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Reviewed by Jul 18, 2022| Updated on
The taxes may be due to the Central Government or state governments. In India, income tax and good and services tax (GST) is levied and collected by the Central Government, while certain goods such as petrol are subject to taxes imposed by the respective state governments.
The tax revenues are a major source of government revenue, both for the Central and state governments. In addition to income tax, the Central Government also levies and collects cess such as 'Secondary and Higher Education' cess. The cess is calculated on the amount of the tax due from a taxpayer.
While income tax is levied and collected on the annual taxable income of a taxpayer, GST is levied and collected on transactions carried out by taxpayers. GST is levied on the sale of intra-state and inter-state sales made by taxpayers.
Taxpayers must register themselves under the applicable laws and discharge their obligations. A taxpayer must pay their tax dues to avoid interest and penalty under the applicable laws. A belated filing of tax returns attracts levy of a late filing fee for the period of delay.
Taxpayers are also required to file annual returns as well as monthly returns. Under income tax, a taxpayer is required to file an annual return of income. Certain taxpayers are also subject to audit and are liable to furnish audit reports in addition to the tax returns. Under GST, taxpayers are required to file monthly returns and make a monthly payment of tax. They are also required to file an annual return and an audit report in certain cases.
At the time of filing of the annual returns, a taxpayer must self assess the tax payable, claim credit for taxes already paid during the financial year, and pay the balance tax if any.