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Taxation

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Overview for Taxation

You must have listened word ‘taxation’ many times, but do you know what does it actually mean. Taxation is a system initiated by the Government or taxing authority. Government and taxing entity enforces tax on citizens and business bodies in India.

What Do You Understand by Taxation? 

The Union and State government define the taxes in India. The state and central governments have initiated different reforms and taxation approaches from the past couple of years.

These reforms increase the country’s GDP income and provide convenience to the taxpayers. In the last few years, a tremendous reform is the Goods and Services Tax (GST) that makes the taxation system easy to sell and release services and goods in India.

Tax Structure in India

In India, the tax structure is categorized into two parts.

Direct Tax

Indirect Tax

Direct Tax: As the name indicated, this task is enforced on a taxpayer directly, and the taxpayer must pay the tax to the Government. Most importantly, a person cannot appoint or pass another individual to pay the taxes on his place.

The superlative tax entities in India impose direct taxes on persons and organizations.

Here are some direct tax examples that are enforced to the Indian Taxpayers

Income tax-

• The tax is pertinent to the income generated by a person or taxpayer.
• Corporate tax- The tax imposed on the profits generated by the organizations through their commercial trades.

Indirect Tax: The tax is not applied on the income, benefits, revenue or profits, and instead of these, it is applicable on goods and services procured by a person or taxpayer. Contrary to direct taxes, indirect taxes can be transferred from one person to another. Previously indirect taxes are customs duty, central excise duty, value-added tax (VAT), service tax and sales tax.

Value Added Tax (VAT) – A tax that was applicable on sold goods in the state. The Government determines the rate.

Octroi Tax – Goods that relocate from one state to another are taxable through Octroi Tax. The state government defines the rates.

Service Tax– Government enforce the tax on services or service providers

Customs Duty– The tax applicable on the goods, services or any articles is imported from the aboard to India.

But with the enforcement of the Goods and Service tax from 01 July, 2017 has changed all types of indirect tax compelled on goods and services by the state and central governments. GST has tremendously decrease physical intervention but also reduce the compliance cost with the indirect taxes amalgamation.

GST has replaced several taxes that include:-

• Purchase Tax
• Service Tax
• Entertainment Tax
• Central Excise Duty
• Sales Tax
• Octroi

There are three components of GST. 

CGST: CGST refers to Central Goods and Services, and the Central Government collects them on an intrastate distribution of services and goods.

SGST: SGST refers to State Goods and Services Tax. It is the subject of State government because state government accumulates this tax an intrastate distribution of services and goods.

IGST: IGST means Stands for Integrated Goods and Services Tax. The central Government amasses this for the inter-state transaction of services or goods.

Which are Tax Collection Entities? 

There are three entities in India for tax collection that have correctly mentioned the terms and conditions; they are allowed to collect the taxes.

The Central Government will collect central excise duties, customs duties and income tax.

The State Governments will collect stamp duty, VAT, GST, state excise duty, professional tax, and tax on agricultural revenue.

Local authorities: Water tax, property tax, taxes on small services

Other Government Entities

For a flexible application of the Indian tax structure, there are authorities devoted to that. They are commonly called revenue authorities.

CBEC: CBEC stands for The Central Board of Excise and Customs, which functionalize the strategies concerning impose and collecting central excise duties, customs and service tax.

CBIC:  After GST Act, starting and application, The CBEC was replaced as the Central Board of Indirect Taxes & Customs (CBIC). The core duty of CBIC is to help the government decision making and policy generation subjects linked to GST.

CBDT: CBDT is an acronym of The Central Board of Direct Taxes is a portion of the revenue department that falls under the Ministry of Finance. It has dual responsibility. Firstly recommends essential concepts, ideas and suggestions for policy and planning in reference to direct tax in India. Secondly, it helps the income tax department in administration direct tax management.

Different Benefits of Taxes:

Every taxpayer is eventually cooperating on the country’s development in terms of economic growth. You may not feel happy to pay tax, but it is essential for you personally as well as for the country.

Taxpaying is not only helping you save but also boost investment. If a person has different investments, a portion of the same amount gets a tax rebate allowing that person to pay concessional tax payments.

When you pay taxes, it means you are a responsible citizen of India, and you are regular in filing your tax return. It boosts your credit score and helps you get quick loan approval. The bank asks for evidence of applicants filing returns regularly to approve the loan.

CSFiling Online Offers Regular Assistance on Taxation and Tax Filing 

We are a leading and experienced accounting and tax consultant in Delhi and across India. Our group of certified chartered accountants and company secretaries are always dedicated to provide accurate services.

We understand India’s hierarchy, management, discipline, pattern, rules, and regulations of tax payment. Hence you can trust us for a seamless taxation system and payment.

Tax return filing has specific dates, and we give reminders to our clients so they can pay taxes on time and save them from late fees and penalties.

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