DIRECT
TAX COLLECTIONS - ECONOMY
News: Net direct tax collections up 21.8%
to ₹9.57 lakh crore
What's
in the news?
●
India’s net direct tax collections grew
21.8% to ₹9.57 lakh crore by October 9, surpassing over half of the Budget
estimates for this year, with personal income tax revenues rising 32.5% and
corporate taxes increasing 12.4%.
Key
takeaways:
●
Refunds held up in some cases over past
tax dues and incorrect bank account details.
Direct
tax:
●
The tax that is levied by the government directly on the individuals or corporations
are called direct taxes.
●
The incidence
and impact of the direct tax fall on the same person.
●
They are progressive in nature.
●
They are not related to inflation changes.
●
Example: Income Tax, Corporation Tax and
Wealth Tax.
Income Tax:
●
Income tax is levied on the income of individuals, Hindu undivided families,
unregistered firms and other associations of people.
●
In India, the nature of income tax is
progressive.
●
For taxation purposes, income from all sources is added and
taxed as per the income tax slabs of the individual.
Corporation
Tax:
●
Corporation tax levied on the income of corporate firms and corporations.
●
For taxation purposes, a company is
treated as a separate entity and thus must pay a separate tax different from
the personal income tax of its owner.
●
Companies both public and private which
are registered in India under the Companies
Act 1956 are liable to pay corporate tax.
●
The government divides it between two
sub-categories such as follows.
●
Domestic
company [Section 2(22A)]:
○
An Indian company (i.e. a company formed
and registered under the Companies Act,1956) or any other company which, in
respect of its income liable to tax, under the Income Tax Act, would have to
pay the tax.
○
A domestic company may be a public company
or a private company.
●
Foreign
company [Section 2(23A)]:
○
A company whose control and management are
situated wholly outside India, and which has not made the prescribed
arrangements for declaration and payment of dividends within India.
○
The
government has reduced the corporate tax rate from 30% to 22% for existing
companies, and from 25% to 15% for new manufacturing companies.