What are Different Terms Used in Taxation? Meaning of the Common Tax Terminologies
Financial education is quite rare in India. With very few people knowing taxation, there are millions of people who have to deal with it without knowing. Having total knowledge about the taxation system and the other financial aspects is not required. But, the essential thing is to understand the common terminologies.
In taxation, knowing the terms perfectly is essential. Half of your burden is relieved if you understand the different terms used in the Indian taxation system. If you are willing to learn all of the taxation terminologies, you are in the right place. In this post, we will share detailed information on the different terms used in the Indian taxation system. All you have to do is to check all of the terms and the meaning of the same.
Essential Taxation Terminologies
VAT is nothing but the Value Added Tax. It’s the tax that is levied on the sale of goods and services. The producers have to collect the VAT from the customer and have to pay the same to the government. It is commonly levied on the increased value of the goods or services. The VAT is an indirect tax, which is a multi-stage tax.
TIN is the Taxpayer’s Identification Number. The TIN is provided by the Income Tax Department of India for all of the eligible taxpayers. It’s commonly available for all of the companies that operate in the Indian boundaries. With the help of the TIN, the users can file the tax returns. The shopkeepers, businesses, e-commerce sites, etc. are required to mention the TIN on the invoices.
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PAN is the Permanent Account Number. It’s the most common term in taxation. The PAN is allotted to the taxpayers by the Income Tax department of India. With the PAN, the users can file the tax returns, quote the same on financial transactions, and use it for identification purposes. It works as the identification proof in India. The PAN is the essential number that everyone should get even if they don’t have to file the taxes.
GST is the essential thing for the businesses that deal with Goods and Services. The government of India recently implemented the new taxation system, named as the Goods and Services Tax. The GST has replaced the VAT in India. Well, the Goods and Services Tax is applicable for all of the businesses that deal in the Goods and services. Be it the traders or the service providers; everyone has to mention the GST identification number on the invoices, file the GST returns, and claim GST input credits on the regular basis. It’s the most important tax that every business should take care of.
The DIN is nothing but the Directors identification number. When the company is formed, every director should get registered. After registration, the direct receives the DIN. The DIN is issued by the Ministry of Corporate Affairs. Before the incorporation of the company, every director is required to obtain the DIN first and then proceed with the incorporation process.
It is essential to understand the common terms in the taxation system. If you know the common terms, then you can avoid any financial issues that you might face due to the lack of knowledge. Also, it helps you stay updated with the taxation system in the country without any issues. We tried to explain all of the common terms that every individual and business person should always keep in mind.