Direct tax in india
Direct Tax in India
The tax levied on an organisation or individual’s income and wealth is a direct tax. The government of India imposes it. It’s a non-transferrable type of tax, which means that it cannot be transferred to another person or entity for return. CAAQ can guide you through challenges that are involved in them via consulting services.
We understand both types of taxes and their differences clearly. Our team has certified experts like chartered accountants, solicitors, and company secretaries to address your queries regarding direct taxes. We have hands-on experience in supporting national and international entities with our expertise and knowledge. You may contact us at any time for getting any kind of assistance in paying direct tax in India.
Types of Direct Taxes in India
Here, different types of direct taxes are payable by the natives of India. Let’s get to know them:
- Corporate Tax
The Indian Income Tax Act, of 1961 mandates paying taxes by indigenous and international entities to the government. The value of domestic entities that are apart from the shareholders is assessable under this tax. For international entities, it’s necessary to pay it to the government if its values appear here. It is applicable to its income, be it in the form of profits, interest, and authorities.
Typically, it covers the following taxes:
- Minimum Alternative Tax (MAT)
The government levies it on the zero-tax firms, whose accounts are maintained in accordance with the Companies Act.
- Fringe Benefits Tax (FBT)
It is applicable to fringe benefits, like drivers and maids, whose costs are decided by companies to their representatives.
- Dividend Distribution Tax (DDT)
It covers the domestic company’s dividend (either disclosed or classified) only that is provided to the shareholders. Foreign entities do not come under this law.
- Securities Transaction Tax (STT)
The income generated through taxable securities transactions is covered in the STT. It does not require any surcharge.
- Wealth Tax
This tax covers capital income. It does not matter whether your property is used for generating income. Even if it’s free or unoccupied, the owner of the property is liable to pay an annual wealth tax to the government. The current market value of the property defines how much you should pay. It is mainly concerned with people like Hindu Undivided Family (HUF) and corporate taxpayers. However, it does not cover everything. Its rules are not applicable to effective assets. Here are some examples:
- Stock holdings
- Gold deposit bonds
- Commercial complex properties
- House property for profession or business
- House property (paid for more than 300 days annually)
- House property for company or professional requirement
- Capital Gains Tax
Capital gains are concerned with the capital assets of an individual who owns them for personal use or investment. A company or business may also own a capital asset, which can be practiced for over a year, is not sold out, and is not exchanged during business operations. These assets can be machinery, vehicles, homes, shares, bonds, art, companies, farms, etc. It covers the benefits received from the sale of properties or assets, which can be short-term gains and long-term gains. Here is how it is computed:
Capital Gains = Sale Value – Purchase Value
The short terms gains can be the capital gains made within 3 years of purchase. Securities are free from this rule. If you have sold capital assets after three years, the income generated will be long-term gains.
Checklist of Documents
Do enclose a valid and complete list of these documents
- Photocopy of PAN card
- Photocopy o f 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.
Consult with CAAQ to quickly getting any solution regarding direct tax and compliance. We are available for assisting you with our expertise.