Personal Income tax: Personal income tax is imposed on the net income of the individual. Hindu undivided family and un-registered firms. Agricultural income is not taxable.
Corporate Income tax: Corporate income tax is levied on profits of companies.
Capital gains tax: This tax is levied on gains on the sales, exchange or the transfer of capital assets. If the gains on capital assets exceeds certain specified limit then capital gains tax is levied.
Tax on property:
Property tax is levied on properties of the families and companies. the taxes paid on property include
Estate duty
Wealth tax
Gift tax
Estate duty: It is levied on the property which is inherited by the heirs while transferring the property. This tax is now abolished in India.
Wealth tax is levied on the net wealth of undivided Hindu families. The tax is levied when the wealth of the family exceeds the taxable limits specified by the Government from time to time. It is a progressive tax on wealth.
Gift tax: is levied on gifts and donations made by the person. The tax is to be paid by the donor and taxable limit is fixed by the Government from time to time.
. Taxes on Commodity: Commodity taxation include
Sales tax
Excise duty and
Customs duty
Sales tax is imposed on a number of commodities sold. Sales tax is levied by the state and central governments on the specified commodities for the two governments respectively. Value added tax (VAT) is an example of state sales tax. Central sales tax is levied on some commodities and services.
Excise duty is a tax on the commodities manufactured in the country. The impact on the tax is on the manufacturers who are to pay the tax. The incidence of the tax is ultimately borne by the buyers of the commodities.
Customs duty: Customs duty is levied on imports and exports. Exports duty is levied on the goods exported to foreign buyers. The exporter has to bear the tax on his exports. Rates of export duty are announced from time to time by the government.
Import duty is levied on the goods imported into the country by the importers. The importer has to pay the tax as per the rates fixed by the government from time to time. VAT (Value Added Tax): Value Added Tax is a multi point sales tax with set off for tax paid on purchases. It is basically a tax on the value addition on the product. The burden of tax is ultimately born by the consumer of goods. In many aspects it is equivalent to last point sales tax. It can also be called as a multi point sales tax levied as a proportion of Valued Added. Necessity of Value Added Tax: The General perception of the existing single point sales tax system is that it is highly complex with multiplicity of rates, plethora of explanation, many rates in some group of item, extensive use of statutory forms, high and unrealistic quota of assessment, loss of revenue on value additions, Tax rate war between States , etc. The consensus was that a new system is needed and Value Added Tax has emerged as a principal instrument of taxing domestic consumption world wide during last four decades. It is now in operation in more than 100 Countries. The basic advantages of Value Added Tax can be stated as its neutrality, transparency, certainty and self policing mechanism. India has a large un-organised market, especially agro-based industries and here a large number of transactions go unrecorded. The menace of stock transfers adds to the problem of tax evasion. In India, introduction of VAT will only change the collection methods for sales tax rather than reform the indirect tax system.
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