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In India, direct taxes are levied and administered by the Central Board of Direct Taxes (CBDT), a part of the Department of Revenue under the Ministry of Finance. Direct taxes are levied directly on individuals or entities by the Government. These taxes cannot be transferred to any other person or entity and are paid by the person or entity on whom they are levied.
Meaning of Direct Tax When the responsibility for paying the tax cannot be shifted from one person, business, or corporate organisation to another, the tax is considered a direct tax. Two of the most well-known categories of direct taxes are Income Tax and Corporate Tax. These taxes are paid directly to the relevant Government by the responsible taxpayer. Direct taxes are a type of tax in which people and businesses' wealth, profits, and income are taxed directly. The Central Board of Direct Taxes (CBDT), a division of the Department of Revenue under the Ministry of Finance, oversees the collection of direct taxes in India. The categories listed below are liable to a direct tax on their real earned income. A person as defined under the Income-tax Act under section 2(3) covers in its ambit natural as well as artificial persons Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, Companies, Local authority and any artificial juridical person not covered under the definition The Government collects direct tax during the entire fiscal year, from April to March of the following year. Sometimes, the Government collects direct taxes throughout the full fiscal year while giving taxpayers plenty of notice to boost and promote tax payments. Types of Direct Taxes In India, there are different types of direct taxes imposed. Some of them are mentioned below – Income Tax The tax imposed on an individual's earnings is called income tax. This sum can be earnings, salaries, profits, etc. Based on an individual's earnings, income tax is due. The various tax slabs that the Indian Government establishes determine what portion of taxable income must be collected. Each year, the taxpayer must file income tax returns (ITR). People may receive a rebate or be obliged to pay taxes based on their ITR. Failure to file an ITR can result in harsh fines and even jail time. Wealth tax The tax must be paid annually depending on who owns the properties and their market value. Wealth tax is when a person possesses assets that generate income. Depending on where they live, businesses, Hindu Undivided Families (HUFs), and citizens are all subject to wealth tax. Securities, including gold deposit bonds, stock investments, residential real estate, commercial real estate rented for more than 300 days, and residential real estate held for industrial and technological purposes, are all excluded from paying wealth taxes. Corporate tax A corporate tax is a tax on the profits or net income of a corporation. Corporate tax is paid on a company's taxable income which includes company's revenue after deducting various kinds of expenses. Foreign companies are also bound to pay corporate tax on income earned in India. Securities Transaction Tax (STT) Selling or buying stocks listed on Indian stock exchanges is subject to the stocks Transaction Tax (STT). The Income Tax Department administers the tax, which was implemented in India in 2004. Depending on the transaction, the securities buyer or seller must pay the STT. The Government sets the tax rate, which is determined by the exchange shares market value. Alternate Minimum Tax (AMT) The tax rate for AMT is 18.5% of adjusted total income (plus applicable surcharge and cess). If the person is a unit located in an International Financial Services Centre (IFSC) and receives income solely in convertible foreign currency, the AMT rate will be 9%. From Assessment Year 2023-24, the rate of AMT is reduced from 18.5% to 15% in case of co-operative society.. AMT Provisions are applicable on Individuals, Hindu Undivided Family (HUF), Association Of Persons (AOP), Body Of Individuals (BOI) or an artificial juridical person when their adjusted total income exceeds Rs.20,00,000 and Every other person (other than an individual, HUF, AOP, BOI or artificial juridical person) irrespective of its income. Estate Tax According to the estate size or the amount of money a person leaves behind after passing away, the estate tax, sometimes called inheritance tax, is paid. However, India still needs to implement the concept of inheritance taxes. The inheritance or estate tax was abolished in 1985. Any property owned by a deceased individual will be passed on to that person's legal heirs upon their death. However, a gift is provided without demanding anything in return. Capital Gain Tax A direct tax known as capital gain tax is imposed on income derived from the sale of investments or other assets. Capital assets include interests in real estate, businesses, farms, stocks, and other financial instruments. Taxes might be categorised as long-term or short-term depending upon capital gain. Any assets sold within 36 months after the date of acquisition are subject to short-term gains. But these assets are not the same as securities. Long-term assets are assessed to see if any money can be generated from selling those owned for over 36 months. Long-term capital gain tax is imposed in such a situation. Service offered by Enterslice The top business and legal services supplier in India, Enterslice, provides a range of direct tax planning and compliance services. Among the direct tax services provided by Enterslice are the following: Tax planning: Enterslice offers complete services, such as investment planning, income tax planning, and tax-saving methods, to help individuals and corporations minimise their tax bills. Compliance with transfer pricing requirements is made possible by Enterslice, a service that carefully examines intra-group transactions to ensure they adhere to the arm's length principle. Resolving tax problems with the tax authorities: Enterslice assists individuals and corporations, including representation before the tax tribunal and appellate authority. To detect potential tax liabilities and hazards, Enterslice conducts thorough studies for firms planning to buy or combine with other enterprises. Overall, Enterslice provides various direct tax-related services to support people and businesses in adhering to tax rules, minimising their tax bills, and maximising their tax benefits. Direct tax advisory: Enterslice offers knowledgeable advice and direction to people and enterprises on a range of direct tax-related topics, including tax compliance, planning, and optimisation. To comply with numerous direct tax rules and regulations, including filing income tax returns and responding to tax audits and assessments, businesses and individuals can turn to Enterslice for assistance.
