Taxation in India is broadly divided into
- Direct Taxes
- Indirect Taxes
The main difference in Direct and Indirect taxes is the entity on whom the burden to deposit taxes lies.
- Applicable on income earned by individuals and companies
- Responsibility of depositing taxes lies on themselves
- Applicable on sale and provision of goods and services
- Responsibility of collecting & depositing taxes lies on seller of the good/service
The power to levy as well as type of taxes and distribution share of taxes rests with both the Central and State government. Besides these, the local municipal authorities may also levy some taxes to enable smooth running of functions
Due to the complex nature of taxation, and to make it uniform and simple, GST – Goods & Services Tax was implemented for indirect taxation.
To help with taxation, numerous government helplines exist as well as services are provided by Chartered Accountants and firms specializing in it.