What are the Different Types of Taxes
Taxes may be categorized into different as their nature as direct taxes, indirect taxes, progressive taxes, regressive taxes etc.
A direct tax is the one, which is paid by the person or entity on whom it is legally imposed. It is collected from the persons or entities on the income they have earned exceeding a certain specified limit. Tax is generally calculated at a certain percentage on the income. Income tax, corporate tax, land revenue tax etc. are the examples of direct tax.
An indirect tax is the one, which is imposed to one person or entity but paid partly or fully by others. It is transferable to others. The tax is collected from customers by including it in the price of the goods or services they have purchased. The producers collect such a tax from wholesalers the wholesalers from retailers and the retailers from the final consumers. Excise duty, custom duty, VAT etc. are some of the examples of indirect tax.
Personal income Tax
Personal income tax refers to the tax imposed on individuals or families who earn income exceeding a certain specified limit subject to change as per the provisions made in financial rules and regulations.
Corporate tax is the tax imposed on the incomes of a business entity. It occupies the most part of the government revenue collected from taxes. Corporate tax rates are generally applied in flat system with high rate of large undertakings and low rates for smaller ones. The small and large undertakings are categorizes as per the size of the activities.
Excise duty is the tax levied on luxurious products. It is intended to discourage the the consumption of harmful products on one side and to collect government revenue in considerable extent on the other side.
Custom duty is the tax charged on the goods dealt in the foreign trade especially on the imported goods to encourage and promote export and to protect national industries. Government simply gives exemption of this tax on export trade and imposes on import trade. Custom duty may be export duty or import duty as its nature and imposed to the trading goods.
Land revenue Tax
Land revenue tax is the one, which is imposed to the landlords on the revenue generated from land especially while selling or purchasing land.
Value Added Tax (VAT)
Value added tax is the tax levied on value added on the price of the product at each stage of production, and or distribution activities. Value added is the difference between sales values and purchase value or the conversion cost plus profit. Conversion cost means the expenses on rent, depreciation, maintenance, insurance, salary etc. It is imposed on the goods at import, production and selling stages.
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