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Tax Structure In India


Income tax was introduced in India in 1860, but discontinued in 1873 and

reintroduced in 1886.


Income tax is levied on income of individual, H.U.F, companies, AOP etc. Income from all sources are added and after certain deduction, tax is calculated on the basis of the slab into which it falls. There was a time when income tax rate was 97.75% (in 1973-74) for the highest slab but since 1974-75 it brought down to 30%.


Corporate tax is levied on flat rate. Tax on domestic and foreign company is different. Certain types of companies are given tax exemption and tax holidays.


Estate duty was introduced in India in 1953. It was levied on the total property passing on to the heirs on the death of a person. It was abolished in 1985.


Annual tax on wealth was introduced in 1957. It was levied on residential houses, farm houses, urban land, jewellery, bullion, motor car etc. having value of more than 15 lakh @ 1%.


Gift tax was introduced in 1958 and was levied on all donations to recognized charitable institutions, gift to wife etc. It was abolished in 1998. It was partially introduced in 2005, i.e. if the aggregate value exceeds Rs. 50000. From 1/10/2009, even movable and immovable property given attracted tax if the value exceeded Rs. 50000.

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