Tuesday, 18 September 2018

What is Tax?

                                     Tax system in India


 What is Tax?

The tax is the compulsory subscription to be deposited with the government treasury. The government needs money to run its economy, to run its economy. This money is collected from the public and it is used to provide facilities to the people.

Types of Taxes

Mainly there are 2 types of tax

1) Direct tax        2) Indirect taxes

Direct tax:

When the responsibility of tax trauma and tax collection falls on one person, then it is said to be a direct tax. For example: - Income tax person has to pay taxes if the person's income is more than the discounted limit.

Indirect tax:

When the responsibility of tax trauma and tax collection falls on different individuals, it is called indirect taxes. For example: - When a manufacturer prepares Rs 100 for an item, suppose the producer has to pay a 100 rupees excise duty, then the item will be Rs.200. If you have to pay 100 rupees for selling it in the shop then it will cost Rs 300. When the customer purchases the item from the shop it will be worth 300 rupees. Originally, the price of the goods was only 100 rupees but the excise duty and sales tax was recovered from the customer's 200 rupees.

Cess:

 Cess means tax on tax . For example: - Suppose someones income is Rs 300000. If the income-tax limit is 2.5 lakh, then the tax will be required to pay tax of Rs 50000 to 10% and Rs 5000. However, if the cess is levied, additional tax @ Rs. 5000 will be charged @ 3% plus tax of Rs. 150

Surcharge:

Surcharge is a tax on additional income. Surcharge is a tax on additional income. For example: - Suppose the surcharge limit is Rs. 1 crore. Suppose a person's income is worth 2 crores if I have deducted the tax-free limit of 2 lakh and taxed at 30% Besides, a surcharge of Rs 1 crore will be incurred on surcharge due to more than Rs 1 crore 98 lakh


Incom Tax

Income Tax  Slab Financial Year 2017-18

Individual Less Than  60 Years old

Income Tax Slabs

Tax Rate
Health and Education Cess
Income up to Rs 2,50,000*

No tax
Income from Rs 2,50,000 – Rs 5,00,000

5%
4% of Income Tax
Income from Rs 5,00,000 – 10,00,000

20%
4% of Income Tax
Income more than Rs 10,00,000

30%
4% of Income Tax













60 Years Old But Less Than 80 years old



Income Tax Slabs
Tax Rate
Health and Education Cess
Income up to Rs 3,00,000*
No tax
Income from Rs 3,00,000 – Rs 5,00,000
5%
4% of Income Tax
Income from Rs 5,00,000 – 10,00,000
20%
4% of Income Tax
Income more than Rs 10,00,000
30%
4% of Income Tax













For Senior Citizen 80 years old and more

Income Tax Slabs
Tax Rate
Health and Education Cess
Income up to Rs 5,00,000*
No tax
Income from Rs 5,00,000 – 10,00,000
20%
4% of Income Tax
Income more than Rs 10,00,000
30%
4% of Income Tax











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