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Direct Taxes: How to avoid being overtaxed

February 14, 2019 2218
In India, taxation is of two types: direct taxation and indirect taxation. As the name implies indirect taxation is the name given to the taxes paid by an individual to a different entity, which are then paid by that entity to the government. Taxes like GST, VAT, any retail taxes etc. come in this category. On the other hand, taxes that are levied by the government directly on the individuals or entities are referred to as direct taxes. Taxes like income tax, wealth tax and capital gain tax etc. come under the purview of direct taxes. Therefore, direct taxes are those that do not require any third-party intervention between the individual or the entity in question and the government.

Various direct taxes payable in India are:

  1. Income tax: This is the tax that an individual, business firm or HUF (Hindu Undivided Family) has to pay as the respective income slab they constitute. It is a mandatory tax and is levied on income in the form of salary, earnings from business, capital gains, etc.
  2. Wealth tax: This tax is levied on individuals, corporate establishments, HUFs on any earnings or profits from the ownership of property.
  3. Corporate tax: This is the tax that is levied on companies and foreign ventures on the earnings made in Indian geographical domain. Taxes like DDT (Dividend Distribution Tax), FBT (Fringe Benefit Tax) and STT (Securities Transaction Tax) come under the purview of corporate taxation.
  4. Capital Gains tax: This is the tax that is levied on the earnings made through investment instruments and related value holdings.

The governing body for direct taxation in India is the CBDT (Central Board of Direct Taxes). CBDT itself is a functioning body that comes under the supervision and regulation of the Revenue Department of the Finance Ministry of the Government of India. Central Board of Revenue Act, 1963 served as the turning point for direct taxation in India and CBDT came into being. CBDT mandates the rules, regulations and any updates regarding the way collection of direct taxes in India is done. Al the working procedures of the Income Tax department segments and the concerned officials responsible for financial audits vis-à-vis direct tax recovery, defaults, tax-evasion etc. are laid into effect by CBDT, under the Finance Ministry.

HDFC Life offers savings and investment plans that are aimed at helping your stay financially healthy at all times and securing the future of your loved ones. For details, click on the mentioned link: https://www.hdfclife.com/savings-investment-plans.

 

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