Direct Taxation

India’s taxation system is among the more complex systems globally and is constantly being updated to account for changes in the economy and policy. The system remains prone to delays and inefficiencies as well as substantial tax burdens for a misstep or lack of knowledge. There are additional restrictions on foreign nationals and companies, as well as international transactions between group companies. MN & Co. keeps abreast of all such changes made in Direct Tax Laws, so as to provide quality services to its clients.
Due to our in-depth research in the field of Direct Taxes, locally as well as internationally, as well as on account of its past experience with the Indian Tax authorities, we are able to provide pragmatic solutions to our clients.
Direct taxes encompass various categories, each serving a distinct purpose in revenue generation and economic regulation. The primary types of direct taxes include:
1. Income Tax
Income tax is levied on individuals, businesses, and other entities based on their earnings. Governments set income tax slabs, which determine the rate of taxation for different income levels. In many countries, progressive tax rates apply, meaning higher income levels are taxed at higher rates.
2. Corporate Tax
Corporate tax is imposed on the net income of companies. The rates vary based on the size, type, and structure of the business. It serves as a major revenue source for governments and ensures that businesses contribute to national development.
3. Capital Gains Tax
Capital gains tax applies to profits earned from the sale of assets such as real estate, stocks, and bonds. It is categorized into short-term and long-term capital gains, with different tax rates applied based on the holding period.
4. Wealth Tax
Wealth tax is levied on an individual's net worth, including properties, financial investments, and other valuable assets. Many countries have abolished wealth tax, replacing it with inheritance tax or other forms of direct taxation.
5. Property Tax
Property tax is imposed on real estate holdings, including residential, commercial, and agricultural properties. It is usually calculated based on the property’s value and is a primary revenue source for local governments.
6. Gift Tax
Gift tax is applicable when an individual receives monetary or non-monetary gifts beyond a specified exemption limit. It ensures that high-value asset transfers are appropriately taxed to prevent tax evasion.
7. Estate/Inheritance Tax
Estate tax, also known as inheritance tax, is levied on the estate of a deceased person before distribution to heirs. The rates vary depending on the relationship between the deceased and the beneficiary.