Tax refers to any amount charged by the government on income, any activity, or any goods or services. Taxes in India are levied or charged by the Central Government as well as the State Governments. Some minor taxes are also levied by the authorities such as the Municipality and the Local Governments.
Major Central Taxes
- Income Tax: Income tax is levied by the Government of India on the income of every person.1
- Central Goods & Services Tax (CGST): CGST or Central Goods and Service Tax2 is levied and collected by the central government on every supply of goods and services within the state.
- Customs Duty: Customs duty3 is applicable on all goods imported and a few goods exported out of the country. Duties levied on import of goods are termed as import duty while duties levied on exported goods are termed as export duty.
- Integrated Goods & Services Tax (IGST): IGST4 is tax levied on inter-state supply of goods. IGST will be applicable on any supply of goods and services in both cases of import into India and export from India.
Major State Taxes
State Goods & Services Tax (SGST): SGST5 is a tax levied on intra-state (within a state) supplies of both goods and services by the State Government. You can find more details on the tax levied by each state here. States also levy other taxes such as taxes on petroleum and alcohol. Some other examples of state taxes are entertainment tax, excise duty, etc.
Direct and Indirect Tax
Taxes are classified on the basis of who has to pay – direct or indirect tax. If tax is levied directly on personal or corporate income, then it is known as direct tax. Some examples are personal income tax, corporate tax, etc. If tax is levied on the good or service, then it is called an indirect tax. Some examples are goods and services tax(GST), excise duty, etc.
- The Income-tax Act, 1961
- The Central Goods and Services Tax Act, 2017
- Ice Gate, e-commerce portal, Customs National Trade Portal, available at https://www.icegate.gov.in/; The Customs Tariff Act, 1975
- The Integrated Goods and Services Tax Act, 2017
- State Goods and Services Tax Act, GST Council, available at http://www.gstcouncil.gov.in/sgst-actGST ACT