These types of taxes are directly paid to the government of India. Government levies a direct charge on the entity or an individual which has to be borne directly by the individual/entity. Direct taxes include several taxes such as income tax, TDS etc.
There are several types of direct taxes available in the Indian Constitution Bill. We define below:
This tax is well-known in India. This tax is paid by the taxpayer whose income exceeds the taxable limit. The taxpayers have to pay tax on applicable rates. As per the income tax rate for FY 2023-24, you do not have to pay income tax if your income is up to INR 2,50,000. But if your earnings exceed 2.5 lakhs then you have to pay 5% tax as income tax up to INR 5 lakhs of Income. A rebate of 12500/- is available for total income up to 5 lacs.
Capital gain tax is the tax that has to be borne by the individual/entity at the time of sale of any capital asset for instance property, shares, bonds valuable material etc. It is levied on the difference between the sale price and purchase cost (or indexed cost).
Capital gain can be long-term or short-term on the basis of the holding period of the capital assets. For instance, for immovable property, if the holding period is greater than 24 months then it will be treated as a long-term capital gain.
The tax rate for short-term and long-term capital gain differs based on their nature.
Securities transaction tax (STT) was introduced in the 2004 Union Budget and came into effect on 1 October 2004. The basic motive behind the introduction of Securities transaction tax (STT) was to curb the evading of taxes on profits from capital gains earned by transacting in securities. This tax is levied at the time of purchase and sale of securities listed on stock exchanges in India. The rate of STT differs based on the type of security traded and whether the transaction is a purchase or a sale.
Tax paid on fringe benefits provided by the company to employees. This is separate from income tax and is calculated on the taxable value of the fringe benefits provided.
The corporate tax also called corporation tax is levied on the income of corporate bodies of our country. In India, taxation companies are divided into international and domestic companies.
The Direct Tax Code or DTC was drawn to substitute the Income Tax Act of 1961. The major purpose of DTC would be to develop an equitable, effective, and efficient direct tax system. DTC shall be made to revise and stabilize the statutory concerned to the direct taxes so that the tax GDP ratio shall surge and voluntary compliance would get simpler.
The major specifications of the Direct Tax Code are clarified below:
The major benefits of direct taxes in India would have been specified below:
Despite there being some disadvantages direct taxes would play an essential role in India’s economy. When these taxes are imposed effectively then they can perform a bigger role in making the price constant and stopping inflation.
See Also: Indirect Taxes
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