Description of various types of taxes in India

  • Direct Tax: This tax is imposed directly on taxpayers and is required to be paid to the government. It cannot be passed or assigned by an individual to another person. For example, Income tax, is the tax applicable on the income earned by an individual or taxpayer, or corporate tax, is the tax applicable on the profits earned by companies from their businesses.

It is levied based on the government’s Income tax slabs, which are revised from time to time. Not all individuals shall pay the same amount of tax; the general rule is – the higher your income, the higher amount of tax you will have to pay

The tax is levied not on the income, profit, or revenue but on goods and services used by the taxpayer. Unlike direct taxes, indirect taxes can be shifted from one individual to another.

Earlier, the list of indirect taxes imposed on taxpayers included service tax, sales tax, value-added tax (VAT), central excise duty, and customs duty. However, with the implementation of the goods and services tax (GST) regime from 01 July 2017, it has replaced all forms of indirect imposed on goods and services by the state and central governments.