A tax paid directly by an individual or organization to the government, where the burden cannot be shifted to another person. Examples include income tax, corporate tax, and capital gains tax.
Direct taxes are levied on income and profits and paid directly to the government by the taxpayer. In India, direct taxes are governed by the Income Tax Act, 1961 and administered by the Central Board of Direct Taxes (CBDT). Key types include: Income Tax (individuals), Corporate Tax (companies), Capital Gains Tax (asset sales), Securities Transaction Tax (STT), and Dividend Distribution Tax. Direct taxes are progressive — higher earners pay a larger percentage. They contribute about 55% of India's total tax revenue.
An individual earning ₹15,00,000 per year pays income tax under the new regime: 0% up to ₹3L, 5% on ₹3-6L, 10% on ₹6-9L, 15% on ₹9-12L, 20% on ₹12-15L. Total direct tax: approximately ₹1,50,000.
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Direct tax is paid by the person on whom it is levied (income tax, corporate tax). Indirect tax is collected by an intermediary from the consumer and paid to the government (GST, customs duty). The burden of indirect tax can be shifted.
Income Tax (for individuals/HUFs/firms), Corporate Tax (for companies), Capital Gains Tax (on asset sales), Securities Transaction Tax (on stock market trades), and Tax Deducted at Source (TDS) which is a method of collecting income tax.
A system of collecting income tax at the source of income, where the payer deducts a percentage of tax before making payment to the payee.
A comprehensive indirect tax levied on the supply of goods and services in India, replacing multiple earlier taxes like VAT, excise duty, and service tax.
A consumption tax levied on the value added at each stage of the supply chain, used in many countries worldwide including Ireland, UK, Australia, and the EU.
A financial statement that summarizes a company's revenues, costs, and expenses over a specific period to show net profit or loss.
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