TYPES OF TAXATION IN INDIA: Direct, Indirect, and Their Economic Impact

This presentation explains the different types of taxation in India, including direct and indirect taxes, their structures, revenue significance, policy implications, and effects on individuals, businesses, and economic growth, with real-world examples and case studies.

1. Types of Taxation in India

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2. CONTENTS

回 Direct Taxes [02] Indirect Taxes

Other Taxes

3. Direct Taxes

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4. Income Tax

Sources of Income

Sources of income include
salaries, house property,
business profits, capital gains,
and income from other sources
like interest and dividends.

Tax Slabs

Tax slabs are the ranges of
income that are subject to
different rates of taxation,

typically categorized into basic,

higher, and top rates.

Deductions

Deductions are specific
expenses or allowances that
reduce the total taxable
income, including investments
in certain schemes, medical
insurance, and home loan
interest.

5. À Corporate Tax

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Domestic Companies

Domestic companies are subject to a specitic tax rate on
their profits, with variations for small, medium, and large
enterprises, including rebates and incentives.

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Foreign Companies

Foreign companies are taxed on income that is received or
deemed to accrue in the country, with different rates and
rules compared to domestic companies.

6. Wealth Tax

01

Applicable Assets

Applicable assets include property, jewelry,
vehicles, bank deposits, and financial
investments, which are evaluated for wealth tax
purposes.

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Calculation Method

The calculation method for wealth tax involves
assessing the market value of applicable
assets and subtracting allowable liabilities to
determine the net wealth.

7. Indirect Taxes

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8. CGST

Central Goods and Services Tax levied by the
Central Government on intra- state supply of
goods and services, aimed at creating a unified
tax market.

SGST

State Goods and Services Tax imposed by State
Governments on the supply of intra- state goods
and services, complementing CGST for revenue
sharing.

À Goods and Services Tax (GST)

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IGST

Integrated Goods and Services Tax charged on
inter- state transactions of goods and services,
serving as a mechanism for seamless input tax
credit across states.

Rates and Structure

GST rates are categorized into different slabs5%,
12%, 18%, and 28%, depending on the type of
goods and services, ensuring a structured
approach.

9. Customs Duty

Exports

Duties on exports are less common but can
be imposed on certain goods to regulate
domestic supply, contro! inflation, or
comply with international agreements.

Imports

Customs duty on imports is levied to
regulate the entry of foreign goods, protect
domestic industries, generate revenue, and
manage trade policies.

Exemptions and Reductions

Various goods might receive exemptions or
reduced custom duties under specific
conditions, such as trade agreements or to
stimulate certain economic activities.

10. Other Taxes

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11. Property Tax

Calculation Method

Property tax is calculated based
on the assessed value of the
property, which includes the land
and any structures on it, using

local tax rates.

Applicable Authorities

Property taxes are administered
by local government authorities,
including municipalities, counties,
and special taxing districts, which
set tax rates and collect
payments.

12. X Professional Tax

Salaried Individuals

Salaried individuals are required to pay
professional tax, which is deducted by their
employers from their salary according to
state- specific slabs and regulations.

Self-Employed

Self- employed individuals must register and
pay professional tax independently, based on
their annual income and applicable state
laws.

13. \ Stamp Duty

Rates and Exemptions

Transactions Covered
The rates of stamp duty vary by state and
transaction type, with certain exemptions available
Stamp duty is levied on legal documents such as for specific categories like charitable institutions or
property sales, mortgages, leases, and other government transactions.

transactions requiring official recognition and
registration.

14. X Entertainment Tax

Applicable Events

Entertainment tax applies to events involving commercial
entertainment, such as movie screenings, sports events, and
concerts, to support cultural and entertainment activities.

Rates and Collection Methods

The rates for entertainment tax are set by state governments,
collected through ticket sales or event organizers, and may vary
based on event type and location.

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