Hello Aspirants, in this article we will look into the basic definition of a tax, types of tax, and also briefing the types of tax.
This article is very important for students who are preparing for exams like SSC, Banking, RRB, and all other government and non-government exams.
What is tax?
Tax is basically an amount that is paid directly or indirectly to the government by an individual or an organization so that in return the government provides us public services like education, roads, health facilities, police protection, etc.
Tax can be broadly classified into two categories-
- Direct Tax
- Indirect tax
When an individual or an organization pays directly to the government (or the imposing entity).
- Income tax
- Wealth tax
- Property tax
- Corporation tax
An individual or organization has to pay a small amount to the government based on the individuals’ income or profit. The percentage of the amount paid varies for different income slots, and this is set by the government.
The tax imposed on total personal assets (real estate, bank deposits, etc.).
This tax is called the “ad valorem” tax. It means according to value. It is imposed on private properties such as houses, cars, land, etc.
A direct tax imposed on a company by the government. This tax is also called company tax, or sometimes corporation tax.
When an individual or an organization pays indirectly to the government through a registered government representative.
- Excise tax
- Customs duty
- Service tax
This tax is imposed on the production of certain goods and services like cigarettes, alcohol, gasoline, etc by the government.
This tax is imposed on the import and export of goods, i.e. when goods cross the boundary of a country.
Trick to learn the types of tax
Wealth (We) Property (Pro) Corporation (Co) Income (In) Excise (Ex) Customs (Cu) Service (Se)
Trick- We Pro Co In
Trick- Ex Cu Se (recall using the phrase Excuse me)