Evading direct tax is equivalent to avoiding your social obligations!
You can pay taxes to the Indian government directly by paying a direct tax. Direct taxes are assessed on all people and businesses, regardless of whether you are an employee, self-employed, or an entrepreneur. Citizens have been subject to direct taxes of some kind from the beginning. And it has changed dramatically over time. In this article, let’s examine what a direct tax is, its many forms, advantages, tax rates, and how it differs from an indirect tax.
Why Do You Use the Term “Direct Taxes”?
A direct tax is one that you pay to the government directly as a person or business. The direct tax includes personal property taxes, real estate property taxes, income taxes, asset-based taxes, and more.
Major Direct Tax Types
The following are the most significant direct tax types:
Your age group and whether you are employed are the two main determinants of your income tax. The Indian government uses that method to determine how much you must pay. Additionally, you must submit an Income Tax Return (ITR) each year. ITR filing is crucial since it enables you to get TDS refunds and informs you of the amount of tax you will (if any) owe despite your investments.
Tax on Capital Gains
You must pay it as a type of direct tax whenever you get money from selling any asset or property, including farms, bonds, shares, businesses, residences, works of art, etc. Long-term capital gains taxes, or LTCG and STCG, and short-term capital gains taxes, or STCG and LTCG, respectively, are based on how long a property, asset, or investment is held. Short-term gains apply to any asset purchased at the time of sale and sold within a 36-month window. If the revenue is derived from the sale of real estate, LTCG is due. However, for the deal to qualify as a long-term capital gain, the property must have been owned for 36 months. For accuracy in capital gain tax, you may consult a direct taxation company in Pune to ease your taxation part.
Corporate tax payment is required of all foreign and Indian businesses that profit from the Indian market. In India, taxes must also be paid on any income derived from the sale of real estate, assets, fees, dividends, or interest-based income.
Interest Rates for various Direct Tax Types
The interest rates for the various direct tax kinds are listed below:
Every business, local or foreign, is required to pay the government in direct taxes. Let’s examine the corporation tax rates for certain firm revenues.
Direct taxation of domestic businesses
The corporation tax imposed on the firm is 25% if its annual revenue is less than 250 crores rupees. However, corporation tax is charged at 30% if the sales exceed Rs. 250 crores.
If a person’s income is between Rs. 1 crore and Rs. 10 crores, a tax of 10% of the taxable income is also applied. 12% tax is used whenever a company’s taxable revenue exceeds Rs. 10 crores.
CESS is calculated as 4% of corporation tax.
Tax on Capital Gains
Short-term capital gains are subject to taxation according to the standard tax slabs. Long-term profits are subject to a 20% tax if the capital tax gain is computed, taking indexation advantages into account.
Additionally, 10% tax is applied to long-term gains if the Capital Gain Tax is computed without taking this advantage into account.
Interest Rate on Income Tax
The amount of income tax is determined by the person’s age and income. The Indian government has developed various tax slabs based on these identical criteria. However, there is no income tax or cess imposed on:
- Those with annual incomes under Rs. 2.5 lakh.
- Seniors (above 60) with an annual gross income of Rs. 3 lakh.
- Super old adults (above 80) make Rs. 5 lakh in gross income.
This is the basic information one needs to know while calculating the taxation for a financial year. The team of Direct Taxation in Pune will help you out with tax-related issues and guide you in the best possible manner.