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 .

SERVICE TAX Dr. Manmohan Singh, the then Union Finance

Minister, in his Budget speech for the year 1994-95 introduced the new concept of Service Tax

Service tax is an indirect tax levied under the Finance Act, 1994, as amended from time to time, on specified services. At present, there are approximately 124 categories of net services taxable under the service tax.

Service provider pays the tax and recovers the amount from the recipient of taxable service.

At present effective service tax rate is 12.0℅ .

UNDER WHICH AUTHORITY SERVICE

TAX IS LEVIED? Vide Entry 97 of Schedule VII of the

Constitution of India, the Central Government levies service tax through Chapter V of the Finance Act, 1994.

The taxable services are defined in

section 65 of the Finance Act, 1994. Section 66 is the charging section of the said Act.

WHAT IS THE CONSEQUENCE FOR DELAY DEPOSITE OF SERVICE TAX?

If a person fails to furnish the ST-3 Return within the due date [25th October and 25th April every year] he shall be liable to penalty which may extend to an amount not exceeding Rs 2000/- depending upon Period of Delay.

NEW SERVICES THAT HAVE BEEN BROUGHT UNDER THIS TAX NET IN BUDGET 2010-11

Promotion, marketing or organizing game of chance including lottery .

Maintenance of Medical Records of the employees .

Promotion of a brand of goods, service, event, endorsement of name .

Services in relation to copyrights .

Special Services provided by a builder or any other person to a buyer.

NON TAXABLE SERVICES Government and Judiciary, RBI,

government regulatory body. Social welfare and public utilities. Agriculture & animal husbandry. Public transportation. Construction & Real Estate. Education. Health.

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