What is Tax? Types of Tax

To run a nation judiciously, the government needs to collect taxes from eligible citizens; Paying taxes to local government is an integral part of everyone's life, no matter where we live in the world. Now, taxes can be collected in any form such as state tax, central government tax, direct tax, indirect tax, and more. For our ease, let us divide the types of taxation in India into two categories, ie. Direct tax and indirect tax. This separation is based on how the tax is being paid to the government.

• What are taxes and its types?

A tax is a mandatory fee or financial charge levied by any government on an individual or organization to collect revenue for public facilities that provide the best facilities and basic facilities. The collected funds are then used to fund various public expenditure programs. If someone fails to pay taxes or refuses to contribute for it, it will invite serious effect under pre-determined legislation.

• Type of tax

Whether it is an individual or any business / organization, everyone has to pay the respective taxes in various forms. These taxes are further sub-classified into direct and indirect taxes, similar to the way they are paid to the taxation authorities. Let us go deeper into both types of tax in detail:

• direct tax

• The definition of direct tax is hidden in  its name which implies that this tax is paid by the government directly by the taxpayer.
• Common examples of this type of tax in India are income tax and wealth tax.
• From the government's point of view, it is relatively easy to estimate tax income from direct taxes because it is a direct relation to the income or wealth of registered taxpayers.

Indirect tax

• Indirect taxes are slightly different from direct taxes and the collection method is also slightly different. These taxes are consumption-based which apply to goods and services when they are bought and sold.
• Indirect tax payment is received by the government from the seller of goods / services.
• The seller, in turn, passes the tax to the end-user i.e. the buyer of the good / service.
• Thus this name does not pay the tax directly to the end user of the good / service as indirect tax.
• Some common examples of indirect tax include sales tax, goods and services tax (GST), value-added tax (VAT), etc.

What is Income Tax?

This tax have to pay by eligible citizen in every year to the government. The government use this money to gross and development for our country.

Income tax assessee

Any person who is liable to file tax and falls in the income tax slab payable is an income tax assessee. A person with regular income is exempted from paying tax if his annual income is less than the limit fixed by the government from time to time or income from exempted sources like agriculture.

Not all individuals will pay the same amount of tax as previously mentioned; The general rule is - the higher your income, the higher the amount of tax you will get. To ensure that tax rates and regulations are reasonable rather than uniform, the government uses income tax slabs to determine the rate at which each individual tax assessor is liable to pay income tax.

Income tax deduction

Citizens with a taxable income of more than Rs. Ab 2.5 lakhs are liable to pay income tax as per their applicable slab. However, there are some tax saving options such as ELSS, mutual funds, PPF, EPF, tax saver fixed deposits, and others that can be used to reduce the income tax payable by the individual. Most of these tax saving schemes are available under Section 80C and 80D of the Income Tax Act, 1961.

Section 140A (1): If an assessee fails to pay taxes, it is partially or fully on the amount of interest, then it will be treated as a defaulter. The Assessing Officer may impose a penalty equal to the arrears as per Section 221 (1).

Section 271 (C): If an assessee does not disclose real income or earnings, a penalty of 100% to 300% in this section may be imposed on the defaulter.

Sections 142 (1) and 143 (2): Under these sections, an income tax notice is sent to the defaulter and if he does not respond to it, the Assessing Officer asks the assessee to file the return or furnish all the details. Can. Of assets and liabilities in writing.