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NMIMS Resolved Taxation Assignment - Direct and Indirect Taxation June 2025 (Rewritten): NMIMS Answered June 2025 Taxation Assignment on Direct and Indirect Taxes

Taxation: Understanding Direct and Indirect - A Key Pillar of Any Economy's Financial Structure (NMIMS Solution)

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Taxation: A Crucial Element of Any Nation's Economy - Direct and Indirect Examination
Taxation: A Crucial Element of Any Nation's Economy - Direct and Indirect Examination

Welcome to the Guide on NMIMS Solved Assignment - Taxation: Direct and Indirect

NMIMS Resolved Taxation Assignment - Direct and Indirect Taxation June 2025 (Rewritten): NMIMS Answered June 2025 Taxation Assignment on Direct and Indirect Taxes

Hey there! Let's dive into the world of taxation and solve some problems related to direct and indirect taxes. This guide is designed to help you grasp the essential concepts of taxation, as covered in the NMIMS curriculum, by illustrating examples, providing insights, and offering a FAQ section.

Table of Contents

  • Direct Taxes
  • Definition
  • Examples
  • Types
  • Key Features
  • Solved Example
  • Indirect Taxes
  • Definition
  • Examples
  • Types
  • Key Features
  • Solved Example
  • Comparison: Direct vs. Indirect Taxes
  • FAQs
  • Try Us Out!

Direct Taxes

Definition

Imposition

Direct taxes are levied directly on the income, wealth, or assets of individuals and businesses. The taxpayer bears the charged tax, and it cannot be transferred to others.

Imposed on income, wealth, or property

Examples

Imposed on goods and services

  • Income Tax
  • Wealth Tax
  • Corporate Tax
  • Capital Gains Tax

Key Features

Payment

  • The tax is paid directly by the taxpayer to the government.
  • The collection and administration process can be complex, involving extensive record-keeping.

Paid directly by the taxpayer to the government

Types

Paid by the consumer, collected by businesses

  1. Progressive Tax: The tax rate increases as the income or wealth of the individual increases.
  2. Proportional Tax: The tax rate remains constant regardless of income levels.
  3. Regressive Tax: A tax that takes a larger percentage of income from lower-income individuals than from higher-income ones.

1. Direct Taxes Solved Example

Progressivity

Let's take the example of an individual earning an annual income of ₹12,00,000 in India, where income tax follows a progressive tax system.```bashTax calculation:

Can be progressive, proportional, or regressive

First ₹2,50,000: No taxTax on ₹2,50,001 to ₹5,00,000: 5% of ₹2,50,000 = ₹12,500Tax on ₹5,00,001 to ₹10,00,000: 20% of ₹5,00,000 = ₹1,00,000Tax on ₹10,00,001 to ₹12,00,000: 30% of ₹2,00,000 = ₹60,000

Generally regressive

Total tax: ₹12,500 + ₹1,00,000 + ₹60,000 = ₹1,72,500```In this case, the individual will need to pay ₹1,72,500 as income tax for the year.

Indirect Taxes

Example

Definition

Income tax, corporate tax, capital gains tax

Indirect taxes are levied on goods and services rather than on income or wealth. The primary distinction between direct and indirect taxes is that indirect taxes are paid by the consumer, but the tax is collected by businesses.

GST, excise duty, sales tax, customs duty

Key Features

  • The tax rate is usually uniform and does not depend on the consumer's income.
  • Indirect taxes are easier to collect and enforce compared to direct taxes due to their embedded nature in pricing.

Types

  1. Sales Tax
  2. Excise Duty
  3. GST (Goods and Services Tax)
  4. Customs Duty

Examples

  • Goods and Services Tax (GST)
  • Excise Duty
  • Customs Duty
  • Sales Tax

2. Direct vs. Indirect Taxes Solved Example

Suppose a product is sold at ₹1,000, with a GST rate of 18%. The GST collected on the sale would be:The total price the consumer pays for the product would be ₹1,180, where ₹180 is the GST collected by the business on behalf of the government.

Comparison: Direct vs. Indirect Taxes

| Feature | Direct Taxes | Indirect Taxes ||--------------|--------------------------|--------------------------------|| Imposition | Income, wealth, or property | Goods and services || Payment | Paid directly by the taxpayer to the government | Paid by the consumer, collected by businesses || Progressivity | Can be progressive, proportional, or regressive | Generally regressive || Examples | Income tax, corporate tax, capital gains tax | GST, excise duty, sales tax, customs duty |

FAQs

  1. What is the primary difference between direct and indirect taxes?
  2. Direct taxes are levied on income, wealth, or property, while indirect taxes are levied on goods and services.
  3. How is income tax calculated in India?
  4. Income tax is calculated based on tax slabs set by the government. In India, income tax follows a progressive tax system.
  5. What is the Goods and Services Tax (GST) in India?
  6. GST is a comprehensive indirect tax applied to the sale of goods and services in India. It is levied at every stage of production and distribution, with credits given for taxes paid on inputs.
  7. How do businesses handle GST in India?
  8. Businesses in India need to register for GST if their annual turnover exceeds the prescribed limit. They collect GST on behalf of the government and file regular returns.

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Here are the sentences containing the given words:

  • In the section on 'Indirect Taxes', the Examples sub-section provides a detailed list of indirect taxes including Goods and Services Tax (GST).
  • As part of your education-and-self-development, this guide is an excellent resource for analysis of finance-related topics, such as understanding direct and indirect taxes.

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