Direct tax is a tax that is directly paid to the Government i.e. where any person who earns an income has to directly pay tax to the Government while Indirect tax is paid indirectly to the Government which means the tax that is charged on any of the goods and services which will be first paid by the consumer to the sellers then goes to the Government. So, in this context Income tax is a direct tax and GST is an Indirect tax. With this let’s know the difference between GST and Income tax.
Goods and Service Tax is an indirect tax that is charged on the supply of goods and services in a Multi tax system by the Government of India.
Central Goods and Services Taxis a tax where the Central Government collects taxes from within the state supply of goods and services.
State Goods and Services Tax is a tax where the State Government collects taxes from within the state for the supply of goods and services.
Integrated Goods and Services Taxis a tax where both the Central and State Government collects this tax. It is charged on the supply of goods and services outside the state. Exports and imports both are involved in IGST.
Union Territory Goods and Services Tax is a tax where the Central government collects taxes from 5 Union Territories. This transaction happens within the Union Territories.
Slab Rates of GST
In GST there are different rates provided to each good or a service which are 5%, 12%, 18%, and 28%. There are certain items that are exempted from GST that are nil rates goods and services. It is determined as 0%.
Income Tax is a direct tax that is paid directly to the Government. These people who earn their income have to pay a certain amount of tax to the government every year. both residents and Non-residents have to pay their income tax.
Heads of Income-tax
- Income from Salary
Those people who earn any income in the form of salary, wages, etc. are taxable and comes under this head of income.
- Income from House Property
These people earn income by renting a house which is taxable and comes under Income from house property.
- Income from Business and Profession
People have to pay their taxes if they have their own business and certain professions who have their own businesses like doctors, lawyers, etc. This type comes under this head of income.
- Income from Capital Gains
Any profit earned from a sale of capital assets (Homes, Stocks, Investment property, etc.) is liable to pay tax under this category.
- Income from Other Sources
Any income earned from winning lotteries, card games, dividends, etc. is liable to pay tax.
Income Tax Slab Rates
These following rates are 5%, 10%,15%, 20%, 25% and 30%. There are certain Exemptions of Income under this rate which is 0%.
These rates are distributed into three categories, they are:-
- Less than 60 years of age
- Between the age 60 to 80
- Above the age of 80
These differences between Indirect tax and Direct Tax i.e. GST and Income Tax both have their own add-on points and negative points. Both of these taxes have shown growth in the Indian economy and have benefited everyone in the Nation.
Want to learn more about GST and being a GSTPractitioner altogether then join now in this GST COURSE