One of the many upsides of being a part of a well-governed country is that you have a said number of rights and an equal, if not more, number of duties. Of all these duties, the most crucial one that working professionals are introduced to the moment they start earning is the concept of taxes.
Let’s take a quick look at the different types of taxes in India one must pay:
As simple as the word sounds, almost many are still puzzled about what is property tax. Each property is a taxable asset. Property tax in India is an annual amount that is paid to the government, depending on the governing authority’s rules.
While property tax is a vague term, one must ascertain the real meaning of it while filing their taxes. A property is any tangible real estate which could include homes, office buildings, rented houses, commercial buildings etc. Even bare land, without any construction is subject to certain amount of taxes. While property tax in India is levied across the country, there are certain minor tweaks in different regions depending on the governing authority there. While calculating property tax in Mumbai, assessment is carried out on location of the property, the occupancy status- self-occupied or rented out, type of property. Whereas, if we conduct a calculation in Delhi, the property tax is determined based on the type of location, type of construction and amenities available around. The Chennai system of determination is a little different. To calculate property tax in Chennai, one estimates the annual rental value of the property by multiplying the plinth area of the property with the base price of the locality and further multiplies it with 10.92, the common factor. Hence, different cities have various ways of calculations.
However, an important piece of information is that you can deduct your property taxes on your annual tax returns, if and only if you are the owner of the property.
Personal Income Tax
According to the new tax rules applicable from the current financial year, i.e, 2017-2018, there are certain changes that one must keep in mind. Firstly, the tax rate slab has been reduced for those earning between 2.5 Lakhs – 5 Lakhs from 10% to 5%. This comes as a huge relief for those who are just starting their career and who could benefit from this tax rebate. A tax saving of Rs. 12,875 is a massive saving for someone earning in that bracket.
One must be informed that income taxes are the only source of income for the state and local governments and the taxes you’ve paid will only help in providing you better civic and infrastructure amenities. Those public schools, roads and bridges are all coming from your tax money. Now doesn’t that make you feel proud?
In case you are looking at minimizing the tax levied, you can check some ways that can help with tax deductions. These include, student loan interest, medical expenses, house rent etc.
Expenditure Tax Act
Introduced in the year 1987, the expenditure tax act, as the name suggests is about the taxes that are levied on your consumption expenses, be it restaurants, groceries and shopping items. These taxes are levied across the country expect in Jammu and Kashmir.
There aren’t too many ways for one to minimize these taxes except keeping a tab on your monthly expenditure. Best way to go about it is create a budget for yourself and stick to it, that way at the end of the financial year the taxed amount won’t come across as a shock.
Securities Transaction Tax
Trading in stock market and securities might seem like a great way to grow your savings but this is not devoid of taxes. Trading stocks at times helps you with substantial gains which can be considered as a source of income, hence to keep this under check securities tax are levied against each sale or purchase of the shares.
Goods and Services Tax
While so much has already been said about this, it is imperative that this still be mentioned since it is one of the most important taxes today. This tax has superimposed many other now-redundant taxes. The GST is a consumption-based tax that is applied on the various value-added services and goods at different points in the supply chain.
While these are some of the most important types of taxes in India, one must keep in mind, there are few more taxes that are levied all across the country.
These are as follows:
- Capital Gains Tax
- Interest Tax Act
- Perquisite Tax
- Corporate Tax
- Wealth Tax Act
- Gift Tax Act
- Value Added Tax
- Sales Tax
- Service Tax
- Excise Duty
- Custom Duty and Octroi
- Swachh Bharat Cess
- Krishi Kalyan Cess
- Professional Tax
- Entertainment Tax
- Stamp Duty, Registration Fee, Transfer Tax
- Infrastructure Cess
- Education Cess/Surcharge
- Entry Tax
- Road Tax and Toll Tax
While the list might seem long and exhaustive, one must never be bogged down by the amount of taxes the government charges. The money collected in the form of tax is used for the country’s development and to raise the standard of living. Hence, indirectly it is being used for your own good. As the end of another financial year is nearing, one must make a good start to the new year by filing taxes the right way.