| India's tax collection structure is well divided and the | | | | deduced on the income earned and the kind of |
| central government, state governments and local | | | | investment made. There are many tax exemptions |
| bodies are responsible for it. The union governments | | | | investment, which is made on the basis on source of |
| collect income tax, central excise and service tax while | | | | income. The investors should have proper tax planning |
| the state governments levy taxes on land revenue, | | | | to avail these benefits. |
| VAT, stamp duty etc. The local bodies are responsible | | | | The income tax can be calculated with the help of |
| for water tax, octroi and many other taxes. | | | | income tax calculator. It calculate the taxable income |
| There are three broad classification of taxes, namely, | | | | by combining the income on the basis of salary, |
| ad valorem and specific taxes, indirect and direct | | | | allowances and incentives, capital gains and other |
| taxes and progressive and regressive taxes. An ad | | | | sources of income. For the fiscal year 2007-08, |
| valorem tax means the tax is imposed on the basis of | | | | income up to Rs 1, 10,000 per annum is exempted |
| total value of the commodity whereas the specific tax | | | | from such tax. For the income above this amount, |
| is the tax imposed on the basis of weight, quantities, | | | | there are various slabs. The additional charge of 10 per |
| size, breadth and width. | | | | cent is levied if the income crosses Rs 8, 50,000. The |
| Direct tax is imposed on someone and its burden is | | | | education cess of 2 per cent is added along with this |
| not shifted to another and borne by the person himself | | | | charge. |
| example income tax, corporate tax. Indirect taxes are | | | | In India, the amount of indirect taxes was very high |
| imposed on someone but whose burden can be | | | | compared to the direct taxes. In 1991, prior to tax |
| shifted to someone else example excise duty, sales | | | | reform, just 19 per cent of the taxes came from direct |
| tax and customs duty. | | | | tax while the percentage was 81 per cent from the |
| A Progressive tax is a tax under which as income | | | | indirect taxes. |
| goes up, the rate of tax will go up so as those earning | | | | The fact that in a country indirect taxes are |
| higher income ends up paying more. A proportional tax | | | | predominant against direct taxes suggest that burden |
| is a tax under which whatever be the income level, the | | | | of taxation falls more heavily on the poor people |
| rate of tax remains the same so that differences | | | | because indirect taxes are taxes on commodities. |
| between higher income and lower income is same | | | | But after tax reform based on Chelliah and Kelkar |
| before tax as it is after tax. | | | | committee recommendation, many of these |
| Every citizen should follow proper tax planning | | | | characteristics have been addressed to make the tax |
| practices. This means that he should pay his taxes as | | | | structure simple, broad based, reduce the multiplicities |
| well as makes proper investment and select right tax | | | | of taxes, reduce complexities of taxes and even plug |
| saving instruments. The tax that is to be paid is | | | | evasion. |