Undoubtedly, there are two things in one's life, which they cannot overlook - Death and Taxes. Here, when we talk about tax, we refer to income tax liability of an individual, which is certain after a certain level of income is reached. Although there is a certain tax rebate in India, individuals earning over and above a certain income level must pay the tax.
There are two types of tax we generally have to pay - Direct Tax and Indirect Tax.
As per Wikipedia, the direct tax is the tax that is imposed on a person or property, whereas the indirect tax is imposed on transactions. One can avail income tax rebate in each financial year, based on their investment(s), which could be new or continued from last one or more years. Income taxfiling is mandatory to claim a refund of the over-deducted income tax.
As per a recent report, the indirect tax collection may have increased in the four months of this financial year, but the personal income tax collection growth is less than half of that in the last two years. Below is the highlight
- The direct tax collected by the income tax department stood at Rs. 2.24 Lakh crore, which at the same time last year stood at Rs. 1.89 Lakh crore.
- Last year, the revenue form the direct tax collection was almost double in percentage.
The Reserve Bank of India (RBI) recently declared the details of the extent of demonetized money, as on June 2017, came back to the bank, setting the burgeoning mystery of the country's tax base in motion.
The government has also declared its direct tax collection increased by 17.5 percent between the months of April and August 2017, amounting to Rs. 2.24 Lakh crore.
The Ministry of Finance also said that for the fiscal year 2017-18, this collection was approximately 22.9 percent of the total Budget Estimates of Direct Taxes.
As per the numbers presented by the honorable Finance Minister, Arun Jaitley, personal income tax (PIT) stood at 16.5% post adjusting for refunds, while corporate income tax (CIT) got stable at 18.1%.
The direct tax collections reported last year were approx Rs. 1.89 lakh crore, while the indirect tax collections were Rs. 3.36 lakh crore. Surprisingly, the percentage of personal income tax revenue went higher one year ago, in the same period, than this year.
The major events that could potentially influence India's personal income tax in this time were Demonetization of old Rs 500 and 1000 and the recently imposed Goods and Serviced Tax (GST).
Post GST implementation, the premium of an insurance policy, which is payable by an individual is hiked to 18%. This means that for every Rs. 1000, you are required to pay Rs. 180 as the tax from July 1, 2017. For example, if you are to purchase a health insurance policy that offers comprehensive coverage, you are going to pay somewhere between Rs. 12,000 and Rs. 15,000 for that, which excludes GST of somewhere between Rs. 2160 and Rs. 2700.
Demonetization certainly was a good move by the government of India, as it claims to have received 99% of the demonetized money (approx. 15.28 lakh crore) back in the banking system. An increasingly large number of people are coming into the tax net. GST implementation, on the other hand, has hiked the insurance premium to 18%, which is quite a lot, thinking from an individual's perspective.