Other Taxes

Types Of Taxes In India- Other Taxes

‘Other Taxes’ include professional tax, property tax, entertainment tax, stamp duty, transfer tax, road tax, and similar taxes. Though they are not great revenue generators, they do contribute to the public budget.

These taxes assist the government in funding a variety of initiatives aimed at improving basic infrastructure and maintaining the country's overall well-being. The taxes in this category are primarily referred to as a cess, which are taxes collected by the government and the funds generated by this are used for certain purposes at the discretion of the Finance Ministry.

Here are some of the 'Other Taxes' paid by Indian citizens -

(a) Professional Tax

Professional Tax is a tax imposed on income and gains from employment, profession or profession-related activity. Professional Tax is charged when a person is remunerated for services rendered in a professional capacity. It is charged on the taxable income of persons engaged in the profession of accountancy, chartered accountancy, auditing, management consulting, architecture, legal professions and their respective practices, engineering, medical (including nursing) professions (including hospital management and health care facilities), piloting, pilot’s licensing, engineering, medical laboring, pharmacy, engineering and their respective practices such as surveying, fire safety inspection, building and construction. This is a state specific tax and it is levied as per the rules of the State.

(b) Property Tax or Municipal Tax

This is specific to the municipal corporation and is fixed by the respective municipal offices. These taxes are imposed to provide and maintain basic civic services. Municipal Tax is levied on all property owners, whether residential or commercial.

(c) Entertainment Tax

Another form of tax that is popular in India is the entertainment tax. The government imposes it on feature films, television programs, exhibitions, amusement parks, and recreational facilities. This tax is levied based on a business entity's total revenue from commercial shows, film festival earnings, and audience participation.

(d) Stamp Duty, Registration Fees, Transfer Tax

Stamp duty, registration fees, and transfer taxes are levied in addition to property tax. For example, when a person buys a house, they must also pay for stamps (stamp duty), registration fees (price levied by a local registrar to legalize a property transaction), and transfer tax (tax paid to transfer ownership of a commodity).

(e) Education Cess/Surcharge

In India, an education cess is a tax imposed to assist government-sponsored educational activities with enough funds. This tax is collected separately from other taxes and applies to all Indian citizens, corporations, and other residents of the country. The effective rate of education cessation is now 2% of an individual's salary.

(f) Gift Tax

When a person receives a gift from another, it is deemed a component of their income from "other sources," and the appropriate tax is levied. The Gift Tax Act, enacted in 1958, declared that whenever an individual received gifts, whether monetary or valuables, a tax was to be paid on such gifts. The tax on such donations was kept at 30%, however it was repealed in 1998.

Gifts provided by family members such as siblings, sisters, parents, spouses, aunts and uncles are no longer taxed under the new laws. This tax does not apply to gifts given to you by the local government. The way the tax works today is that if someone other than exempt entities gives you something worth more than Rs. 50,000, the entire gift amount is taxable.

(g) Wealth Tax

Another tax imposed by the government was the Wealth Tax, which was calculated based on the assessee's net wealth. The net wealth of a property is subject to wealth taxation. Net wealth is the sum of an individual's assets minus the cost of acquiring them (any loan taken to acquire them). Wealth tax is no longer in effect, having been repealed in the 2015 Union Budget.

The Wealth Tax Act governs the worth tax, which authorizes the government to levy a tax on a person's, a HUF, or a company's net wealth. This tax was scheduled to be repealed in 2016, however until then, the tax charged on net wealth was around 1% on wealth in excess of Rs. 30 lakhs. There are certain exceptions to this tax, such as organizations that are exempt from paying wealth tax. Trusts, partnership enterprises, social groups, political parties, and so on are examples of such organizations.

(h) Toll Tax & Road Tax

Vehicle owners pay road tax when they purchase a vehicle. This tax is levied for the use of government-maintained roadways throughout the country. This tax money is mostly used to build and maintain thousands of kilometres of highways.

Toll tax is a levy that you must often pay in order to use toll highways and other government-built infrastructure. The tax amount levied is insignificant and is utilized for the maintenance and basic upkeep of a certain project. As a result, you only pay them when you utilize such roads and not otherwise.

(i) Swachh Bharat Cess

This is a cess levied by the Indian government as part of the Swachch Bharat Abhiyaan and went into effect on November 15, 2015. This tax is levied on all taxable services and is currently set at 0.5%. The Swachh Bharat cess is levied in addition to GST that is currently in place. It is important to note that this cess does not apply to services that are totally exempt from service tax or those that are on the negative list of services. It would be collected by the Consolidated Fund of India and utilized to fund and promote any government campaigns related to the Swachh Bharat projects. This tax, on the other hand, is distinct from service tax and is levied as a separate line item on invoices.

(j) Krishi Kalyan Cess

This is another important cess imposed by the Indian government since June of 2016. It is primarily intended to provide assistance to all farmers and to enhance agricultural facilities in the country. This tax, like the Swachh Bharat cess, is levied on all taxable services and has an effective rate of 0.5%. It is levied in addition to the service tax and the Swachh Bharat cess.

(k) Infrastructure Cess

Another tax that went into force on June 1st, 2016 is the infrastructure cess. This tax imposes a 1% surcharge on petrol/LPG/CNG-powered motor vehicles with a length of 4 meters or less and an engine capacity of 1200cc or less. A 2.5% tax is required for diesel motor vehicles that do not exceed 4 meters in length and have engines with capacity less than 1500cc. The cess for large sedans and SUVs is 4% of the total cost of the vehicle.

(l) Entry Tax

Entry tax is a tax levied in some states throughout the country, including Uttarakhand, Madhya Pradesh, Gujarat, Assam, and Delhi. All items entering the state via e-commerce establishments are taxed under this provision. This tax is levied at a rate ranging from 5.5% to 10%.

In India's current economic environment, there are numerous types of taxes. The funds produced in this manner not only fuel the country's economy, but also provide a much-needed boost to the lower classes.