INCOME TAX

An income tax is a government levy (tax) imposed on individuals or entities (taxpayers) that varies with the income or profits (taxable income) of the taxpayer. There are several types of income taxes that help the government raise money to support its daily operations. These income taxes can affect income earned by individuals or corporations, and sometimes affects both.

TYPES OF TAXES

Direct Taxes

Direct Taxes are levied directly on income, capital value, wealth, corporate assets. Consequently, following are the types of Direct taxes. Income tax, Capital Value tax, Wealth tax, and Corporate Assets tax are Direct taxes. These taxes are directly applied on the capital gain, profit, earnings and salaries of people. Income tax is a kind of progressive tax whereas corporate tax is a kind of proportional tax or applied on flat rate.

 Indirect taxes

Indirect taxes are charged hidden without the prior information of payee. Mostly these are consumption taxes. Most common indirect taxes are sales tax, central excise tax, and customs. These are called consumption taxes.