Taxation in India | Complete Overview of Tax Structure in India

Taxation in India : Taxes form an important source of income to the Government. Direct taxes are levied on taxable income earned by individuals and corporate entities and indirect taxes are levied on the sale and provision of goods and services respectively. The taxation in India is such that the taxes are levied by the Central Government, State Governments and some by the local authorities such as the Municipality and the Local Governments.

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Taxation in India : Major Central and State Taxes

Major Central and State Taxes in India include :

Major Central Taxes

• Income Tax
• Central Goods & Services Tax (CGST)
• Integrated Goods & Services Tax (IGST)
• Customs Duty

Major State Taxes

• State Goods & Services Tax (SGST)
• Stamp Duty & Registration

Taxation in India : Major Central Taxes

Income Tax

Individual taxpayers will need to pay the income tax based on the slab system they fall under based on their income. Individuals with a higher income will need to pay more tax. The slab system was introduced to maintain a fair tax system in the country.

New Regime Income Tax Slab Rates for Individuals

Income Tax Slab	Tax Rate
Up to Rs.2.5 lakh	Nil
Above Rs.2.50 – Rs.5 lakh	5% of the total income that is more than Rs.2.5 lakh
Above Rs.5 lakh – Rs.7.50 lakh	10% of the total income that is more than Rs.5 lakh + Rs.12,500
Above Rs.7.50 lakh – Rs.10 lakh	15% of the total income that is more than Rs.7.5 lakh + Rs.37,500
Above Rs.10 lakh – Rs.12.50 lakh	20% of the total income that is more than Rs.10 lakh + Rs.75,000
Above Rs.12.50 – Rs.15 lakh	25% of the total income that is more than Rs.12.5 lakh + Rs.1,25,000
Above Rs.15 lakh	30% of the total income that is more than Rs.15 lakh + Rs.1,87,500

Central Goods & Services Tax (CGST)

CGST is a tax levied on Intra-state supplies of both goods and services by the Central Government and will be governed by the CGST Act. Section 8 of the GST Act mentions that the rate of tax will not exceed 14% each. It subsumes taxes such as Central Excise Duty and Central Surcharges.

Integrated Goods & Services Tax (IGST)

IGST is a tax levied on all Inter-State supplies of goods and services. IGST is also applicable on any supply of goods and services in both cases of import into India and export from India.

Customs Duty

Customs duty in India is defined under the Customs Act, 1962 and governed by Central Board of Excise & Customs (CBEC). Government levies duty on exports and imports, prohibit export and import of goods, procedures for importing/exporting and offenses, penalties, etc.

Taxation in India : Major State Taxes

State Goods & Services Tax (SGST)

SGST refers to the tax levied by the state government on the intrastate transaction of goods and services payable to the state.

Stamp Duty & Registration

Stamp duty is a tax imposed on the sale of property/property ownership by the state government, payable under Section 3 of the Indian Stamp Act, 1899. The duration of the stamp duty at the time of registration shall be based on the value of the house/property and the state or area where the property is located, and whether it is a new or old house.

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