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Taxes by State Government in India


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Taxes by State Government in India

There are various taxes that an Indian citizen needs to pay to its government. Some taxes that one needs to pay to its state government are-
  • Sales Tax/VAT- Sales tax is levied on the sale of movable goods. Most of the Indian States have replaced Sales tax with a new Value Added Tax (VAT) with effect from April 01, 2005. VAT is imposed on goods only and not services. No VAT is charged on essential commodities, on bullion and precious stones 1%, on industrial inputs and capital goods and items of mass consumption 4% and all the other items VAT is levied at 12.5%.  VAT rates vary in different States on Petroleum products, tobacco, liquor etc. A Central Sales Tax at the rate of 4% is also levied on inter-State sales.

Other State Taxes

  • Luxury tax- The Govt. tapped the source of revenue from Hospitality Industry with the introduction of Luxury Tax w.e.f from November 01, 1996 on the luxuries provided in various hotels, lodging houses, clubs etc. The Govt. notifies different rate(s) from time to time and for the different classes of hotels. The present rate of Luxury Tax is 12.5% and is levied according to the declared tarrif w.e.f 2004.

  • Stamp Duty- It is a tax equally borne by both the parties which the purchaser/transferee has to pay in case of property exchange in the absence of an agreement. Stamp duty of 5% of market value of non-residential properties is levied. Stamp duty on residential flats in a housing society and buildings of the worth between Rs. 1,00,001 to Rs.2,50,000 is 0.5% , Stamp duty for the value between Rs. 2,50,001 to Rs.5,00,000 is Rs. 1,250 + 3% of the value and for the value above Rs.5,00,000 stamp duty is Rs.8,750 + 5% of the value.

  • State Excise duty- State Excise is levied by State Government and is charged only on goods like liquor which are within the state subject.

  • Entertainment Tax- Entertainment tax is the tax paid by the entertainment industry in India. The tax is applicable for entertainment shows, sponsored private festivals, movie tickets, video game arcades, and amusement parks.

  • Professional Tax- Professional Tax is levied on profession, trade calling and employment by the Municipal Council of a state. Every company which transacts business and any person, who is engaged directly or indirectly in any profession, trade, calling or employment with in the Town Panchayat on the first day of the half-year for which return is filed, shall pay half-yearly tax at the rates specified according to the varied tax slabs in different states of India.

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