Taxation in India is governed by a comprehensive set of laws and regulations that cover both direct and indirect taxes. These tax laws play a crucial role in generating revenue for the government and ensuring compliance by individuals and businesses. Indian Taxation regime is divided in Direct and Indirect Tax.

DIRECT TAXATION:

1. Income Tax: The Income Tax Act, 1961, governs the taxation of individuals, Hindu Undivided Families (HUFs), and companies. It covers the assessment, calculation, and collection of income tax on various sources of income, such as salaries, business profits, capital gains, and more.

2. Corporate Tax: The tax laws prescribe the rates and regulations for the taxation of domestic and foreign companies operating in India. The Finance Act determines the corporate tax rates and provisions for deductions, exemptions, and tax incentives.

3. Wealth Tax: Wealth tax has been abolished in India. It used to be levied on individuals and HUFs with net wealth exceeding a specified threshold.

4. Capital Gains Tax: Capital gains tax is imposed on the profits earned from the sale of capital assets, such as real estate, stocks, or other investments. The tax rates and exemptions depend on the holding period and nature of the asset.

INDIRECT TAXATION

Goods and Services Tax (GST): Introduced in 2017, GST is a comprehensive indirect tax levied on the supply of goods and services across India. It replaces various indirect taxes, such as excise duty, service tax, VAT, and more. GST has different rates for different goods and services and is administered by the Goods and Services Tax Council.

  1. Customs Duty: Customs duty is imposed on the import and export of goods. The Customs Act, 1962, governs the levy and collection of customs duty. The rates vary based on the nature of goods and trade agreements between India and other countries.
  2. Excise Duty: Excise duty is levied on the manufacture and production of goods in India. It is imposed under the Central Excise Act, 1944, and the rates are determined by the Central Government.
  3. Service Tax: Service tax, which was subsumed under GST, used to be levied on the provision of specific services. It covered a wide range of services, and the rates were determined by the Finance Act.