Taxes are a fundamental part of any country’s economy. In India, the tax system is structured to collect revenue for the government while supporting economic growth and development. Whether you are a salaried individual, a business owner, or an investor, understanding how India’s taxation works can help you plan your finances efficiently.
This blog explores India’s tax structure, major tax types, key terms, and the latest updates in 2025.
📌 Types of Taxes in India
India follows a dual tax structure comprising Direct Taxes and Indirect Taxes:
1. Direct Taxes
These are taxes paid directly to the government by individuals or organizations.
a. Income Tax
Paid by individuals, Hindu Undivided Families (HUFs), and businesses on earnings.
Tax slabs vary based on age and income.
New Regime (optional) offers lower rates but fewer exemptions.
b. Corporate Tax
Paid by companies on profits.
Domestic companies: 25% (with turnover limits);
New manufacturing companies (under section 115BAB): 15%
c. Capital Gains Tax
Tax on profit from sale of property, stocks, mutual funds, etc.
Short-term and long-term gains taxed at different rates.
d. Securities Transaction Tax (STT)
Levied on stock market transactions.
e. Dividend Distribution Tax (DDT)
Now removed. Dividends are taxed in the hands of the investor.
2. Indirect Taxes
These are taxes collected by intermediaries (like sellers) and passed on to the government.
a. Goods and Services Tax (GST)
Replaced VAT, service tax, excise, etc.
Four major GST slabs: 5%, 12%, 18%, and 28%.
Separate for CGST (Central), SGST (State), IGST (Interstate transactions).
b. Customs Duty
Levied on imports and exports.
c. Excise Duty
Still applicable on certain products like alcohol, tobacco, and fuel (outside GST scope).
📄 Important Tax Terms to Know
PAN (Permanent Account Number): Required for filing taxes.
TDS (Tax Deducted at Source): A portion of income withheld by the payer and deposited with the government.
Advance Tax: Income tax paid quarterly by taxpayers if liability exceeds ₹10,000 in a year.
ITR (Income Tax Return): Annual return form filed with the Income Tax Department.
🔄 Latest Tax Updates in 2025
New Tax Slab Regime is now the default option (but old regime still allowed).
Standard Deduction for Salaried Individuals: ₹50,000 under both regimes.
Revised TDS rates for freelancers and influencers.
AI-driven Tax Scrutiny has been introduced for high-value transactions.
GST Returns Filing Simplified for small businesses (QRMP scheme continues).
🧾 Who Should File Income Tax Returns?
You must file your ITR if:
Your gross income exceeds ₹2.5 lakh (below 60 years).
You earned capital gains or foreign income.
You want to claim a refund or carry forward losses.
You have income from crypto or digital assets.
💡 Benefits of Paying Taxes
Eligibility for loans and visas.
Helps build nation infrastructure.
Avoids penalties and legal issues.
Enables participation in formal financial systems.
📆 Important Tax Filing Deadlines
| Activity | Deadline |
|---|---|
| TDS return filing | Quarterly |
| Income Tax Return (ITR) | 31st July (Non-audit) |
| ITR for audit cases | 31st October |
| Advance Tax Installments | 15th June, Sept, Dec, March |
🧠 FAQs: India’s Tax System
Q1. What is the difference between old and new tax regimes?
A1. The new regime offers lower tax rates but no exemptions; the old regime allows deductions under 80C, HRA, etc.
Q2. Is GST applicable on online freelancing income?
A2. Yes, if your revenue exceeds ₹20 lakh (₹10 lakh in NE states), GST registration is mandatory.
Q3. Can I file ITR without a PAN card?
A3. No, PAN is mandatory for filing income tax returns in India.
Q4. How is crypto taxed in India?
A4. Crypto gains are taxed at 30% plus 1% TDS on each transaction.
Q5. What if I don’t file ITR on time?
A5. You may face late fees under Section 234F, and you can't carry forward certain losses.
published on 21st june
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