The taxation system in India includes direct taxes like income tax and indirect taxes like goods and service tax (GST). Income tax rates vary based on an individual's age and income level, with lower rates for those below age 60 and senior citizens. Corporate tax rates were recently reduced to 22% for existing companies and 15% for new manufacturing companies. Indirect taxes include GST applied between 0.25-28% on various goods and services, as well as taxes like customs duty and excise duty. The document provides details on tax slabs, rates and policies in India.

1. Taxation system in India
SANDEEP SATHEESH
SANDEEPPR906@GMAIL.COM

2. Taxation in India
 The tax structure in India is divided into direct and indirect taxes. While
direct taxes are levied on taxable income earned by individuals and
corporate entities, the burden to deposit taxes is on the assesses
themselves. ... Taxes in India are levied by the Central Government and
the State Governments.

4. Income Tax Slabs & Tax Rate in India
According to the current income tax laws in India, the income tax rate on resident
individuals varies based on their age. There are different tax slabs applicable to the
individuals for the financial year 2018-19 and 2019-20. For instance, a resident
individual, aged below 60 years, with an income less than Rs 2.5 lakhs is exempt from
paying income tax.
Given below are the tables for the latest income tax slabs for FY 2018-19 and
FY 2019-20.
income Tax Slab Tax Rate for Individual & HUF Below the Age Of 60 Years
Up to ₹2,50,000* Nil
l₹2,50,001 to ₹5,00,000 5% of total income exceeding ₹2,50,000
₹5,00,001 to ₹10,00,000 ₹12,500 + 20% of total income exceeding ₹5,00,000
Above ₹10,00,000 ₹1,12,500 + 30% of total income exceeding ₹10,00,000

5. Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years
Old) for FY 2019-20
 Income Tax Slabs Tax Rate for Senior cetizens aged 60 Years But Less than 80 Years
Income up to Rs 3,00,000* No tax
Income from Rs 3,00,000 – Rs 5,00,000 5%
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
4% Health & education cess will be applicable on the tax amount calculated as above.

6. Surcharge applicable to the individuals covered
Income limit Surcharge Rate on the amount of income tax
Net income exceeds Rs.50 Lakhs but doesn’t exceed Rs. 1 Crore 10%
Net income exceeds Rs.1 Crore but doesn’t exceed Rs 2 crore 15%
Net income exceeds Rs.2 Crore but doesn’t exceed Rs 5 crore 25%
Net income exceeds Rs.5 Crore 37%
Income Tax Slabs for Domestic Companies for FY 2019-20
Turnover Particulars Tax Rate
Gross turnover upto 400 Cr. in the FY 2017-18 25%
Gross turnover exceeding 400 Cr. in the FY 2017-18 30%
Where the company opted for Section 115BA 25%
GWhere the company opted for Section 115BAA 22%
Where the company opted for Section 115BAB 15%

7. In addition cess and surcharge is levied as follows:
Cess: 4% of corporate tax
Surcharge applicable:
Income Limit Surcharge Rate on the amount of income tax
Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Core 7%
Net income exceeds Rs.10 Crore 12%
Wealth Tax: Wealth tax is imposed on the richer section of the society. The intention of doing so is to bring parity
amongst the taxpayers. Wealth tax is imposed on the richer section of the society.. The simplest calculation of
wealth tax was that if the net wealth exceeded Rs. 30 lakhs, then 1% of the amount that exceeded Rs. 30 lakhs
was payable as tax. It was abolished in the budget announced in 2015. It has since been replaced with a
surcharge of 12% on individuals that earn more than Rs. 1 crore per annum. It is also applicable to companies that
have a revenue of over Rs. 10 crores per annum
Gift Tax : the gifts were taxed in the hands of the donor at a flat rate of 30% with a basic exemption of 30,000

8. Capital Gains Tax:
Depending on the holding period, capital gains tax can be Long term Capital Gains
Tax (LTCG) or Short term Capital Gains Tax (STCG). LTCG is 10% for stocks and equity
mutual funds and 20% with indexation for real estate, debt mutual funds and other asset
Corporate Tax: India slashed corporate tax rates to 22% from 30% for existing
companies and to 15% from 25% for new manufacturing companies. Including a
surcharge and cess, the effective tax rate for existing companies would now come down
to 25.17% from 35%.
Indirect Tax
Sales Tax: Sales Tax Rate in India is expected to be 18.00 % by the end of this quarter,
according to Trading Economics global macro models and analysts expectations. In the
long-term, the India Sales Tax Rate - GST is projected to trend around 18.00 percent in
2020, according to our econometric models

9.  Service Tax: For transactions that occurred on or after 1 June 2016 this tax is at 15%. 2016
Union budget of India has proposed to impose a cess, called the Krishi Kalyan Cess,
at 0.5% on all taxable services effective from 1 June 2016. The current service tax is at 15%
 Goods and Service Tax:.
Tax Rates Products
0.25% Cut and semi-polished stones are included under this tax slab.
5% Household necessities such as edible oil, sugar, spices, tea, and
coffee (except instant) are included. Coal, Mishti/Mithai (Indian Sweets)
and Life-saving drugs are also covered under this GST slab
12% This includes computers and processed food
18% Hair oil, toothpaste and soaps, capital goods and industrial
intermediaries are covered in this slab.
28% Luxury items such as small cars, consumer durables like AC and
Refrigerators, premium cars, cigarettes and aerated drinks, High-end
motorcycles are included here.

10.  Value Added Tax: Indian states have fixed VAT for these items at 1% of the
amount. 4-5% VAT Rate: A large number of daily consumption goods have been
put by several state governments under this category of VAT. So VAT charged on
goods like oil, coffee, medicines etc. is around 4-5% for most states in India
 Custom duty : When you purchase anything that needs to be imported
from another country, a charge is applied on it and that is the customs duty
 Excise Duty:e xcise duty is a form of indirect tax that is levied by the
Central Government of India for the production, sale, or license of certain
goods. Excise duty charges are also collected by state governments for
alcohol and narcotics. Excise duty is a kind of indirect tax charged on the
sale of certain products.

11. Reference
 https://www.startupindia.gov.in/content/sih/en/international/go-to-market-
guide/tax-system-india.html
 https://cleartax.in/s/income-tax-slabs
 https://www.investindia.gov.in/taxation
 https://www.policybazaar.com/tax/

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