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Budget 2024 explained: What is direct tax, income tax and how are they imposed?
Budget 2024: Direct tax is a tax paid directly by individuals or organisations based on their earnings to the government.
As the country awaits Interim Budget 2024, taxes are an area of great interest in the budget speech which will be made by Union Finance Minister on February 1 in the parliament. Here's a look at what is direct tax.
What is direct tax?
Direct tax is a tax paid directly by individuals or organisations based on their earnings to the government. If an individual has earned money, they will have to pay this tax, as simple as that.
Which types of taxes fall into the direct tax category?
Other than income tax, direct taxes also includes taxes like gift tax, wealth tax, capital gains tax, etc. Corporate tax for companies also comes under the scope of this tax.
What is income tax?
Read more: Budget 2024: ‘Bahi khata’ to paperless, a look at the evolution of budget
Income tax is the tax paid on wages or income that is produced. It is paid as per several tax slabs that determine the amount of tax.
What is Capital gains tax?
Capital gains tax is a form of direct tax that is paid on income earned from the sale of assets or investments.
What is Corporate tax?
Domestic companies have to pay corporate tax while foreign companies also have to do the same on income earned via selling assets, technical service fees, dividends, royalties, or interest that is based in India is taxable.
What is Wealth tax?
Wealth tax is levied on property ownership and market value. If someone possesses real estate, they are required to pay wealth tax.
