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Direct Tax Collection in India

Direct Tax Collection in India

Source: The Hindu
GS III: Economics


Overview

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  1. News in Brief
  2. How it helps

Why in the News?

The net Direct Tax collection is 80.61% of the total Budget Estimates of Direct Taxes for F.Y. 2023-24.

News in Brief

  • India’s net direct tax collections touched ₹14.7 lakh crore by January 10.
  • This meeting over four-fifths of this year’s target and reflecting a growth of 19.4% over the same period of 2022-23.
  • The Central Board of Direct Taxes said that provisional direct tax collections continue to register ‘steady growth’ with gross collections rising 16.77% to ₹17.18 lakh crore.
  • It led by a 26.11% rise in Personal Income Tax (PIT) inflows.
  • Corporate Income Tax or CIT collections grew at a relatively muted pace of 8.32%.
Tax in India

  • Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied.
    • Income tax, wealth tax, corporation tax, and property tax are some examples of direct tax.
  • Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government.
    • Goods and Services Tax (GST) is an example of indirect tax.
    • Corporation tax forms a large chunk of the government’s tax revenue.
Major Taxes
  • Income Tax:
    • Governed by the Income Tax Act, individuals and businesses are liable to pay income tax on their earnings.
    • Income tax rates vary based on the income slab in which an individual or entity falls.
    • The income tax system includes provisions for deductions, exemptions, and rebates.
  • Goods and Services Tax (GST):
    • GST is a comprehensive indirect tax that replaced various indirect taxes at the central and state levels.
    • It is levied on the supply of goods and services and is administered by the Goods and Services Tax Council.
    • GST is categorized into Central GST (CGST), State GST (SGST), and Integrated GST (IGST).
  • Corporate Tax:
    • Corporates are subject to corporate income tax, which is applicable to the profits earned by companies.
    • The rate may vary based on the type of company and its turnover.
  • Customs Duty:
    • Customs duty is imposed on goods imported into India.
    • The rates and regulations are governed by the Customs Act.
  • Excise Duty:
    • Excise duty is a tax levied on the production or manufacture of goods in India.
    • However, with the implementation of GST, excise duty has been subsumed into the GST regime.
  • Service Tax:
    • Service tax was replaced by GST, and now services are taxed under the GST framework.
  • Securities Transaction Tax (STT):
    • Applicable to transactions in the securities market, STT is levied on the purchase and sale of securities.
  • Property Tax:
    • Property tax is imposed by local municipal bodies on the value of a property.
  • Wealth Tax:
    • Wealth tax was abolished in the Finance Act, 2015, and is no longer applicable.
  • Professional Tax:
    • Levied by state governments on the income earned by professionals.

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