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Direct Tax in India

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Direct Tax: An Overview

Direct taxes are usually collected from individuals or organisations and paid directly to an oppressive institution, like the government of India, based on an individual's income and wealth. This type of tax cannot be transferred to another person or entity for a refund by the in-question person or company. Wealth tax and income tax are two instances of direct taxes.

Residents of India are subject to both direct and indirect taxes from the Indian government. Direct taxes, such as income tax, cannot be transferred to another person; instead, each person is responsible for paying them directly to the Indian government. Direct and indirect taxes both play important roles and are crucial components.

Types of Direct Tax in India

Income Tax

Income tax is a fee that must be paid, depending on an individual's age and income. The amount of income tax that must be paid is decided by the Government of India's various tax slabs. Every year, the taxpayer is required to submit income tax return (ITR). Depending on their ITR, individuals can be eligible for a refund or might have to pay taxes. People who fail to file an ITR face severe consequences.

Wealth Tax

This yearly payment is based on the ownership of the real estate and the property's market value. Regardless of whether a person's property produces an income or not, wealth tax must be paid if they own it. Depending on where they live, corporations, Hindu Undivided Families (HUFs), and private taxpayers all have to pay wealth tax. Assets like gold deposit bonds, stock holdings, residential property, commercial property rented for more than 300 days, and residential property used for a business or profession are excluded from paying wealth tax.

Estate Tax

Often known as inheritance tax is paid based on the number of assets a decedent leaves behind after passing away.

Corporate Tax

Domestic businesses must pay corporate tax, excluding shareholders. Foreign businesses that earn money in India must also pay corporate tax. Income that is based in India and is derived from the sale of assets, technical service fees, dividends, royalties, or interest is taxable. The types of corporate tax include Minimum Alternative Tax (MAT), Fringe Benefits Tax (FBT), Dividend Distribution Tax (DDT), and Securities Transaction Tax (STT).

Common Documents Required for Direct Tax

  • Photocopy of PAN card
  • Copy of Aadhar Card
  • Bank account number with IFSC
  • TDS (Tax Deducted at Source) certificates like Form 16, 26AS, 16A, etc.
  • Tax payment challan for self-assessment or advance tax returned by you.

FAQs on Direct Tax in India

Three subsections are used to classify tax deductions under Section 80CCD: Contribution of the Employee according to Section 80CCD(1): a maximum of 10% of employee salary or 20% of gross annual income (for self-employed individuals). The maximum is ₹1.5 lakh (aggregate of 80C, 80CCC, and 80CCD)
It is extremely time-consuming. But, you can always seek assistance from a third party who will make the process easier for you by filing taxes. Vakilsearch has the best lawyers in town who can help you with the same.
An evaluation year is a 12-month period that runs from April 1 through March 31 of the following year.
You can invest in the National Pension Scheme or the Atal Pension Yojana if you want deductions that go beyond the maximum allowed by Section 80C. The Income Tax Act's Section 80CCD (1B) allows for deductions of up to 50,000 for contributions made to these plans.
While income and earnings are subject to direct taxes, products and services are subject to indirect taxes. The fact that direct taxes are paid to the government immediately, but indirect taxes from end-consumers are typically handled through an intermediary, is a significant distinction between direct and indirect taxes.

Why Vakilsearch?

Do you think tax filing is easy? For an individual, tax filing without making any errors is a time-consuming task. But at this point, Vakilsearch can step in and make it easier with India’s best legal experts.

The process will be quick, transparent and done within the given time frame at the most affordable rates.

Experience the seamless process at Vakilsearch and never be stressed over the hassles of direct taxes again!

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