TAX LAWS-6
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Transcript of TAX LAWS-6
8/14/2019 TAX LAWS-6
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BUSINESS AND TAX LAWS
INCGUNTUR
PUTTU GURU
PRASAD
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Classification of taxes
Service tax
VAT
Sales taxEstate tax
Custom dutiesWealth taxExcise dutyIncome tax
Indirect taxDirect tax
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INCOME TAX
It is applicable to all persons of India
An individual A Hindu undivided family A company A firm An associate of persons local authority Every artificial juridical persons
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Heads of income
Income from salaries
Income from house property Profits and gains of business or profession
Capital gains
Other incomes
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Other sources of income
Dividends
Lotteries
Puzzles Races
Card games
Gambling
Betting
Welfare schemes Interest on securities
Income from furniture let on hire
Bonus
Sum receive under key man insurance
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Exempted incomes
Incomes of trade unions Incomes of charitable trusts Incomes from SEZ/FTZ/EPZ Incomes from political parties Incomes of local authorizes Incomes of former rulers Incomes and allowances of MLA/MP Agricultural income
Receipts by an individual from HUF Share of profit of a partnership firm Any sun from life insurance policy Scholarships granted to meet the cost of education Income by way of interest on notified securities Any long term capital gain arising out of transfer in a listed company as
equity
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WEALTH TAX
The wealth tax is chargeable in respect of net
wealth of every individual, HUF, andcompany in respect of every assessment
year at the rate of 1% of the amount where
the net wealth exceeds Rs.15 lakhs
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Assets that are exempted
Agricultural land, crops, grass, standing trees
Building owned or occupied by a cultivator
Animals
A right to annuity
Deemed assets
Assets transferred by one spouse to another Assets held by minor child
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CENTRAL EXCISE
Central excise is the duty that is collected on
a product, that manufactured or produced inIndia, irrespective of its sale or realization
value.
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Applicability of duties
The Central Government is vested with the
powers to levy excise duty by virtue scheduleVII of the constitution of India. However the
C.G has no power to impose duty on
Alcoholic liquors for human consumption
Opium, Indian hemp and other narcotic drugs
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SALES TAX
Sales tax was being levied by states even if one of the following
ingredients was present:
The goods are present or in existence in the state at the time of sale
The manufacturer has taken place in the state
The property in the goods is transferred in the state for a price
There has been a payment of price and title in the goods has
been passed
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SALES TAX
Applicability of central sales tax
Tax is levied on interstate sales Sales thus collected is retained by the
collecting state
Sales tax under the scheme is payable in the
state from where movement of goods begin
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Rates to various categories
Sale to government :- the sales tax on sale to government is
charged at 4% general sale tax rate for sale within the state
whichever is lower. Government department that purchases thegoods has to issue certificate in D form.
Sale to Registered dealer :- is taxed at 4% or sales tax rate for
sale within the state which ever lower, provided the goods are
eligible as per section 8(3), and these are specified in the
registration certificate issued to the purchasing dealer.Purchasing dealer has to submit the declaration in C form.
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Rates to various categories
Sale to unregistered dealers:-
Declared goods- it is twice the rate applicable to sale or
purchase of such goods with in the state other than declared goods- as applicable for sale inside the
state or 10% which ever is higher
If local sales tax rate is nil CST will also be nil, if sale is to
unregistered dealer
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Calculation of sales turnover
Sales tax is payable on sale turnover of a period. Rate of tax is
determine as per sec 8 and turnover is determined as per sec
2(J). Turnover :- the sales turnover (taxable turnover) is the
aggregate of the sale price received and receivable by the
dealer in respect of sales of any goods in the course of
interstate trade or commerce during any prescribed period
Prescribed period means the period that stipulated by the localsales tax law, for filling the sales tax returns. It is usually a
quarter and in some states it is monthly
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CUSTOMS DUTY
Customs duty is collected by the central
government on every product that is exportedor imported from India. This duty is governed
by the customs act 1962. this duty is levied
as a percentage on the assessed value of
the product that is exported or imported fromIndia.
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Customs duty
Customs duty is applicable on transporting of goods
by land , air , and water including the Indian territorial
waters. Indian territorial waters spread around 12nautical miles from the seacoast of India. The
jurisdiction of customs authorities extends up to
border of Indian waters. If they found illegal transit is
going on the authorities has the powers to search,confiscate arrest and even shoot out the vessel if it
is not stopped
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The objective of levying customs duty
To restrict imports to preserve foreign exchange To protect Indian industry from undue competition To prohibit imports and exports of goods for
achieving the policy of the government To regulate exports To coordinate legal provisions with other laws
dealing with foreign exchanges such as foreign trade(development and regulation act) FEMA,conservation of foreign exchange prevention of smuggling act etc.,
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Types of customs duty
Basic duty
Countervailing duty Anti dumping duty
Protective duty
Duty on bounty fed articles Export duty
Import duty
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Exemptions from customs duty
Goods derelict , wreck etc.,
Remission of duty on lost, destroyed or abandoned goods
Denaturing or mutilation of goods
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VALUE ADDED TAX
VAT is a form of sales tax collected by the
government of the destination state ( that isstate in which the final consumer is located)
on consumer expenditure, it collected
through business transitions involving the
sale of goods within the state. The term VATis self explanatory and brings forth the nature
of the tax.
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VALUE ADDED TAX
It is the tax at the final or retail point of sale which iscollected at each stage of sale when there is a value
addition to the goods. It is a tax on retail salescollected in stages on multipoint sales basis indifferent stages of products and trade levied in sucha manner that it is added in each stage and is taxedonce and only once with a view to avoid cascading
or tax on tax effect so that the burden to the finalconsumer not more than what it is intended by theprescribed rate of tax.
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VALUE ADDED TAX
Definition of Sale under the VAT:- The conventional sale, i.e. transfer of property in goods
Supply of goods by a society, club, firm and company to itsmembers Transfer of property in goods involved in execution of works
contract Delivery of any goods on hire purchase or any other system of
payment by installments
Transfer of right to use any goods for any purpose whether or not a specific period Supply by way of as part of any service on I any other manner
what so ever, of goods being food or any other article for human consumption on any drink
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SERVICE TAX
The service tax is applicable to several service providers right
from transport operators to the hospitality sector. Every year
the C.G enhances or adds new services to the existing list byidentifying new service sectors. These providers has to collect
tax from their customers and pay to government .
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objectives
To determine the turnovers of the un-
organized service sectors To bring unorganized under tax purview
To make part in the Government revenue by
imposing tax the service sector is the major
contributor to the GDP
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FRINGE BENEFIT TAX
Perquisites are the benefits are the benefits
both monitory and non monitory provide bythe employer to his employees in addition to
the cash salary or wages. These perquisites
are often called as Fringe Benefits. These
benefits are paid to encourage the wellperforming employees .
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FRINGE BENEFIT TAX
The tax on these fringe benefits or perquisites is called fringe benefittax (FBT) usually these perquisites are taxed in the hands of employees but this tax is collected from the hands of employer . It
means the employer has to bear the tax on payment of fringe benefits. Entertainment Festival celebrations Gifts Use of club facilitates Employee welfare
Hotel boarding and lodging Repair , running and maintenance of motor cars, aero planes Use of telephones Scholarships to the children of the employees