TAX STRUCTURE IN INDIA:
Both Central and State Governments are empowered to collect taxes in India.

TAXES LEVIED BY UNION/CENTRAL GOVERNMENT:

DIRECT TAXES
Personal Income Tax: Personal Income Tax is the tax levied on the income of Individuals, Households, Hindu Undivided Families (HUF), Partnership Firms, Sole Proprietorships, etc. Various types of income covered under Personal Income Tax are – salary, profit from business/profession, rental income, income from interest, royalty, capital gain from sale of property or investments.

Tax on Corporate Profit: Corporate Income Tax is the tax levied on profit earned by the incorporated firms or companies.

Securities Transaction Tax (STT): STT is a tax levied on every purchase or sale of securities listed on recognized stock exchanges such as shares, bonds, mutual funds, etc. It is levied on the value of the transaction.

INDIRECT TAXES
Goods & Services Tax (GST): It is a destination-based tax on consumption of goods and services levied at all stages right from manufacture up to final consumption with credit of taxes paid at previous stages available as setoff. In a nutshell, only value addition will be taxed and burden of tax is to be borne by the final consumer. The tax would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply.

The taxes collected from GST is shared between Central Governments and State/UT governments. Introduction of GST has brought paradigm shift in the way interstate business and related tax administration. The GST regime has brought considerable efficiency in indirect tax administration, though there are many contentious issues to be sorted out.

INDIRECT TAXES OUTSIDE GST:
Basic Customs Duty: Basic Customs Duty is a tax on imported goods, separate from GST, aimed at regulating imports and supporting local businesses, calculated based on the item’s value entering India.

Tax on Petrol and Diesel: The central government taxes the production of petroleum products, while states tax their sale. The central government levies an excise duty on petrol and on diesel. These make up around 31% and 34% of the current retail prices of petrol and diesel, respectively. While excise duty rates are uniform across the country, states levy sales tax/ Value Added Tax (VAT) which varies across states

TAXES LEVIED BY THE STATE/LOCAL GOVERNMENTS

In addition to the direct and indirect taxes collected and shared by the Central and State Governments, States/UTS are empowered to levy and collect Tax on Tobacco and Alcohol, Stamp Duty on sale/purchase of Property, Vehicle Registration Tax, Road Tax, High ways Toll, Entertainment Tax, Professional tax etc