Central Government Taxes in India
Details of the taxes in India that are administered by the central government…
These are levied by the central government on goods imported into and exported out of India. There are 11 types of customs duty in India, including the basic customs duty on imported goods and export duty on exported goods. The central government sometimes levies several additional protective duties on imported goods that have a visibly negative impact on domestic industry.
Cess is a type of duty that the central government imposes to help fund education programmes for the poor.
- For more information about customs duties from the Central Board of Excise & Customs: Click here
- For more information about customs duties from the Indian Customs EDI Gateway: Click here
- The Central Board of Excise & Customs also provides details about import and export duties for foreign nationals: Click here
These are taxes levied by the central government on goods manufactured in India. The rate generally ranges between 8 percent and 24 percent. Liquor and narcotics are taxed separately by state governments. Most manufacturers and retailers include excise duties in the retail price of goods.
Excise duties are not levied on items such as: bicycles; electric lightbulbs; toys; kitchen utensils; butter; jams and jellies; packaged tea; ketchup; coffee; vegetable oils.
Among the products that attract the highest level of excise duty (24 percent) are: Cars and motorcycles; chewing tobacco; air-conditioners; aerated soft drinks; polyester filament yarns.
This tax is levied by the central government on all gifts valued at more than Rs50,000 and on movable (art, jewellery, stocks) and immovable property (land, buildings, hereditary rights) acquired below the market value. Gift tax was enacted to prevent money laundering through high-value gifts of cash and/or property.
It is the responsibility of the recipient to pay the gift tax to the central government after declaring any taxable gifts on their annual income tax return.
For gifted property, the difference between the market value (set by the government) and the acquired price will be taxed only if it is more than Rs50,000. The easiest way to determine the market value of property is to consult a reputed real-estate broker or insurance company.
Cash gifts of less than Rs50,000, cash or property gifts of any value from blood relatives or a spouse’s relatives, and gifts of property located outside of India are exempt from gift tax.
Cash or property gifts of any value are exempt from tax under these specific circumstances:
- Within marriage
- Through will or inheritance
- In contemplation of death (of the donor)
- From a government body or local authority
- From a university or other educational institution
- From a hospital
- From a registered public charitable trust, foundation or fund
For non-resident Indians and non-Indian foreign nationals, immovable property outside of India is not taxable. However, gifts of money or property given in India and valued at more than Rs50,000 are taxable.
Money transferred by a non-resident Indian from a foreign account to either a non-resident external account or a resident account in India is not taxable.
- For further information on gift tax regulations from the Ministry of Finance’s Income Tax Department: Click here
This is levied on certain services specified by the central government. Throughout India, the service tax rate is 10.3 percent of the value on taxable services. Jammu and Kashmir is the only state that does not have a service tax.
A service tax is commonly listed and charged separately by these establishments:
- Restaurants serving alcohol
- Travel agencies
- Real-estate agencies
- Internet cafés
- Beauty parlours
- Dry cleaners
- Gyms/fitness centres
For registered businesses in India, the service tax can be paid monthly or quarterly, depending on the state. Service tax returns are filed every six months.
- For further information about service tax regulations and the required forms: Click here
This is an annual tax levied by the central government on the combined value of all assets acquired in India by individuals, Hindu Undivided Families and companies. The wealth tax rate is 1 percent on net wealth above Rs15,00,000 (15 lakhs).
Non-Indian foreign nationals do not have to pay a wealth tax on assets acquired outside of India. Likewise, debts incurred in the country are deductible.
Non-resident Indians who return to India to settle permanently are exempt from paying wealth tax for seven years.
Assets subject to wealth tax are:
- Houses, guesthouses, farmhouses, residential complexes and shopping malls
- Motor vehicles owned by individuals for personal use
- Jewellery made from precious metals such as gold, silver and platinum
- Aircrafts, yachts and boats used for non-commercial purposes
- Rs50,000 cash in hand (for individuals and Hindu Undivided Families)
- Any cash not recorded in an account log book
- Urban land in an area inhabited by at least 10,000 people (as per last census)
Assets exempt from wealth tax are:
- Aircrafts or boats used for business purposes and provided by a company
- Furniture, apparel and electrical goods for personal use
- Accommodation provided by a company or organisation for its employees
- Land donated for religious purposes or to a charitable trust
Further information about wealth tax regulations and required forms can be found on the Income Tax Department’s website: Click here
For an overview of income tax in India see the Income Tax section.