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TYPES OF TAXES IN INDIA
DIRECT TAXES Income taxWealth taxProperty tax etc.
INDIRECT TAXESSales tax VatExcise duty Custom duty etc.
IN ACCORDANCE WITH THE CONSTITUTION OF INDIAN GOVERNMENT THE MAIN TAXES/DUTIES THAT THE UNION GOVERNMENT IS EMPOWERED TO LEVY INCOME TAX (except tax on agricultural
income, which the State Governments can levy),
VAT (value added taxes)
Central Excise and Sales Tax (CST)
Service Tax (tax levied on service provided )
PRINCIPAL TAX LEVIED BY THE STATE GOVERNMENT Sales Tax
Stamp Duty
State Excise
Land Revenue
Octroi
WHAT IS EXCISE DUTY
-Excise duty is an indirect tax levied and collected on goods manufactures in india .
WHAT IS SALES TAX?
Sales tax is a tax on the supply of goods and certain services ,it is charged at the time of sale and then deposited in the Government treasury.
WHAT TYPES OF BUSINESS ARE NOT LIABLE FOR SALES TAX?
Agricultural Products Most Of Pharmaceutical Products Educational & Scientific Materials Equipment For Fighting AIDS &
CANCER
HOW DOES SALES TAX OPERATE?Output tax
Input tax
HOW SALES TAX REGISTERED
WHEN IS SALES TAX PAYABLE?
OBJECTS OF SALES TAX To formulate principles for determining
To provide for levy, collection and distribution of taxes
To declare certain goods
BASIC SCHEME OF THE CST ACT
Sales Tax Revenue To States Tax Collected In The Sated Where
Movement Of Goods Commences Tax On Inter State Sale Of Goods State Sales Tax Law Applicable In Many
Aspects CST Act Defines Some Concepts Declared Goods
INTER-STATE AND INTRA-STATE SALE
WHAT IS INTERSTATE SALE
According To S3, A Sale Or Purchase Shall Be Deemed To Take Place In The Course Of Interstate Trade Or Commerce In The Following Cases:
When The Sale Or Purchase Occasions The Movement Of Goods From One State To Another
When The Sale Is Effected By A Transfer Of Documents Of Title To The Goods During Their Movement From One State To Another
MAIN PRINCIPLES IN STATES SALES TAX LAWS
Existing Goods Or Future Goods In Most Of The Cases Related To
The Sales Tax Under The Provisions Of Same
State Laws A Quarter Return Of Sales Or
Purchases Concerned Sales Tax/Commercial
Tax Officer Apply For Registration And Obtain
A Registration
INTRODUCTION OF VAT
WHAT IS VAT? Vat Means
Value Added Tax
Vat Paid By Dealers On Their Purchases Is Usually Available For Set-off Against The Vat Collected On Sales.
IS VAT YET ANOTHER TAX
It Will Replace The Following Four Existing Taxes:
The Bombay Sales Tax Act, 1959 The Maharashtra Sales Tax On
The Transfer Of Right To Use Any Goods
Bombay Sales Of Motor Spirit Taxation Act,1958
WHY CHANGE TO VAT
Vat Is A Modern And Progressive Tax System Now Used In Over 130 Other Countries.
WHAT ARE THE BENEFIT OF VAT
It Is Simple, Transparent And Progressive
Business Friendly System Of Taxation
Reduction In The Number Of Tax Rates To Only Two Main Rates – 4% And 12.5%
Reduction In The Effective Tax Rate For Many Goods
Elimination Of “Tax On Tax” Existing In The Sales Tax System
Simplification Of Tax Forms And Procedures
WHAT TYPES OF BUSINESS ARE LIABLE FOR VAT?
VAT APPLIES TO ALL TYPES OF BUSINESS INCLUDING:
Importers Manufacturers Distributors Wholesalers Retailers Works Contractors Lessors
HOW IS VAT CHARGED?
Vat Is Not A Cost To The Dealers
Vat As A Separate Amount On A Bill Or Cash Memorandum
WHAT ARE THE OBLIGATIONS OF DEALERS REGISTERED FOR VAT?
Dealers Who Are Required To Be Registered For Vat Must:
Change And Collect Vat On Their Sales Of Taxable Goods
Issue Proper Tax Invoices Keep Proper Records And Books Of
Account Calculate The Vat To Government
Based On Vat File Vat Returns On A Regular Basis
Declaring Their Vat Liability
WHAT IS RATE OF VAT?
Under The Vat, The Tax Rates Have Been Simplified:
4% For Items Consisting Mainly Of Raw Materials Used In The Manufacturing Process
12.5% For All Goods Unless They Are Listed Under The Other Rates.
