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INTRODUCTION ON TAXATION IN INDIA

TYPES OF TAXES IN INDIA


DIRECT TAXES
Income tax Wealth tax Property tax etc.

INDIRECT TAXES
Sales tax Vat Excise 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

LOCAL BODIES EMPOWRED LEVY TAXES ON


Property Expenditure

User charges

Procedure of payment of taxes


Types of Payment Interest Royalties* Technical service fee* 10% Rate

What is 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 96 categories (including 15 new services introduced by Budget 2006) of net services taxable under the service tax.

WHO IS AUTHORIZISE TO ADMINISTER SERVICE TAX

WHO IS LIABLE TO DEPOSITE SERVICE TAX

WHAT IS THE CONSEQUENCE OF DELAY OF DEPOSITE OF SERVICE TAX

NEW SERVICES THAT HAVE BEEN BROUGHT UNDER THIS TAX NET IN BUDGET 2006-07 2006

Include services provided by share transfer agents and registrar to issues recovery agents, maintenance and management of Automatic Teller Machines sale of advertising space or time (except for print media) sponsorship of events by companies (except for sports) public relations management services, ship management services, international air travel (excluding economy class)

CONTINUED..

rail container handling services (excluding haulage charges), cruise ship travel, Internet telephony services business support services, auctioneers service (excluding auction of property under directions or orders of a court of law or auction by the government) and credit card, debit card and other payment card-related services.

WHAT IS EXCISE DUTY


-Excise duty is an

indirect tax levied and collected on goods manufactures in india .

WHO IS RESPONSIBLE TO PAY EXCISE DUTY TO THE GOVERNMENT

ON WHICH GOODS EXCISE DUTY IS CHARGED

HOW AND WHEN EXCISE DUTY IS PAID

HOW EXCISE DUTY IS DIFFERENT FROM OTHER TAX

HOW EXCISE DUTY IS CALULATED

CHANGES/AMENDMENTS HAVE BEEN MADE VIDE BUDGET 2006.

Exemption from payment excise duty on manufacture of computer has been withdrawn &with effect from March 1,2006,excise duty on of 12% has been impose on manufacture of computers. Excise duty impose on package software, also know as canned software is about 8% Excise duty on storage device i.e. DVD driver .USB flash memory has been reduce from 16% to Nil Excise duty on MP3 Player & MPEG4 player reduced from 16% to 8%

Custom Duty Is A Tax Which A State Collects On Goods Imported Or Exported Out Of The Boundaries Of The Country

In India, Custom Duties Are Levied On The Goods And At The Rates Specified In The Schedules To The Custom Tariff Act, 1975


OBJECTIVES OF CUSTOM DUTIES


Restricting Imports For Conserving Foreign Exchange Protecting Indian Industry From Undue Competition Regulating Exports Prohibiting Imports And Exports Of Goods For Achieving The Policy Objectives Of The Government Co-ordinating Legal Provisions With Other Laws Dealing With Foreign Exchange

CUSTOM DUTY IS LEVIED ON

IMPORT OF GOODS

EXPORT OF GOODS

RULES

Custom Valuation Rules,1988 For Valuation Of Imported Goods That Calculates The Custom Duty Payable Custom And Central Excise Duties Drawback Rule,1971 For Calculating Rates Of Duties As Drawbacks On Exports

REGULATIONS

The Central Board Of Excise And Customs Has Been Empowered To Make Regulations To Carry Out The Provisions Of The Act In Order To Maintain The Rules Of The Act Several Regulations Like Customs House Agnents Licensing Regulations, 1984 Have Been Framed.

NOTIFICATIONS
The Central Government May Also Issue Notifications In The Official Gazette For The Purpose Of The Act. The Notification Is Not Considered To Be Valid If It Is Not Approved Within A Span Time Of Fifteen Days.

TYPES OF CUSTOM DUTIES


Basic duty Addition duty Anti-dumping duty Export duty Protective duty

WHAT IS INSTANT ONLINE CUSTOM DUTY

Instant Online Custom Duty Is An Product For Online Payment Of Taxes And Expenses Developed Jointly By Bank Of China And The Custom.

ADVANTAGES AND CHARACTERISTICS OF ONLINE INSTANT CUSTOM DUTY

Online Payment Of Taxes And Expenses Is A Supplementary Service Of China Electronic Port. The Enterprises Can Apply To Go Through Relevant Import And Export Procedures With Government Agencies The first bank that cooperate with the custom on development of products for online payment of taxes and expenses in china, bank of china has rich experience in development, operation and service maintenance of the products.

TYPES OF TAXES AND EXPENSES PAID INSTANT ONLINE CUSTOM DUTY

Import/Export Custom Duty

Anti-dumping Tax And Other Special Custom Duties Import Value-added Tax Import Consumption Tax

BUSINESS PROCESS OF INSTANT ONLINE CUSTOM DUTY OPERATING PROCESS


Open an account t bank of china

Become port user

pply for online payment service

Bank verifies nd approval

Customs electronic tariff Imposition notice

Enterprise online payment Bank withholding


Tariff is transferred to Treasury or customs Bank checks tariff

Custom examination nd clearance Bank deduction succeeds

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

INTERINTER-STATE AND INTRAINTRASTATE 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 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.

Raw Material Producer

Sale Price Rs. 1,000 Vat Rs. 100

Manufacturer

Sales Price Rs.1,500 Total Vat Rs.150 Vat Payable 150150-100=50

Consumer Wholesaler

Sales Price Rs.1,800 Total Vat Rs.180 Vat Payable 180180-150=30

Retailer

Sales Price Rs. 2,000 Total Vat Rs.200 Vat Payable 200200-180=20

DEFINITION OF INCOME TAX

An income tax is tax levied on financial income of person co-operation or coother 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-youearn 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 ThatIncome 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 NIT= GTI-DA Compute Net Tax
INCOME TAX =NET (IT)*(Rate of tax)

INCOME TAX
INCOME
When Computed? Assessment Year How Computed? Assessment

TAX

What Is Income

At What Rate? (Rate Laid Down In Annual Finance Act I.E Budget

Whose Income Income Of Every Person

Payable By Whom? Payable By Assessee


Income Of What Period Income Of Previous Year

Income How Computed? Income Computed According To Provisions Of Income Tax Act

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.) Up To 1,10,000 Up To 1,45,000 (For Women) Up To 1,95,000 (For Resident Individual Of 65 Years Or Above) 1,10,000 1,50,000 1,50,001 2,50,000 2,50,001 1,000,000 1,000,001 Upwards

Rate (%) Nil 10 20 30 30*

Tax Rates for NRI


Name Of Income Dividend** Interest Received On Loans Made In Foreign Currency To An Indian Concern Or Government Of India. Income Received In Respect Of Units Purchased In Foreign Currency 20% 20% Rate*

20% For Agreements Entered Into: yAfter 31.05.97 But Before 01.06.05 - @ 20% yAfter 01.06.05 - @ 10% 10%

Royalty Fees Or Technical Fees

Interest On FCCB

FRINGE BENEFIT TAX


Fringe Benefit Medical Reimbursements Taxable Percentage 20% Effective Tax Rate 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

Country Australia Canada Estonia Denmark Hong Kong India Israel Malaysia Mexico Russia Singapore Uk Us

Personal Income Tax Rate 0% - 48.5% 16% - 29% 24% - 24% 44% - 63% 0% - 33% 0% - 33% 10% - 49% 0% - 29% 3% - 32% 13% - 13% 0% - 22% 0% - 40% 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

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