As the name suggests, direct taxes are those that are levied directly on taxpayers — the income-tax, wealth tax, corporation tax, etc. In other words, it is a type of tax where the impact and the incidence fall under the same category.
Direct taxes in India are overseen by the Central Board of Direct Taxes (CBDT). It was formed as a result of Central Board of Revenue Act, 1924.
Some examples of direct tax:
Income tax: Income tax is paid by an individual based on his/her taxable income in a given financial year. Taxable income refers to total income minus applicable deductions and exemptions.
The Budget estimate of the government's income tax revenue for the year 2020-21 was Rs 6,25,000 crore. The revised estimates of income tax for the 2019-20 Budget came at Rs 5,47,000 crore, while the actuals for the 2018-19 Budget stood at Rs 4,61,487 crore.
Corporation tax: Corporation Tax is the money paid by companies and businesses on the income earned by them in a given financial year.
On September 2019, the central government announced a cut in the rate of corporation tax for domestic companies to 22 per cent from 30 per cent previously. This brought effective corporation tax rate, including all additional levies, to about 25.2 per cent, for companies that do not receive any incentives or exemptions.
The Budget estimate of the government's corporation tax revenue for the year 2020-21 was Rs 6,81,000 crore. The revised estimates of corporation tax for the 2019-20 Budget came at Rs 6,10,500 crore, while the actuals for the 2018-19 Budget stood at Rs 6,63,571 crore.
Read provisions relating to direct taxes
Provisions relating to direct taxes in Budget 2020-2021