India is one of the largest democratic countries of the world comprised of well structured taxation system. Ministry of Finance of Indian Government is the regulatory authority who managed and controlled the computation and collection process of taxes from the different income groups in the country. The authority of collecting taxes varies from one form of taxes to another. There are many types of taxes that are levied by local state bodies or by the government of different states in India.
Time to time the taxation system in India has undergone to the mode of review where the necessary amendments have been taken by the concern authority. Since independence, the whole structure of taxation department has changed in order to implement the strategy of better compliance, easy to pay taxes by different income groups and better enforcement. In past 25 to 30 years the taxation system of India has reformed to a large extend where it provides special attentions and allowances to the slab of taxation for low income groups and for women. Most of the taxes have got reformed where some of them have been simplified and many different taxes have been getting added to the slab.
As per the latest reinforcements in the taxation system of India; VAT has been implied to the slab of India taxation that needs to collect on the sales of the every product or services. Value Added Tax is levied by the state governments.
- Central Government levies taxes on service tax, income, custom duty and central excise.
- State government levies taxes on professional taxes, state excise, VAT and land revenues.
- Whereas third authorities levied taxes on daily utilities segments like drainage, water supply and tax on properties.
Under taxation system of India there are two types of taxes direct taxes and indirect taxes.Indirect taxes are comprised of :
- Excise Duty
- Customs Duty
- Service Tax
- Central Sales Tax
- Value Added Tax
- Income Tax - This income tax further categorize into two forms withholding tax, personal income tax.
- Corporate Tax - This form of tax further categorize into several taxes including corporate sector tax, minimum alternate tax, fringe benefit tax, dividend distribution tax
- Securities Transaction Tax
- Wealth Tax
- Capital Gains Tax