We all are aware of the fact that we have to pay tax to our government in one form or the other and this is the reason why it is important to understand the state and country law for tax payments. Every person who is earning has to pay income tax to the government and he is required to show the income sources. Apart from income tax, there are various types of tax which a person has to pay and they are elaborated below:
Personal Income Tax
The personal income tax in India is similar to other countries world wide. The tax is deducted based on the total income earned by a person through all sources. This is some percentage which is calculated to get the total amount to be deducted. An annual income below 100,000 INR is not taxable while the income which exceeds 100,000 to 1.5 million INR is taxed at 10%. If the earning id between 1.5 millions to 2.5 millions, then the tax will be deducted at 20% rate. The income which is more than tax may fall under 30%-40% of the total income.
If the income is through stock market, the total tax will be calculated as per 20% of the annual income. The income tax for non-citizens will be decided as per the type and source of income. Royalty and technical service fees are taxed at 10% of the total income. All other person incomes are taxed at 30%.
Like any country India also imposes a sales tax on the goods sold and bought. However, the tax ranges as per the types of goods and this is the reason the amount may vary. The tax on precious stones and bullion is 1%, on bulk consumption goods such as cell phones, computers, sneakers and other items will be at 4%. It there are any uncategorized items, the amount of tax will be 12.5%. There is tax on tobacco, petroleum and liquor; however, food, board and room are not taxed. State governments a regulatory control on them and this is one of the reasons why the taxes may vary from state to state. You should know them as per the state law.
Tax on Corporate Income
There are various forms of this type of tax in India and this is one of the reasons why it is important to understand if you are already or going to start a new venture. For domestic corporations in India, the income tax rate is 35% along with 2.5 % surcharges. The tax has implications on those foreign organizations which have bases in India such as Microsoft, HP and IBM. These companies have to pay for 40% of the total income along with 2% of the surcharges. This income tax policy also requires that the people living in this country should pay income tax on all income such as work done on other countries and if the person has worked for the corporation which is situated in a foreign country including telecommunications work.
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