Page 145 - DMGT401Business Environment

Business Environment

Notes 5. Service Export Promotion Council: This was set up with the objective of tapping
opportunities in key markets and to develop strategic market access programmes. This
includes brand-building in coordination with players of each sector and recognising nodal
bodies of the services industry.
6. Common Facility Centre: The Common Facility Centre will be promoted by the
government for use by home-based service providers, particularly in areas like engineering
and architectural design, multimedia operations, and software developers at state and
district levels, to draw a multitude of home-based professionals into the service export
arena.

6.3 Direct Taxes

A Direct tax is a kind of charge, which is imposed directly on the taxpayer.

Example: Property tax and income tax.
Alternatively, it can be said that a direct tax is one that is taken away from one's salary or wages.
When the tax is imposed by the government upon the property, then it is called property tax,
which is also a direct tax.

Direct Tax is the tax paid to the government directly by the assessee like the Income Tax or the
Capital Gains Tax. There has been a steady rise in the net Direct Tax collections in India over the
years.
All the collections of the direct taxes in India like the Corporate Tax, Personal Income Tax,
Securities Transaction Tax, Banking Cash Transaction Tax, and the Fringe Benefit Tax have been
going through a healthy ascent.

Example: In the current year the personal income taxes collection have increased with
the rate of TDS being higher than the previous years.
Overall, as per the estimates of the Budget of the financial year 2006-07, the target of Direct Tax
growth rate was estimated to be 27.5%, but so far it has exceeded this limit and reached 41.2%. At
present, the net Direct Tax collection of India is at 610.30 billion, which is estimated to rise to
42% over 429.80 billion as it was in the last financial year. This growth in the rate of Direct Tax
reflects a continued increase in the economy, high tax compliance, and better tax administration.

One of the main forms of Direct Tax is the Taxes on Corporate Income, under which the companies
residing in this country pays a tax on their global income arising from all sources. The payment
of the tax follows the provisions of the Income Tax Act. On the other hand, the non-resident
companies pay the Direct Tax on the income obtained from an India-based business connection.
The resident companies pay a tax at the rate of 35% with a surcharge of 2.5% while for the non-
resident companies the basic tax rate goes up to 40% along with the same 2.5% surcharge. Along
with these the corporate companies also pay an education tax at the rate of 2% and a wealth tax
at the rate of 1%. Moreover, a Minimum Alternative Tax at 7.5% also requires to be paid by the
Domestic corporations.

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