India has two types of taxes: direct and indirect.

Direct tax is a tax that is computed and paid directly on your income, for example. tax on salary etc. Income tax is a direct tax.

Indirect tax is a tax that is indirectly billed to you when you buy goods or use services, for example: Buying a mobile phone or eating in a fast-food joint. The mobile phone vendor or fast-food service provider charges you the tax and then deposits the same into the government account. The Goods and Services Tax (GST) now applies to most indirect taxes.

Anyone earning more than a certain amount has to pay income tax. Your income could come from salary, interest from savings, mutual funds, the sale of assets or business or professional income. Income tax rates are predetermined at the beginning of the year in the EU budget (in the Parliament of India).