Direct Tax

Direct tax means a tax paid directly to the government

by the person on whom it is impersoned
Example

Income Tax
Gift tax
Wealth tax
Property tax etc

Income Tax
There are two types of income taxes
Personal Income tax
Corporate tax

Personal income tax

Levied by central government
Levied on individual and HUF(Hindu undivided family)
It is a progressive tax
On this basis low income people have been exempted
from the income tax with minimum exempt limit which
varies from year to year.
Currently, the minimum taxable income with reference
to income tax is Rs 250000

Slab of individual/HUF(M/F) less than

60 years of age
Income

Rate of Tax

Upto 250000

Nil

2500003-500000

10%

500000-1000000

20%

Above 1000000

30%

Further surcharge of 10% on people earning above

1Cr.

 Income Tax Slabs for senior citizens(60 but less

than 80 years)
Income

Rate of Tax

Upto 300000

Nil

300001-500000

10%

500001-1000000

20%

Above 1000000

30%

Income tax slabs for very senior citizens (Aged 80 and above)
Income

Rate of Tax

Upto 500000

Nil

500001-1000000

20%

Above 1000000

30%

Corporate Income Tax

Corporate tax is levied on the profit of the companies
Currently tax rate for domestic companies is 30% and
for foreign companies is 40%.
After including surcharge and cesses the current
effective corporate taxes are 33.9% for domestic
companies and 43.26% for foreign companies.

Capital Gain Tax

This tax is levied if you sell your property, bonds,
shares, jwelery or anything that gives you profit.
The profit can be calculated by deducting the total
amount you get by selling your asset and the amount
you pay for it you have to pat tax in the profit.

Short term capital gain

Long term capital gain

Gains arising on transfer of a Capital gain arising on transfer

capital asset held for not more
of capital asset held for a
than 36 months( 12 months in
period exceeding the aforesaid
the case of a share help in a
periods are long term.
company or other security Section 112 of the Income Tax
listed on recognised stock
Act provides for the ta on long
exchange in India or a unit of a
term capital gains at 20% of
mutual fund) prior to its
the gain computed with the
transfer are short term.
benefit of gain computed with
Tax on STCG is 15 %.
the benefit of indexation and
10% of the gain computed
without
the
benefit
of
indexation

Securities and transaction Tax

When you buy or sell a stock from the share market,
you have to pay securities transaction Tax. This tax is
imposed by the government because the most of the
people who earn their profits from the share market do
not disclose their assets. As a result they can avoid
paying capital gain tax as the government can levy tax
only on the profit they earn of these are not declared.
STT is levied on derivative instruments, equity shares
equity oriented mutual funds etc.

Product

Transaction

STT Rate

Charged on

Equity

Purchase

0.10 %

Turnover

Delivery

Sell

0.10 %

Turnover

Equity

Purchase

Intraday

Sell

Future

Sell

0.010

Turnover

Option

Purchase

0.125

Settlement price on
exercise

Sell

0.017

Premium

5. Fringe benefit tax(FBT)

Introduced in the finance Act 2005 contained in chapter
XII(H) of the income tax act, 1961.