Direct Taxes
Direct taxation forms the foundation of a country’s revenue collection system, encompassing taxes that are levied directly on individuals and entities’ income and wealth. For Chartered Accountants, a comprehensive understanding of direct taxation is essential to offer accurate financial advice, tax planning, and compliance services to clients. This summary provides a succinct overview of the key aspects of direct taxation, including types of taxes, regulations, and their implications.
Types of Direct Taxes:
Income Tax: Income tax is the primary direct tax levied on an individual’s or entity’s income, which includes earnings from various sources such as salary, business profits, capital gains, and rental income.
Corporate Tax: Corporate tax is imposed on the profits earned by companies and corporations. The tax rate may vary based on the type and size of the business.
Wealth Tax (in some jurisdictions): Wealth tax is levied on the net wealth or assets owned by individuals or entities. It’s relatively rare and has been abolished in many countries.