Question

please write by paraphrase about Taxes and its types , write also the references .

At least 5 pages .

Answer 1

Taxes and its types

Tax is a contribution to the government which is levied on the income of the individuals, the gains from the businesses, or some transaction cost of goods and services.

The taxes are taken from the citizens of a country by the government to enhance and uplift the condition of a country. By uplifting the condition of a country the living standard of the people also gets enhanced.

There are two types of taxes. They are direct and indirect tax. Some taxes like the income tax, corporate tax, wealth tax are paid directly so they are known as direct tax. Whereas, some taxes like sales tax, service tax and value added tax are paid indirectly so they are known as indirect tax.

Apart from the two taxes there are other taxes which serves some special agendas of the government. They are entertainment tax, professional tax, wealth tax, municipal tax, toll tax, entry tax, gift tax, education tax etc.

Direct tax

These taxes are paid directly by the individuals to the government directly. It can never get transferred to any other individual.

• Income tax

This type of tax can be levied on the individuals who has a certain amount of income, the profits received from the investment, owing a property or a house, a business etc.

• Wealth tax

This type of tax is levied on the person who has a certain amount of property or land with him. There is a margin given by the government under which the taxes are paid. If anyone exceeds that margin he/she has to pay the wealth tax.

• Gift tax

If a person received precious gifts like property or any valuable jewels etc. he/she has to pay a gift tax. This tax no longer exists. Now, the precious gifts which you receive from your relatives are not subject to tax anymore.

• Capital gains tax

This type of taxes comes from the long term and short term investment. Whenever your sum gets matured and you get a lump some money in your hand then the government takes away some money as taxes from you. This type of tax is known as capital tax.

• Securities transaction tax

This type of tax is levied on the share holders. If anybody buys or sells any share from the stock market then he is supposed to pay a considerable amount of tax to the government. This type of tax is known as securities transaction tax.

• Perquisite tax

The privileges and the perks that are provided by the government has some taxes levied on them. It includes cars, houses or even companies which the people hold. For enjoying the facilities from the government the individuals has to pay a minimum amount of tax to the government which is known as perquisite tax.

• Corporate tax

A company pays a certain amount of tax to the government from the profits earned by them. These are known as corporate taxes.

Indirect taxes   

The taxes levied on the goods and services which are used by the individuals are known as indirect taxes. These taxes differ from the direct taxes as they are not paid to the government directly by the individuals. The most common examples of indirect taxes are as follows:

• Sales tax

This type of tax is imposed on all the products which are used by the consumers. Any product which is produced in a company has sales tax levied on it. This type of tax is known as sales tax.

• Service tax

Like the sales tax service tax is also given to the services which are given to the customers by the producers. The services which the customers get has the service tax levied on it. It does not changes with the goods but the services provided by the company changes the amount of tax provided for the service.

• Value added tax

These taxes are known as commercial taxes. The goods which are exported contains VAT on it. VAT is applied to every step of the supply chain of the good. Right from the beginning i.e. from the manufacturers, the dealers, the distributors and at the end to the customers.

• Custom duty tax

This tax is levied on the products which are imported from different countries. The products which comes via sea, air or land has customs duty tax levied on it. The purpose of this tax is to notice that the goods which come from outside are properly taxed or not.

• Excise duty

This tax is imposed on all the manufactured goods and services which are produced in an economy.