CLASSIFICATION OF TAX LEVYING,COLLECTION AND DISTRIBUTION AMONG CENTRE AND STATE :
1.Taxes Levied by the Central Government of India
The Central Indian Government that is officially named as the "Union
Government" is responsible for the imposition of both direct taxes as
well indirect taxes. Listed below are some of the taxes that are levied
by the India Government:
Direct Taxes
 |
| DIRECT TAXES |
- Banking Cash Transaction Tax
- Capital Gains Tax
- Corporate Income Tax
- Fringe Benefit Tax
- Personal Income Tax
- Securities Transaction Tax
Indirect Taxes
 |
| INDIERCT TAXES |
- Customs Duty
- Excise Duty
- Service Tax
2.Taxes Imposed by the State Governments
Though the majority of the taxes are levied by the Central Government of
the country, there are some taxes, which can not be levied by them.
These kinds of taxes are the one of the sole responsibilities of the
governments of the individual states. To name a few of such taxes in
India are:
- Dividend Tax
- Endowment Tax
- Estate Tax
- Gift Tax
- Flat Rate Tax or Flat Tax
- Fuel Tax
- Inheritance Tax
- Transfer Tax
- Payroll Tax
- Poll Tax
- S. E. T. or Self Employment Tax
- Social Security Tax
- Usage Tax
- Value Added Tax or Sales Tax
- Wealth Tax
3.Taxes Levied by the Local Bodies
The
Octori Tax or Entry Tax is the most famous tax, which is being
imposed by the local bodies or the municipal jurisdictions on the goods'
entry.
Tax Incentives in India
WHAT IS DIRECT TAXES :
In
case of direct taxes (income tax, wealth tax,
etc.), the burden directly falls on the taxpayer.
According
to Income Tax Act 1961, every person, who is an
assessee and whose total income exceeds the maximum
exemption limit, shall be chargeable to the income
tax at the rate or rates prescribed in the Finance
Act. Such income tax shall be paid on the total
income of the previous year in the relevant assessment
year.
Assessee
means a person by whom (any tax) or any other sum of
money is payable under the Income Tax Act, and includes
-
(a)
Every person in respect of whom any proceeding
under the Income Tax Act has been taken for the
assessment of his income (or assessment of fringe
benefits) or of the income of any other person
in respect of which he is assessable, or of the
loss sustained by him or by such other person,
or of the amount of refund due to him or to such
other person;
(b)
Every person who is deemed to be an assessee under
any provisions of the Income Tax Act;
(c)
Every person who is deemed to be an assessee in
default under any provision of the Income Tax
Act.
Where
a person includes:
- Individual
- Hindu Undivided Family
(HUF)
- Association of persons
(AOP)
- Body of individuals
(BOI)
- Company
- Firm
- A local authority and,
- Every artificial judicial
person not falling within any of the preceding
categories.
Income
tax is an annual tax imposed separately for each
assessment year (also called the tax year). Assessment
year commences from 1st April and ends on the
next 31st March.
The
total income of an individual is determined on
the basis of his residential status in India.
For tax purposes, an individual may be resident,
nonresident or not ordinarily resident.
Definition of Resident::
An
individual is treated as resident in a year if
present in India:
1.
For 182 days during the year or
2. For 60 days during the year and 365 days during
the preceding four years. Individuals fulfilling
neither of these conditions are nonresidents.
(The rules are slightly more liberal for Indian
citizens residing abroad or leaving India for
employment abroad.)
Resident but not Ordinarily Resident:
A resident
who was not present in India for 730 days during
the preceding seven years or who was nonresident
in nine out of ten preceding years is treated
as not ordinarily resident.
Non-Residents:
Non-residents
are taxed only on income that is received in India
or arises or is deemed to arise in India. A person
not ordinarily resident is taxed like a non-resident
but is also liable to tax on income accruing abroad
if it is from a business controlled in or a profession
set up in India.
Non-resident
Indians (NRIs) are not required to file a tax
return if their income consists of only interest
and dividends, provided taxes due on such income
are deducted at source. It is possible for non-resident
Indians to avail of these special provisions even
after becoming residents by following certain
procedures laid down by the Income Tax act.
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