What is tax, types of tax.:- StudySpot02

Tax 


Tax is a compulsory financial charge or some others type of Levy imposed on a taxpayers by governmental organization in order to fund government spending various public expenditures.

Purpose of tax 

As per the article 256 of constitution states that " NO TAX SHALL BE COLLECTED EXPERT BY ATHORITY OF LAW." There are tax structures in India consists of 3 federal parts :- Central , states and local bodies. This taxes are used for  government expenses such as during the time of disaster for its recovery , Railways,  construction of infrastructures and  various government policies etc.

Types of taxes 

There are 2 types of taxes:-  Direct tax and Indirect tax .
■Direct taxes :- Direct taxes are the taxes which are Directly collected by the taxpayers. The taxes included in Direct taxes are:- Income tax , corporate tax etc. 
1. Income tax :- The tax that government imposed on income generated by business and individual within their jurisdiction. 
2. Capital gains tax :- A tax levied on profit from the sale of property is known as capital gains tax .
3. Corporate tax :- Corporate tax are the taxes that companies have to pay on the profits they make .
 ■Indirect taxes :- Indirect taxes are taxes which are collected by the government through Indirect ways such as Excise duty ,custom duties etc. The taxes included in Indirect taxes are :- 
1. Sales tax :- A tax charged on the total value of ghw commodity, when the sale take place is known as sales tax.
2. Service  tax :- A tax is levied by the government on service offered by service providers. 
3. Custom duty (octroi) :- This tax is imposed on both exports and imports of goods and services. 
4.Excise duty :- This tax is imposed on the goods for their production licensing and sale . Mostly it is imposed on Petroleum and liquor. 
5.value added tax :-  VAT is tax charged at each level of the production and distribution chain whenever the value is added to the product. 

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