What are Different Types of Tax?

Taxes are generally an involuntary fee levied on individuals or corporations that is enforced by a government entity, whether local, national or regional in order to finance government activities. In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, like a business, or the end consumers of the business's goods. Bookkeeping Services helps to manage business taxes puts impact on the profitability of businesses and investment. Taxation is a very important factor in the financial investment and decision-making process for business growth. It is very important for every citizen to pay tax to the government for betterment of the country.

The different types of taxes are:

• Income Tax: It is one of the common types of tax. This tax is deducted directly from your income if your are liable to pay this tax if your income exceeds the certain limit.

• Professional Tax: If you are working in a private firm or organization, you have to pay this tax and it gets deducted from your salary. The rate of this tax may change as per government rules.

• Capital Gains Tax: It is charged if you sell your property, bonds, shares, jewelry that gives you profit. The profit can be calculated by deducting the total amount you collected from selling your asset and the amount you paid for it.

• Securities Transactions Tax: When you buy or sell a stock in the share market, you have to pay securities transaction tax. It is imposed by the Government because people often do not declare the profit and assets earned from the stock market. They avoid paying capital gain tax, as the government can levy tax only on the profits they earn if these are not declared. The securities transactions tax is levied on derivative instruments, equity shares, equity oriented mutual funds.

• Perquisite Tax: Perquisite Tax is levied on employees for the non-monetary benefits given to their employers. The taxable value of perquisites in the hands of the employees is its cost to the employer.

• Corporate Tax: These taxes are paid by the companies to the government and it is levied on the income of the corporate.

• Sales Tax: When you purchase any commodity, you have to pay its cost price plus the sales tax extra. The manufacturer then pays it to the Government. The Sales Tax is levied only on the intra-sale of commodities.

• Service Tax: When you avail services you have to pay tax on it and this is called Service Tax. It is applicable to every type of services and products. Some of the services include advertising, healthcare, financial services.

• Stamp Duty and Registration: When you purchase a property, you have to pay this tax as per cost fixed by the seller, and if you want to have the property transferred to your name.

• Customs Duty and Octroi: This tax is levied on the goods imported into the country as well as the goods that are exported to any other foreign country. It is charged on airport, docks, railway stations. The Octroi Tax is levied on goods that are transported from one municipality to another.

• Excise Duty: The Excise Tax is levied on the goods that are produced within the country. There are a number of rules which keep on changing as per government discretion.

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