TYPES OF TAXES

Taxes

According to Prof. Seligman, taxes are defined as a compulsory contribution from a person to the government to defray the expenses incurred in the common interest of all without reference to special benefits conferred.

Types of tax

In modern times taxes are classified into two types. There are:
✓Direct Tax
✓Indirect Tax

Direct Tax

A Direct tax is paid directly by an individual or organisation to imposing entity.

A tax payer, for example, pays direct taxes to the Government for different purposes, including real property tax, personal property tax, income tax or taxes or on asserts.

Corporation Tax

It is levied on profit of corporations and companies. It is changed on royalties, interest, gains from sale of capital assets located in India, fees for technical services and dividends.

Wealth Tax

It is imposed on property of individuals depending upon the value of property. The same property will be taxed every year on its current market value.

Gift Tax

It is paid to the Government by the recipient of gift depending on value of gift.

Estate Duty

It is charged from successor of inherited property. It is not desirable to avoid payment of taxes. They are levied directly on income and property of persons, who pay directly to the government.

Indirect Tax

On the other hand when liability to pay a tax is on one person and the burden of that tax shifts on some other person, this type of tax is called an indirect tax. Indirect Tax is a tax whose burden can be shifted to others.

Service Tax

It is raised on provision of Service. This tax is collected from the service recipients and paid to the Central Government.

Sales Tax or VAT

It is an indirect tax on sale of goods because liability to collect tax is that of shopkeeper but the burden of that tax falls on the customer. The shopkeeper realizes the tax amount from the customer by including it in the price of the commodity that he sells.

Excise Duty

It is paid by the producer of goods, who recovers it from wholesalers and retailers. This tax in India is levied by the Central Government.

Entertainment Tax

The state government charge such tax on every transaction related to entertainment.

Some examples are movie tickets, video game arcades, stage shows, exhibitions, amusement parks, and sports-related activities.

Goods and Services Tax (GST)

Goods and Services Tax is a kinds of tax imposed on sale, manufacturing and usage of goods and services. This tax is applied on services and goods at a national level with a purpose of achieving overall economic growth. GST is particularly designed to replace the indirect taxes imposed on goods and services by the Central and State.

“It was only for the good of his subjects that he collected taxes from them, just as the Sun draws moisture from the Earth to give it back a thousand fold”
– Kalidas