Seminar Topic Presentation for
A SEMINAR ON
Topic:“TAX STRUCTURE IN INDIA”
On
May 2024
Presented by :
Mr. BIJNANA SETHY
Registration No: 2206392021
Semester : 4th Semester MBA
Welcomes
SVIM, to Odisha
Bhubaneswar,
Organized by
Master of Business Administration (MBA)
Swami Vivekananda Group of Institutions, Bania
Tangi, Khordha , Bhubaneswar, Odisha India
INTRODUCTION
Taxes are an important and largest source of income for the government. The government
uses the money collected from taxes for various projects for the development of the nation.
The Indian tax system is well structured and has a three-tier federal structure.
The tax structure consists of the central government, state governments, and local
municipal bodies. When it comes to taxes, there are two types of taxes in India - Direct and
Indirect tax. The direct tax includes income tax, gift tax, capital gain tax, etc while indirect
tax includes value-added tax, service tax, goods and services tax, customs duty, etc.
The Central Government of India imposes taxes such as customs duty, central excise duty,
income tax, and service tax. The state governments impose income tax on agricultural
income, state excise duty, professional tax, land revenue and stamp duty. The local bodies
are allowed to collect octroi, property tax, and other taxes on various services like water
and drainage supply.
Types of Taxes in India
Taxation in India is majorly divided into Central and State Govt taxes with
two types of taxes:
[Link] Taxes
[Link] Taxes
While direct taxes are levied on your earnings in India, indirect taxes are
levied on expenses. The responsibility to deposit the direct tax liability lies
with the earning party, whether individual, HUF or a company.
Indirect taxes are collected majorly by the corporates and businesses
providing services and products. Thus, the responsibility to deposit indirect
taxes lies with these entities.
What is Direct Tax?
Direct taxes are imposed on corporate entities and individuals.
These taxes cannot be transferred to others. For individual
taxpayers like you, the most important type of Direct tax is the
income tax. This tax is levied during each assessment year (1st
April to 31st March). As per the Income Tax Act, 1961, it is
mandatory for you to make income tax payments if your
annual income is above the minimum exemption limit. You can
get tax benefits under various sections of the Act.
What are the Different Types of Direct Tax?
Direct taxes account for almost 50% of the government’s revenue
in India. However, income tax is not the only direct tax. Here are the types
of direct taxes applicable in India:
[Link] Tax
[Link] Gains Tax
[Link] Tax
Income tax applies to any income of an Individual and HUF except capital
gains and profits from business and profession. Income tax is calculated as
per the applicable slab rates for the Assessment Year.
The central government announces the slab rates in the annual budget.
You also have the provision to reduce your taxable income using the tax-
saving investments and expenses under section 80C.
What other Taxes come under Direct
Tax?
Individuals in India, earn an income in a diverse range. Therefore,
it is important to levy a tax on you based on your income and if
someone earns more, the tax percentage should be different. The
Income Tax Act segregates the income range and charges
different rates as per the segregation. The different groups are
known as tax slabs. Your income tax slab can vary not only based
on your income but also your age. Every year during the Central
Government’s Budget Session, amendments are made in the
income-tax slabs.
1. Capital Gains Tax
Capital gains tax apply to the profits from the sale of a capital asset only. The rate of tax on capital
gains depends on the type of capital gain. Income Tax Act, 1961 divides the capital gains tax into the
following two types:
•Short-Term Capital Gains Tax
•Long-Term Capital Gains Tax
Short-term capital gains are when the assets are sold within a specified period, for example:
[Link] stocks sold within 12 months of purchase
[Link] mutual fund units sold within 36 months of purchase
[Link] estate property or gold sold within 36 months of purchase
If the asset is sold after the specified period, the gains or losses will become long-term capital gain or
loss.
Depending on the type of asset your gain may receive indexation benefit on long-term capital gains.
Indexation allows you the benefit of inflation to your capital gains, reducing your tax liability.
