8 Taxes All Indians Pay

By Hemanth | August 9, 2015

Tax-Indian-Pays

A long weekend out could burn a hole in your pocket and you don’t know why you’ve overshot your budget. A lot of us forget to figure in the added taxes as they are left out of the menu or tags.

There are many small taxes we pay every day, apart from the annual income tax and VAT is just one of them.

Here is a look at 8 such taxes that every Indian pays knowingly or unknowingly.

1: Income Tax: If you earn more than Rs.2 lakhs annually, you’re liable to pay income tax on your earnings as per the associated tax bracket. You can save your liable income tax by investing in certain schemes that are tax deductible.

2: Service Tax: You are liable to pay a tax to service providers for their services. The government charges service tax to the service provider who, in turn, passes on the tax to you, as you are the final beneficiary of the service. So, all your telephone bills, broadband bills, tour operators, health clubs, gyms, dining in AC restaurants, financial services etc., come with a service charge component. The service tax rate is currently fixed at 14%.

3: VAT: VAT or Value Added Tax, is the way the state government earns money while it taxes goods and services that enter the state borders. Just like the central government imposes a sales tax, the state governments also imposes a value added tax. VAT is applicable on all goods and services including petrol, diesel and the goods you purchase through online shopping. The VAT regime may end soon as the government is planning to replace the VAT system with a new refined Goods and Service Tax or GST system.

4: Road Tax: Whenever you buy a vehicle, you’ll have to pay a road tax while getting the vehicle registered with the government. Every individual needs to pay an annual road tax which allows you to drive your vehicle on the roads laid down by the government. Road taxes are fixed by respective state governments and that is one of the reasons why the prices of vehicles vary in different states. Road tax also varies based on the category of the vehicle.

5: Entertainment Tax: Any entertainment service is required to pay an entertainment tax. This includes movies, commercial shows, exhibitions, broadcasting and cable services. The entertainment complex here passes this tax to the viewers. This tax, which may go unnoticed in the bills are actually making the price of tickets like movie tickets go up.

6: Property Tax: Property tax, also known as municipal tax or house tax, is imposed by the respective municipal corporations where your property is located. The rate of property tax varies from city-to-city, but every property owner needs to pay an annual property tax to the respective municipal or corporation body during a stipulated time period.

7: Stamp Duty and Registration Charges: When buying property, you’ll have to shell out an additional sum of money as a registration fee, to register the property in your name, and a certain stamp fee for executing this. The amount varies from state-to-state, and is also based on the location and price of the property. For example, in Delhi, the stamp duty is 6% (if the vendee is a man) and the registration fee is 1% of the total value of the sale deed. Bank loans usually do not include this expense when offering home loans. You will have to have a corpus ready for stamp duty and registration charges if you are buying a property using a home loan.

8: Toll Tax:  You need to pay a tax on certain highways and roads. This tax structure is known as ‘toll tax’ and is paid for maintaining roads, highways and bridges. The toll tax price varies for different roads and can range from Rs 10 to Rs. 200, depending on the road and vehicle.

Taxation is a double edged sword as it can pinch your pocket but it also helps you avail services for your welfare. Now you know why the movie tickets seem expensive and why going out for dinner never seems to fit right into your budget.

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About Hemanth G

Hemanth is Editorial Head of Content Research at BankBazaar. A published author with Westland Publishers, Hemanth is an alumnus of Indian Institute of Management Calcutta and has been a senior management professional for over a decade and a half, with deep experience in business strategy and marketing and a specialization in Advanced Finance from AIMA. Five years and a day ago, he started writing in a professional capacity, and has since penned seven books including two bestsellers. Also a consulting editor, his works include fiction novels, international anthologies and corporate biographies. Hemanth writes under the pseudonym of "Hemanth Gorur".

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