When people hear the term "income tax", they generally think about the direct taxes they pay to the government, usually in the form of TDS. This income tax is paid every year and is based on the income slab of the taxpayer. There are also many different types of income tax returns which the taxpayers are required to submit to get their returns assessed by the IT department and receive the refund if any. However, apart from this standard income tax, you are also required to pay taxes on your income in other different ways.

Here is a list of 3 various kinds of income taxes-

1. Wealth Tax

If you want to know about the different types of income tax, start with the wealth tax. It is a type of direct tax which you are required to pay if you own any kind of property, irrespective of whether your property is earning any sort of income.Wealth tax is levied on individuals, companies, HUFs (Hindu Undivided Families) and the tax liability is as per the residential status.

2. Corporate Tax

As per the IT Act of 1961, national as well as international corporate organisations are also required to pay corporate tax. This tax is levied on domestic companies that exist as separate entities from the shareholders. Even the foreign companies which earn or are deemed to earn income in India are required to pay corporate tax.The corporate tax also includes other income tax types such as FBT (Fringe Benefits Tax), MAT (Minimum Alternative Tax), STT (Securities Transaction Tax), and more.

3. Capital Gains Tax

Another type of income tax in India is capital gains tax. It is a tax which is imposed on any income that is derived from the sale of assets or investments. This includes property, cars, machinery, businesses, art, bonds, and shares. It applies to individual taxpayers as well as businesses. Depending on how long you held the investment or asset, you will be required to either pay short-term capital gains (STCG) tax or long-term capital gains (LTCG) tax.

Nations Are Made When Taxes Are Paid

The income tax or direct tax that the government collects is used for national development. Thus, it is essential for every taxpayer to pay the applicable taxes every year. Understand the different types of ITR and income taxes in detail to avoid any confusion and ensure that your taxes are correctly paid on time. Non-payment could result in severe penalties and prosecution.

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DISCLAIMER

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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