Direct Taxation

India is a developing nation, and a developing country requires various sources of revenue to fund its further expansion.

One of those various sources of revenue is Tax. 

Indian government makes up a large chunk of their revenue from Taxes that the citizens of the country pay. These taxes are then spent on the betterment of the country.

What are the types of Direct Taxes in India?

Direct tax in India is broadly divided into three parts: income tax, corporation tax, and Wealth Tax. Here’s the detailed info for each: 

Income Tax – Income tax is one of the most common taxes paid by Indians. The income tax charged varies on specific income brackets. Income that falls under the taxable bracket is known as “taxable income.” The entities that have to pay income tax are individuals, companies, corporate firms, and trusts. 

Wealth Tax –  If you own any property in India, you need to pay tax for property ownership. Wealth tax is charged regardless of whether the taxable property earns income or not. This tax is dynamic & changes based on the current market rate of the said property. Keep in mind that “working assets” such as stocks, gold deposit bonds, and commercial properties are exempt from wealth tax.

Corporation Tax – Companies existing independent of their shareholders come under Corporation Tax. It is charged on royalties, interest, and gains from the sale of capital assets in India. The tax rate is charged based on if the company is incorporated in India or abroad. Domestic companies have to pay 30% of total revenue gained in the financial year.