How Many Types of Direct Tax are There in India?

M( Posted by: Maherzad Patrawala (Maher)
• 09 September, 2025
3 Reply

There are many types of direct taxes imposed by the central government of India, which are:
 

  •  Income Tax: This type of tax is imposed on the Hindu undivided families (HUFs), individuals, partnerships, and associations of persons (AOPs). The tax on individuals is based on their age and their income. The collection of Income tax in India is provided by the guidelines of the Income Tax Act, 1961. 
     
  • Securities Transaction Tax (STT): This type of direct tax is applied on the sale and purchase of securities, like bonds, derivatives, shares, and equity-oriented mutual funds. This tax is paid by the seller or payers, depending on the transactions. 
     
  • Capital Gains Tax: This applies to the gains from the transfer and sale of capital assets, like stocks, real estate, and mutual funds. The capital gains tax is also divided into 2 categories, which are long-term capital gains and short-term capital gains. 
     
  • Corporate Tax: This type of tax is imposed on the profits earned by corporations and companies. The corporate tax is applied to both foreign companies and local companies in India. The corporate tax rates, deductions, and exemptions are determined by the Finance Act. 
     
  • Estate Tax: This tax is also known as the inheritance tax, which is a tax on transferring an individual's property and assets upon their death. However, India does not have a specific tax provision for this tax at the national level. 
     
  • Gift Tax: Gift tax is levied on the transfer of the specified property or asset without consideration, but in India, the gift tax is cancelled, and you have to pay tax f the gifts you receive.  
     
  • Dividend Distribution Tax (DDT): This tax is imposed on the dividends that are distributed by the companies to the shareholders. The income generated from the dividends is added to the taxable income of the individual according to the tax slab rates. Before April 1, 2020, this tax was imposed on the company distributing dividends in place of individuals.   

Tags : Types of Direct Tax in India

  • Neel Kaul 18 September, 2025

    There are many types of direct taxes in India, which are corporate taxes, income tax, capital gains tax, securities transactions tax, dividend distribution tax, gift tax, and estate tax. These types of direct taxes unlock many benefits, such as: 
     

    • The Indian government has imposed some tax slabs on the basis of the individual income and age, which will help to keep an economic and social balance. The government also provided fairness and exemptions to solve income inequalities. 
       
    • The direct taxes provide a source of income to the government as the economy and workforce are growing rapidly, so the Indian government is generating high revenue from the direct taxes.  
       
    • Direct taxes can help the government control the situation by increasing taxes, which results in reducing the demand for goods. 
       
    • Through the direct taxes, there is clarity between the government and the taxpayer. The individual knows the amount required to pay, and for the government, it is a good source of income. 
       
    • Through the high taxes paid by individuals and organizations. The government used to uplift the unprivileged sections of society. 

  • Parth Thakur 16 September, 2025

    Here are the eligibility criteria for individuals, persons of Indian origin, companies, and associations of persons to pay the direct tax: 
     

    • Any Indian resident individual, person of Indian origin, or non-resident individual who is a taxpayer in India as per the Income Tax Act is eligible to pay direct tax in India. This includes self-employed persons, professionals, freelancers, salaried employees, and other individuals who generate income in India. 
       
    • Hindu undivided families (HUFs) are considered a separate tax entity under the Income Tax Act. So the head of the HUF, which is the Karta, is responsible for filing the ITR. 
       
    • The partnership firms under the Indian Partnership Act, 1932, are eligible to pay direct tax, and the profits are taxed according to the respective shares by the hands of partners. 
       
    • Foreign companies and companies situated in India are eligible to pay direct taxes in India on the profits they generate. It includes all the companies, like private limited companies, public limited companies, and one-person companies. 

  • Pranav Bhattacharya 12 September, 2025

    The direct taxes are imposed on individual income or profits. These taxes are imposed by the Central Government, and they include Corporate Tax, Securities Transactions Tax (STT), Capital Gains Tax, Income Tax, Dividend distribution tax (DDT), and many others.

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