See how the latest budget impacts your tax calculation. Updated as per latest budget on 1 February, 2020. No deductions will be allowed under the new tax regime.
2. Securities Transaction Tax
The securities transaction tax, as defined under the Indian tax system, gets levied on the stock market and securities trading. This tax is imposed on the price of the share and the traded securities traded on the ISE (Indian Stock Exchange).
What Other Taxes come Under Direct Taxes in India?
The following are some other common types of direct taxes in India:
1. Professional Tax
2. Property Tax
3. Capital Gains Tax
4. Gift Tax
5. Fringe Benefits Tax
2. Indirect taxes in India
Taxes that get imposed on products and services when they are bought and sold are called indirect taxes in India. The sellers of the service or products collect these taxes under the Indian tax system. The tax gets levied as an addition to the original price of the product or service, which increases their cost. Following are the different types of indirect taxes in India.
Goods and Services Tax
Goods or Services Tax (GST) is a consumption tax imposed on services and goods supply and has completely replaced the indirect taxes in India. The Indian tax system stipulates that every stage of the goods production process and value-added services is under the obligation to pay GST.
The introduction of GST under the Indian tax system has resulted in the abolition of other kinds of indirect taxes in India and charges like Value Added Tax (VAT), OCTROI, Central Value Added Tax (CENVAT), and also custom and excise taxes.
As per the Indian tax system, an exemption is given to the products or services such as electricity, alcoholic drinks, and petroleum products that do not get taxed under GST. This tax is imposed according to the previous tax regime decided by the different state governments.
What Are Some Other Indirect Taxes in India?
A number of indirect taxes in India have been discontinued after introduction of Goods and Services Tax (GST) in India. The following are some of the common indirect taxes applicable to Indian tax payers:
1. Value Added Tax (VAT)
2. Customs Duty
3. Excise Duty
4. Service Tax
5. Securities Transaction Tax
What are the Differences between Direct Taxes and Indirect Taxes in India?
It is imposed on income and conducted activities.
It is imposed on products and services.
The load of tax cannot be shifted in case of direct taxes in India.
The load of tax can be shifted for indirect taxes in India.
The concerned person directly pays direct taxes in India.
One person pays indirect taxes in India but recovers the same from another person, i.e. a person who actually bears the burden is ultimately the consumer.
Direct taxes in India are paid only after the taxpayer receives an income.
Indirect taxes in India are paid before the service or goods reach a taxpayer.
Examples of direct taxes in India are wealth tax and income tax.
Examples of indirect taxes in India are GST, excise and custom duties.
What are the benefits of paying taxes?
Paying income tax might be a compulsion as per the Indian tax system but is hugely beneficial for individuals who earn taxable salaries (especially the one that surpasses the necessary exemption limit) and file their income tax returns.
As per the Indian tax system, in case the tax liability is zero after deductions, the case remains the same. Also, if your income is lesser than the basic exemption limit, there are many benefits to filing taxes defined under the Indian tax system. Here are some of the advantages of paying your taxes on time:
· Faster Loan Approval
Major banks request a copy of your income tax returns when you apply for a loan, be it a home loan or a vehicle loan. As per directives defined under the Indian tax system, the income tax returns filed for the previous 2-3 years can help get a higher loan amount. The reason behind asking for ITR files is to calculate an individual's ability to repay the loan based on his income.
· Faster Visa Processing
During Visa Interviews, most foreign embassies necessitate the provision of income tax returns for the previous years. The UK, US, Europe, and Canada consulates consider it as a mandate, while the South East Asian countries and the Middle East do not always ask for ITR files. As per the Indian tax system, these ITR files act as evidence that you are not exiting the country to avoid taxes.
As per the directives of the Indian tax system, it is prudent to carry your ITR file receipts with you while you are travelling abroad, be it for work or leisure as it comes in handy in cases of emergency, and you need to seek the help of the embassy.
· Income Proof for The Self-Employed
According to the directives of the Indian tax system, Form 16 is not available for individuals who are freelancers, consultants, businesspersons, and partners of companies. If the yearly income exceeds the basic exemption limit as defined under the Indian tax system, then ITR file receipts can be provided as an income proof. Also, ITR receipts are useful during any financial or business transaction as sanctioned under the Indian tax system.
· Easier Refund Claims
The only way one can claim any refunds due from the Income Tax Department, as defined under the Indian tax system, is when the ITR has been filed. Even if the income is under the tax exemption bracket, the Indian tax system says that there could be refunds from various savings tools that can be claimed this way.
Are There Any Penalties for Not Paying Taxes?
Under the Indian tax system, the government can levy penalties of differed degrees on any individual or legal entity who avoids paying taxes. The punishment is reliant on the tax category that has been evaded. Consequently, the Indian tax system sanctions that the owed tax amount should be paid in full, and additionally,  a fine and interest are also imposed as a penalty.
Be A Responsible Citizen, Remember Your Taxes
Defined under the Indian tax system, both indirect and direct taxes in India are both significant for the country as its entire economy intricately linked to them. It is crucial for the government to collect these different types of taxes for the well-being of the nation. As per the mandates of the Indian tax system, the central and respective state governments collect direct and indirect taxes in India based on the type of tax imposed.
As per directives of the Indian tax system, you can make sure that you have maximal tax savings, by investing in a tax-saving instrument during the financial year and file ITR on time. Life insurance policies from Max Life Insurance help safeguard your family's future and help you save significant tax, in accordance to the directives mentioned under the Indian tax system.
While providing tax benefits as stipulated under the Indian tax system, these insurance policies provide financial support against any medical emergencies and unexpected loss of income. So, be a responsible family person and a citizen, and know more about the different types of taxes in India - especially about the direct and indirect taxes and pay them in time.
Sources:  https://www.incometaxindia.gov.in/tutorials/28.%20penalties.pdf