Business Law CIA 3 presentation on:

Direct Taxes : Income Tax and Wealth Tax

Presented By:Group 2:

Sree Ram Karthik (1627627)Pooja Singh (1627645)

Divya Shree G S (1627637)Reshma Mary Titus (1627650)

Savio Joseph (1627624)2 MBA- “I”

Taxes and Taxation

Taxes: Taxes are generally involuntary fees levied on individuals or corporations that is enforced by a government entity, whether local, regional or national in order to finance government activities. In economics, taxes fall on whomever pays the burden of the tax, whether this is the entity being taxed, like a business, or the end consumers of the business's goods.

Taxation: A means by which government finance their expenditures by imposing charges on citizens and corporate entities. Governments use taxation to encourage or discourage certain economic decisions.

Branches of TaxTax

Direct

Income tax

Wealth tax

Indirect

Sales tax

Service tax

Excise duty

What Is Direct Tax

• A government levy on the income, property, or wealth of people or companies. A direct tax is borne entirely by the entity that pays it, and cannot be passed on to another entity.

Direct vs Indirect

In case of direct tax, the impact and incidence are on the same person who pays the tax.

In the case of indirect tax, the burden is on one person and the incidence on another.

Income TaxAn income tax is a tax that governments impose on financial income

generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine

whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds that the government uses to fund its activities and

serve the public.

The year in which is income is earned is earned is known as Previous Year (P.Y.) and it is taxed in the next year called Assessment year (A.Y.)

Income Tax (Contd.)Income broadly includes:

Profits & Gains from Business and Profession Salary Income Dividend Income Winnings from lotteries, crosswords, races, games, gambling or betting. Capital Gains, Amount recd. under a Keyman Insurance Policy, Voluntary Contributions recd. by a religious or charitable trust or scientific

research association or a sports promotion association, Allowances given to the assessee by his employee, Gift received by individual & HUF, in excess of Rs.25000 on or after 01.09.2004.

Income Tax SlabsIncome tax slab for individual tax payers & HUF (less than 60 years old) (both men & women)

Income Slab Tax RateIncome up to Rs 2,50,000 No TaxIncome from Rs 2,50,000 – Rs 5,00,000 10%Income from Rs 5,00,000 – 10,00,000 20%Income more than Rs 10,00,000 30%

Income tax slab for senior citizens (60 years old or more but less than 80 years old) (both men & women)

Income Slab Tax RateIncome up to Rs 3,00,000 No TaxIncome from Rs 3,00,000 – Rs 5,00,000 10%Income from Rs 5,00,000 – 10,00,000 20%Income more than Rs 10,00,000 30%

Income tax slab for super senior citizens (80 years old or more) (both men & women)

Income Slab Tax RateIncome up to Rs 2,50,000 No TaxIncome up to Rs 5,00,000 No taxIncome from Rs 5,00,000 – 10,00,000 20%Income more than Rs 10,00,000 30%

ASSESSEE

One who is assessed or is liable to pay tax.

According to sec. 2(7) assessee means & includes:

A person by whom any tax or any other sum is payable. A person in respect of whom any proceeding under the Act is taken.

Every person :1. who is assessable in respect of income or loss of another person, or2. who is deemed to be an assessee, or3. who is deemed to be assessee in default.

PERSON : Sec. 2(31)

a) Individual

b) HUF

c) Company

d) Firm

e) AOP/BOI

f) Local Authority

g) Any artificial juridical person not falling under any of the above category.

Wealth Tax

Wealth tax is imposed on the wealth or assets held by individuals.

It is levied every year on the total value of a person’s property or wealth or capital.

It is a tax based on the market value of assets that are owned.

Applicability

Section 1• The Wealth Tax Act, 1957 extends to whole of India.

• Every individual, HUF or company who is an assessee shall be charged with wealth tax at the rate of 1% on the amount by which his net wealth determined on the basis of his nationality and residential status on the valuation date exceeds Rs 30,00,000/-.

Persons not liable to pay wealth tax

• Any company registered under section 25 of the companies act, 1956. [non-profit making company]

• Any co-operative society• Any social club• Any political party• A mutual fund specified in Income tax