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Direct Tax Rates
Direct Tax Rates
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A Direct Tax is a type of tax in which the impact and incidence of the tax fall on the same entity. The entity can either be a person or an organisation and the tax is individually paid by the taxpayer directly to the government. The responsibility of paying the tax rests with the entity and it cannot be passed on to another person or entity. These taxes are mostly levied on income and some of the most common examples include income tax, property tax, gift tax, corporation tax, etc. It is one of the most important sources of revenue for the government and it also helps in reducing inflation to a large extent.
Direct tax in India is generally of five main types and they include income tax, wealth tax, estate tax, capital gains tax and corporate tax. Income tax is levied on an individual’s age and earnings and there are different tax slabs based on which Income Tax Returns (ITR) can be filed yearly. Wealth tax is paid on an annual basis and it depends on the market value and ownership of properties. An estate tax is also known as inheritance tax and it is based on the value of an estate or the amount that a person has left after demise.
Capital gains tax is paid on income that is earned from an asset sale or investment. The definition of capital assets includes income from farms, shares, art, home, bonds and businesses. It can further be classified as short-term or long-term depending on the holding period. direct tax in India is also levied on domestic companies that make a profit and it is called the corporate tax. Foreign companies that generate income within India also have to pay this tax. Further, other taxes like dividend distribution tax, minimum alternate tax, securities transaction tax, etc. are also included under the corporate tax.
The direct tax rate differs and depends on the type of tax to be paid. In the case of Income tax, there are three types of slabs and that include people below 60 years, from 60 to 80 years and individuals beyond 80 years of age. The slab also varies as per the amount. Corporate tax rate varies between domestic and foreign corporations while wealth tax depends on the net wealth of assets.