Common questions on Tax Laws
- What is Tax?
- Which Laws govern Tax ?
- What are the types of Taxes which a person needs to pay?
- What is the Penalty for non-Payment of Taxes?
What is Tax?
Tax is any contribution imposed by government upon individuals, for the use and service of the state, whether under the name of toll, tribute, impost, duty, custom, excise, subsidy, aid, supply, or other name.
Taxes refer to the measure of money we pay to the Government at predefined rates and periodicity. Taxes are the fundamental source of revenue to the Government utilizing which it gives different sorts of administrations to the tax payers.
Laws which govern Tax
- Income Tax Act,1961
- Goods & Service Tax Act,2016
- The Customs Act, 1962
- Central Excise Act,1944
- The Wealth Tax Act 1951
- The Property Tax Act,2009
What are the types of Taxes which a person needs to pay?
There are two types of taxes, direct and indirect taxes.
India follows a 3 tier structure for the taxation system. It is inclusive of the Union Government, the State government, the local/municipal government, for the primary purposes of collection of taxes.
The direct taxes refer to income tax, wealth tax, and interest tax. There are several bodies that regulate the aspect of taxation in India. For Direct Taxes, an important regulatory agency is the Central Board of Direct Taxes (CBDT).
Out of these taxes, the most prominent, is the Income Tax. It is governed by the Income Tax Act 1961. The income, which this act taxes, can originate from any source like a business, owning a house or property, increases got from ventures and compensations, and so forth. This is the act that characterizes how much the tax advantage on a settled store or a disaster protection premium will be. It is additionally the act that chooses the amount of your income which you would be able to spare through speculations and what the slab for the income tax will be.
Wealth Tax is regulated by The Wealth Tax Act 1951, and looks into taxation linked to the net wealth of a person, Hindu Undivided Family, or a company. The most straightforward calculation of wealth tax was that if the net wealth surpassed Rs. 30 lakhs, at that point 1% of the sum that surpassed Rs. 30 lakhs was payable as tax. It was annulled in the financial backing declared in 2015. It has since been supplanted with an extra charge of 12% on people that win more than Rs. 1 crore for every annum. It is additionally material to organizations that have a revenue of over Rs. 10 crores for every annum. The new rules radically expanded the sum the government would gather in taxes as restricted the sum they would gather through the wealth tax.
Interest Act which is governed by the Interest Tax Act 1974, manages the tax that was payable on interest earned in certain particular circumstances. It’s observed that the Act does not matter to interest that was earned after March 2000.
All the significant indirect taxes have been clubbed into one category under the umbrella term of Goods & Services Tax. Certain indirect taxes have not been subsumed under the Goods & Services Tax, some of them are Custom Duty, Stamp Duty, vehicle Tax, Entry Taxes and Toll, etc.