Simple Definitions of Taxes in India

       1. Direct Tax: Direct Tax is the tax paid to the government directly by the assessee like the Income Tax or the Capital Gains Tax. All the collections of the direct taxes in India like the Corporate Tax, Personal Income Tax, Securities Transaction Tax, Banking Cash Transaction Tax, and the Fringe Benefit Tax have been going through a healthy ascent.

       2. Indirect Tax: Indirect Tax or the tax that is levied on goods or services rather than on persons or organizations are of different types in India like Excise Duty, Customs Duty, Service Tax (VAT), and Securities Transaction Tax.

       3. Income Tax: It is a tax imposed by the Government of India on any body who earns income in India. Income Tax in India includes all income except the agricultural income that is levied and collected by the central government. Any Individual or group of Individual or artificial bodies who/which have earned income during the previous years are required to pay Income tax on it. When Companies pay taxes under the Income tax Act it is called Corporate tax.

      4. Excise Tax: An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to custom duties, charged on goods from outside the country). It is a tax on the production or sale of a good. Typical examples of excise duties are taxes on gasoline tobacco and alcohol(sometimes referred to as sin taxes).

       5. Value Added Tax: This is the tax that a manufacturer needs to pay while purchasing raw materials and a trader needs to pay while purchasing goods. VAT is eventually expected to replace Sales Tax. All goods and services provided by business individuals and companies come under the ambit of VAT.

       6. Sales Tax: A sales tax is a consumption tax charged at the point of purchase for certain goods and services. The tax is usually set as a percentage by the government charging the tax.

       7. Fringe Benefit Tax: Fringe benefit tax will apply to foreign companies if it has employees based in India. Fringe benefit tax will apply to liaison offices of foreign companies in India if the liaison offices have employees based in India - CBDT Circular No. 8/2005 dated 29-8-2005.

       8. Minimum Alternative tax: The concept of Minimum Alternate Tax (MAT) was introduced in the direct tax system to make sure that companies having large profits and declaring substantial dividends to shareholders but who were not contributing to the Govt by way of corporate tax, by taking advantage of the various incentives and exemptions provided in the Income-tax Act, pay a fixed percentage of book profit as minimum alternate tax.

       9. Goods and service Tax: Goods and Service Tax is a tax on goods and services, which is leviable at each point of sale or provision of service, in which at the time of sale of goods or providing the services the seller or service provider can claim the input credit of tax which he has paid while purchasing the goods or procuring the service.GST is an indirect tax and ultimate burden of the GST has to be taken by the last customer.