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Some Taxes In India

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Some Taxes In India
Rajat Mishra - 11 November 2019

New Delhi, November 11: Like most countries, India too has many types of taxes. We are going to explain different taxes:

Professional Tax:

As the name suggests it is a tax levied by the states not only on profession but on all kinds of trade, employment. Unlike its name, if you earn up to Rs 15,000 per month in Karnataka then it is nil for you. If you are earning more than this it will be Rs 200 per month. This varies from state to state. Professional tax is collected by the commercial tax department. This ultimately reaches the fund of municipality corporation.

Capital Gains Tax:

This is a tax on gains made from capital investments. If you sell property, shares, bonds and other precious material and earn profits from it within a fixed time frame you are supposed to pay capital gains tax. Capital gains taxes are of two kinds - long-term and short-term capital gains tax.

If the capital assets are kept for more than a certain period, say, one year in case of shares and three years in case of property, then long-term capital gains tax will be levied. Short-term capital gains tax is applicable for less than a year for shares and less than three years for the property.

When you sell your gold asset which may be in the form of physical gold within three years of its date of acquisition, any gains arising from such sale will be considered as short-term capital gain. When you sell after three or more years from the date of acquisition or purchase, the profit arising from the sale will be categorised under long-term capital gains. This carries a tax rate of 20 per cent along with applicable surcharge and education cess.

Securities Transaction Tax:

It is a financial transaction tax that is levied on every purchase and sale of securities that are listed on the recognised stock exchange and is governed by the Securities Transaction Tax Act.

That means if you buy or sell equity shares, derivative instruments, and equity-oriented Mutual Funds this tax is applicable.

This tax is added to the price of a security during the transaction itself, hence you cannot avoid it.

Dividend Distribution Tax:

Dividend Distribution Tax (DDT) is a tax on the dividend distributed by companies to shareholders. Dividends are subject to dividend distribution tax and are exempt from tax in the hands of the recipient or shareholder. DDT is also applicable on mutual funds. The fund house deducts DDT at the source. Hence, dividends from mutual fund schemes are tax-free.

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