As a responsible citizen, it is important that we remain aware of the different types of taxes and pay the ones we are liable to pay. Income tax and wealth tax are both forms of direct taxation.
Wealth tax is imposed on individuals who belong to the richer section of the society and to ensure high earning entities pay higher taxes. Individuals, HUF (Hindu Undivided Family), and companies were charged 1% on earning of over Rs 30 lakhs.
Residents Indian were liable to pay wealth tax on their global assets, whereas NRIs were to pay the wealth tax only for assets held in India.
However, the wealth tax was abolished by Finance Minister Arun Jaitley during the Union Budget 2016-2017, as mentioned in Tax Guru. The tax was replaced with an additional surcharge to ensure that the tax loss is compensated.
It is applicable to individuals, HUF (Hindu Undivided Family), and companies who fall in the High Net-Worth (HNI) category which is defined by above Rs 1 Crore income for individuals and Rs 10 crores or higher for companies.
This was done to ensure simple tax procedures, easier taxation system, reduce administrative reporting, improve reporting, and widen the tax base.
Income Tax is the tax that you need to pay if you have an income above the permissible limit of exemption.
As per the Indian Income Tax Act; Individuals, Hindu Undivided Family (HUF), local authorities are a few entities liable to pay income tax as per their respective tax bracket.
The income range and the tax bracket are and can be modified by the Finance Ministry during the annual budget.
The taxpayers are liable to pay income tax and also have the privilege to claim deductions and rebates as per the rules & regulations of the Income Tax Act. Deductions can be claimed against the amount invested in pension schemes, the amount spent on medical insurance, and various other provisions. Companies and firms do not pay income tax but are liable to pay corporate tax of 22 per cent plus applicable surcharges.
The amount of income tax individuals have to pay on income changes based on the age of the taxpayers.
Senior citizens and super senior citizens (80+ years) are provided higher tax slabs. Income Tax is also collected as TDS, TCS, and by voluntary payment made by the taxpayers. Income Tax is a form of direct tax that is levied by the government. Any form of income is added to the total income of the taxpayer.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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