When the responsibility for paying the tax cannot be shifted from one person, business, or corporate organisation to another, the tax is considered a direct tax. Two of the most well-known categories of direct taxes are Income Tax and Corporate Tax. These taxes are paid directly to the relevant Government by the responsible taxpayer.
Direct taxes are a type of tax in which people and businesses' wealth, profits, and income are taxed directly. The Central Board of Direct Taxes (CBDT), a division of the Department of Revenue under the Ministry of Finance, oversees the collection of direct taxes in India. The categories listed below are liable to a direct tax on their real earned income.
A person as defined under the Income-tax Act under section 2(3) covers in its ambit natural as well as artificial persons
Hindu Undivided Families [HUFs], Association of Persons [AOPs], Body of individuals [BOIs], Firms, LLPs, Companies, Local authority and any artificial juridical person not covered under the definition
The Government collects direct tax during the entire fiscal year, from April to March of the following year. Sometimes, the Government collects direct taxes throughout the full fiscal year while giving taxpayers plenty of notice to boost and promote tax payments.
In India, there are different types of direct taxes imposed. Some of them are mentioned below –
The tax imposed on an individual's earnings is called income tax. This sum can be earnings, salaries, profits, etc. Based on an individual's earnings, income tax is due. The various tax slabs that the Indian Government establishes determine what portion of taxable income must be collected. Each year, the taxpayer must file income tax returns (ITR). People may receive a rebate or be obliged to pay taxes based on their ITR. Failure to file an ITR can result in harsh fines and even jail time.
The tax must be paid annually depending on who owns the properties and their market value. Wealth tax is when a person possesses assets that generate income. Depending on where they live, businesses, Hindu Undivided Families (HUFs), and citizens are all subject to wealth tax. Securities, including gold deposit bonds, stock investments, residential real estate, commercial real estate rented for more than 300 days, and residential real estate held for industrial and technological purposes, are all excluded from paying wealth taxes.
A corporate tax is a tax on the profits or net income of a corporation. Corporate tax is paid on a company's taxable income which includes company's revenue after deducting various kinds of expenses. Foreign companies are also bound to pay corporate tax on income earned in India.
Selling or buying stocks listed on Indian stock exchanges is subject to the stocks Transaction Tax (STT). The Income Tax Department administers the tax, which was implemented in India in 2004. Depending on the transaction, the securities buyer or seller must pay the STT. The Government sets the tax rate, which is determined by the exchange shares market value.
The tax rate for AMT is 18.5% of adjusted total income (plus applicable surcharge and cess). If the person is a unit located in an International Financial Services Centre (IFSC) and receives income solely in convertible foreign currency, the AMT rate will be 9%. From Assessment Year 2023-24, the rate of AMT is reduced from 18.5% to 15% in case of co-operative society.. AMT Provisions are applicable on Individuals, Hindu Undivided Family (HUF), Association Of Persons (AOP), Body Of Individuals (BOI) or an artificial juridical person when their adjusted total income exceeds Rs.20,00,000 and Every other person (other than an individual, HUF, AOP, BOI or artificial juridical person) irrespective of its income.
According to the estate size or the amount of money a person leaves behind after passing away, the estate tax, sometimes called inheritance tax, is paid. However, India still needs to implement the concept of inheritance taxes. The inheritance or estate tax was abolished in 1985. Any property owned by a deceased individual will be passed on to that person's legal heirs upon their death. However, a gift is provided without demanding anything in return.
A direct tax known as capital gain tax is imposed on income derived from the sale of investments or other assets. Capital assets include interests in real estate, businesses, farms, stocks, and other financial instruments. Taxes might be categorised as long-term or short-term depending upon capital gain.
Any assets sold within 36 months after the date of acquisition are subject to short-term gains. But these assets are not the same as securities. Long-term assets are assessed to see if any money can be generated from selling those owned for over 36 months. Long-term capital gain tax is imposed in such a situation.
The top business and legal services supplier in India, Enterslice, provides a range of direct tax planning and compliance services. Among the direct tax services provided by Enterslice are the following:
Enterslice offers complete services, such as investment planning, income tax planning, and tax-saving methods, to help individuals and corporations minimise their tax bills.
Compliance with transfer pricing requirements is made possible by Enterslice, a service that carefully examines intra-group transactions to ensure they adhere to the arm's length principle.
Resolving tax problems with the tax authorities: Enterslice assists individuals and corporations, including representation before the tax tribunal and appellate authority.
To detect potential tax liabilities and hazards, Enterslice conducts thorough studies for firms planning to buy or combine with other enterprises.
Overall, Enterslice provides various direct tax-related services to support people and businesses in adhering to tax rules, minimising their tax bills, and maximising their tax benefits.
Enterslice offers knowledgeable advice and direction to people and enterprises on a range of direct tax-related topics, including tax compliance, planning, and optimisation.
To comply with numerous direct tax rules and regulations, including filing income tax returns and responding to tax audits and assessments, businesses and individuals can turn to Enterslice for assistance.
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