Taxation
At AK Legal Mantra, we tailor our advice to the needs of our clients based on their areas of operation, business models and jurisdictional requirements. Our team has extensive experience with major multinational corporations in conducting due diligence in the course of proposed acquisitions / business expansion plans, due diligence on sales agents and other third party representatives, conducting compliance investigations in response to inquiries of governmental agencies and among others.
The government needs to collect tax from the eligible citizens; paying taxes to the local government is an integral part of everyone’s life, no matter where we live in the world.
Nowdays, taxes can be collected in any form such as state taxes, central government taxes, direct taxes, indirect taxes, and much more. In India Taxation is divide in two categories direct taxes and indirect taxes.
What is Tax and its Types?
A tax is a mandatory fee or financial charge levied by any government on an individual or an organization to collect revenue for public works providing the best facilities and infrastructure. The collected fund is then used to fund different public expenditure programs.
If one fails to pay the taxes or refuses to contribute towards it will invite serious implications under the pre-defined law. Paying tax is a necessary thing in India, but it is very difficult for a common man to deal with the complexities of India’s tax system.
There are many types of taxes; their details are listed below:
1. Income Tax: Income tax is a tax that is levied on earnings earned by individuals and businesses. This tax is also considered progressive in many places because the higher the revenue of a company, the higher its rate increases.
2. Corporate Tax: This is a tax that is imposed only on the corporation and is collected from the company according to the profit of the corporation. And the tax rate may be different for every corporation because the profit of every corporation is different.
3. Sales Tax: This tax can be imposed only on the products and services of a company or shop, and its exemption is given according to the sales percentage of the company or shop.
4. Property Tax: This is a tax that is levied only on personal and real estate property owned by an individual or company, and property taxes are assessed once a year and can usually be assessed by local governments.
Key areas of Taxation
1. Payroll and Employment Taxes
Social Security taxes are taxes that are placed on wages to fund Social Security programs, including disability and survivor benefits. It uses payroll taxes to finance the Medicare program and also provides health insurance for people over 65 and young people with disabilities.
Unemployment insurance taxes are taxes paid by employers to fund unemployment insurance programs that provide financial help to unemployed workers on a temporary basis.
2. Capital Gains Taxation
Under short-term capital gains, tax is levied on profits arising from the sale of property held for less than a year, and generally, the tax rate is kept the same as ordinary income.
Long-term capital returns are taxed on profits from the sale of assets held for less than a year and are generally taxed at lower rates than short-term profits, but only for long-term investments.
3. Indirect Taxation
Customs duty is a tax that is levied only on import duty. The purpose of imposing this tax is that domestic industries will remain protected and revenue will continue to be generated.
Tariffs are taxes that are specific types of customs duties imposed on certain products to regulate trade and protect domestic producers.
