Direct tax
Direct taxes are levied on an individual’s income and are paid for by the person upon whom they are levied.
Merits of Direct Taxes:
- a. It is more progressive and places a strong emphasis on equity.
- b. It has higher elastic properties.
Demerits of Direct Taxes:
- It is more likely to evade.
- It is a burden for tax payers.
- Direct taxation cannot be used to reach the low income group.
Types of Direct Tax:
a. Income Tax
With the Income Tax Act of 1961, income tax became a reality. This Act establishes all income tax laws and regulations. Any income you generate through profits, assets, salaries, investments, or a business is subject to income tax. The Income Tax Act of 1961 has provisions that allow taxpayers to get tax advantages from fixed deposits and insurance premiums.
b. Gifts Tax
The gift tax was first enacted in 1958, and it was renewed in 2004. According to the statute, every gift or present you get for more than Rs. 5 lakh would be subject to a 30% tax. Gifts from a spouse, family, parents, or blood relatives are exempt from the tax.
c. Wealth Tax
Individuals, Hindu Undivided Families (HUFs), and corporations are all subject to the wealth tax. For example, If your personal wealth exceeds Rs.1 crore, you’ll have to pay a 12% fee. Businesses with a revenue of more than 10 crore rupees are subject to property tax..
d. Long-Term Capital Gains
Hackable income is taxed at 0%, 15%, or 20% depending on the long-term capital gains rate. The tax rates are 0%, 15% (depending on the long-term capital gains rate), and 20% for hackable income.
e. Capital Gains on a Short-Term
The sale, transfer, or disposal of a personal or investment asset results in a short-term financial gain. When an investment, such as a stock, is sold after a year or less, it is referred to as short term capital.
Types of Taxes
India is a democratic, socialist, and republican nation. The supreme law of the nation in India is the Constitution. The Indian Constitution is supreme over all other laws, including the Income Tax Act and the Central Goods and Services Tax Act. According to the Constitution, “no tax shall be imposed or collected unless by Authority of Law”.