Estate Developers’ Association of India (Credai) today urged the Government to focus on development of the housing sector by reducing interest rates.
Greater Hyderabad Municipal Corporation targets Rs 1,111-cr property tax
Mar 31, 2014
HYDERABAD: Greater Hyderabad Municipal Corporation (GHMC) commissioner Somesh Kumar has said the corporation will reach the magic figure of Rs 1,111 crore in property tax collections by March 31. Till Saturday, the corporation could collect Rs 895 crore, which was Rs 148 crore more than the last financial year's collection of Rs 747 crore, he added.

Latest Realty News Of State

Realty Talk's