Also Read: Capital gains accounts scheme
What are the Different Types of
Indirect Taxes in India?
in India have been the most consistent and largest revenue source for the government. The Indian tax system has
had multiple indirect taxes, some of these are still operational:
[Link] Tax
[Link] Excise Duty
[Link] Added Tax (VAT)
[Link] Duty
[Link] Transaction Tax (STT)
[Link] Duty
[Link] Tax
Few of the indirect taxes in India like service tax, value-added tax and excise duty have been removed for a large
number of goods and services. These taxes have been replaced by a single Goods and Services Tax.
Customs duty tax applies to the goods being imported into India from other countries, and in a few cases on the
goods being exported from India.
Securities Transaction Tax or STT applies to the transactions involving an exchange of financial securities. For
example, equity stocks, mutual fund units, future and options contracts. This tax is necessarily applied to securities
exchange transactions. However, you can also pay Stamp duty and STT on securities changing hands outside the
exchange or over the counter.
STT allows the buyers and sellers of securities to benefit from lower short and long-term capital gains taxes on the
exchange.
Stamp duty is a State Government levy on the transfer of assets within their territory.
What is Goods and Services Tax?
Goods and Services Tax or GST has been a consolidation of a complex web of indirect
taxes in India. Taxation in India can have three layers of levies – Centre, State and Local
Authority or Municipalities.
Before GST introduction in the Indian taxation system, the following indirect taxes could
apply to the goods and services in India:
[Link] Duty
[Link] Tax
[Link] Added Tax (VAT, State)
[Link]
[Link] Tax
[Link] Sales Tax (collected by State)
[Link] Tax
[Link] Tax (State)
[Link] Tax (State)
These interconnecting and often overlapping taxes posed many disadvantages and
conflicts for suppliers and manufacturers along with the government bodies.
Difference between Direct and
Indirect
Taxation in India hasTax
been divided into direct and indirect taxes based on their
application. Key differences between the two tax methods are as follows:
Direct Taxes Indirect Taxes
Applicable on income receipts Applicable on expenses or sale of goods and service;
i.e., adds to the outflow rather than reducing inflow
unlike direct taxes
Investment in specified instruments or spending on No rebate for the consumer. However, it could apply to
specified activities allow you to reduce direct tax on the sellers with turnover being the basis of it
income
Paid by the person receiving money directly to the Paid by the person paying money but collected by the
Government supplier
Three types of Direct Tax in India - Income Tax, Indirect Taxes in India include - GST, excise duty,
Corporate Tax and Capital Gains Tax customs duty and VAT
Exemptions on Tax Deduction
The tax deduction is a reduction of income that eventually lowers your tax liability. Deductions are
expenses that you incur during the year and it can be subtracted from your total income in order to
calculate how much tax you need to pay. There are many deductions that you can use to reduce
your total income. Here are some of the most commonly used ways for the tax deduction –
[Link] Rent Allowance
2. - If you have a rented accommodation, you can get the tax benefit under HRA. The amount
exempted can be totally or partially exempted from income tax.
[Link] Insurance Deduction
4. - If you have brought a medical policy, the premium you paid for the policy could save your tax as
the amount is deducted from gross income (up to a limit).
[Link] Coupons
6. - Some employers may provide you with food coupons such as Sodexo. Such meal coupons are tax-
exempt up to a certain limit. The yearly exemption for food coupons is up to Rs 26,400.
[Link] 80C, 80CC and 80CCD(1)
8. - This is the most popular option and you must already be using it to reduce your taxes. Under
this, you can reduce your taxable income by putting your money in tax saving investments.
Conclusion
In this article, we went through the
definitions and understanding of the Indian
tax structure, why it is necessary, what are
its types, and what is a direct and indirect
tax. We also looked at the features of the
Indian tax structure which told us what
problems are affecting the taxation in India.
We also looked at the types of taxes based
on the source of the taxpayer’s income and
THANK YOU ALL