Foodgrains Including Pulses, Milk, Vegetables Books are Not Subject To Vat.
Wholesaler
Sales Price Rs.1,800Total Vat Rs.180
Vat Payable180-150=30
Retailer
Sales Price Rs. 2,000Total Vat Rs.200
Vat Payable200-180=20
Sales Price Rs.1,500 Total Vat Rs.150Vat Payable150-100=50
ManufacturerSale Price Rs. 1,000Vat Rs. 100
Raw Material Producer
Consumer
DEFINITION OF INCOME TAX
“An income tax is tax levied on financial income
of person co-operation or other legal entity.”
HISTORY
PRINCIPLES Personal Earnings Capital Gains Business Income Rates For Different Types Of Income
May Vary And Some May Not Be Taxed At All.
Capital Gains May Be Taxed When Realized
Business Income May Only Be Taxed If It Is Significant
Personal Earnings May Be Strictly Defined
Tax Rates May Be Progressive, Regressive,or Flat
A Progressive Tax Taxes Differentially Based On How Much Has Been Earned
Personal Income Tax Is Often Collected On A Pay-as-you-earn Basis
CRITIQUE OF INCOME TAX
Extremely Complex Requiring Detailed Record-keeping Lengthy Instructions Complicated Schedules Worksheets And Dorms It Can Penalize Word Discourage Saving And Investment Not Border-adjustable
CHARGE OF INCOME TAX
Section 4 Of The Act States That- Income Tax Shall Be Charged At The Rates Laid Down By The Finance
Act For That Assessment Year In Accordance With Subject To The
Provisions Of This Act In Respect Of The Total Income Of The Previous Year Of Every Person
COMPUTATION OF INCOME AND TAX
Determine Scope Of Total Income Residence Year Place Exclude Exempt Income Classify Income Under Different Heads Compute Income Under Each Head Determine Gross Total Income Deduct Claims For Deductions Compute Net Taxable Income
Compute Net Tax
NIT= GTI-DA
INCOME TAX =NET (IT)*(Rate of tax)
Whose IncomeIncome Of Every Person
What Is Income
Income How Computed?Income Computed According To Provisions Of Income Tax Act
Income Of What PeriodIncome Of “Previous Year”
Payable By Whom?Payable By Assessee
When Computed?Assessment YearHow Computed?
Assessment
At What Rate?(Rate Laid Down In Annual
FinanceAct I.E Budget
INCOME TAX
INCOME TAX
PERSONAL TAX RATES
For Individuals, Huf, Association Of Persons (Aop) And Body Of Individuals (Boi):
For the Assessment Year 2007-08
Taxable Income Slab (Rs.) Rate (%)
Up To 1,10,000Up To 1,45,000 (For Women)Up To 1,95,000 (For Resident Individual Of 65 Years Or Above)
Nil
1,10,000 – 1,50,000 10
1,50,001 – 2,50,000 20
2,50,001 – 1,000,000 30
1,000,001 Upwards 30*
Tax Rates for NRI
Name Of Income Rate*
Dividend** 20%
Interest Received On Loans Made In Foreign Currency To An Indian Concern Or Government Of India.
20%
Income Received In Respect Of Units Purchased In Foreign Currency
20%
Royalty Fees Or Technical Fees
For Agreements Entered Into: After 31.05.97 But Before 01.06.05 - @ 20% After 01.06.05 - @ 10%
Interest On FCCB 10%
FRINGE BENEFIT TAX
Fringe BenefitTaxable
PercentageEffective Tax Rate
Medical Reimbursements 20% 6.8%
Telephone Bills 20% 6.8%
Employee Stock Options (Difference Between Market Value And Purchase Price On Vesting Date)
100% 33.99%
INCOME TAX RATES ACROSS THE WORLD
CountryPersonal Income Tax Rate
Australia 0% - 48.5%
Canada 16% - 29%
Estonia 24% - 24%
Denmark 44% - 63%
Hong Kong 0% - 33%
India 0% - 33%
Israel 10% - 49%
Malaysia 0% - 29%
Mexico 3% - 32%
Russia 13% - 13%
Singapore 0% - 22%
Uk 0% - 40%
Us 10% -35%
CORPORATE INCOME TAX
Income Tax Deduction
Income Tax Sections
Section10(30)
Section88b
Section88c
INDIVIDUAL INCOME TAX
Income Tax On Salary
Income Tax On House Property
Income Tax On Pension
Income Tax On Capital Gains
Income Tax Upon Income From Business Or Professions