what are the different types of direct taxes?

Taxation is an important part of any country’s economy and in India, direct taxes constitute a substantial part of the government’s revenue.

Direct Tax is a type of tax where the incidence and impact are both on the same party. It is also known as Pay as you Earn (PAYE) or Pay as you go tax. This means that the entity paying the tax directly pays it to the government, and there is no involvement of any intermediary.

Direct taxes are compulsory tax and they are levied on fixed assets, salaries, profits and even assets.

What are the different types of direct taxes?

Some of the types of direct taxes that are prevalent in India are:

• Income tax

Income tax is a common term used in the country when referring to taxes that are levied on an individual’s income. Individuals pay taxes depending upon what the income level is and by how much it exceeds any specific threshold regarding the amount earned. The Income Tax Department determines the different slabs that take into account various factors like age of the taxpayer, income levels, tax deductions and credits. Depending on the rate of tax that is payable, one must file a return once a year. A refund can also be received depending on the status of one’s account. However, different penalties apply in cases where no returns are filed or incorrect returns are filed.

One important aspect of income tax is the TDS Your salary is paid to you by the employer and a certain amount of tax is deducted at source (TDS) from your salary. This means that before your employer pays you, they deduct a certain amount of tax from your salary at the source. You can look up TDS rate chart to find out about your deductions in detail. Visit this page for more info.

• Wealth tax

Your wealth tax payment is calculated on an annual basis, and it depends upon the size of your assets and their market value. Your wealth is taxable when you own a property, regardless of whether it generates revenue or not. Resident and non-resident individuals, HUFs and Hindu Undivided Families must pay wealth tax. The wealth tax has many exemptions. Some of these are for assets like gold deposit bonds, house property, stock holdings, and commercial property if it has been rented for more than 300 days. If you wish to earn money by selling your property you should learn about TDS on sale of property. See more.

• Estate tax

The estate tax is an inheritance tax and it is normally imposed on the recipients of distributions from estates, not on the estate itself. It is imposed by the local, state and federal governments. In some countries, it is also referred to as inheritance tax.

• Corporate tax

There are different types of taxes that can be imposed on a company. Corporate tax is one. It is imposed on the income earned by a company.

Owners of domestic corporations, not just shareholders pay corporate tax. Corporate tax will also be levied on foreign companies with income in India. Taxes must be paid on income earned from selling assets, fees for technical services, dividends, royalties, or interest if it is generated in India.