INTRODUCTION ON TAXATION IN INDIA

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INDIRECT TAXES Sales tax Vat Excise duty Custom duty etc.TYPES OF TAXES IN INDIA DIRECT TAXES Income tax Wealth tax Property tax etc. .

which the State Governments can levy). ´ VAT (value added taxes) ´ Central Excise and Sales Tax (CST) Service Tax (tax levied on service provided ) ´ .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.

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. At present. there are approximately 96 categories (including 15 new services introduced by Budget 2006) of net services taxable under the service tax. 1994. on specified services. . as amended from time to time.

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. ship management services. 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. international air travel (excluding economy class) ´ ´ ´ ´ .

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

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 ´ Exemption from payment excise duty on manufacture of computer has been withdrawn &with effect from March 1.excise duty on of 12% has been impose on manufacture of computers.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

 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 .

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 ´ .RULES ´ Custom Valuation Rules.

´ .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.

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

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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. bank of china has rich experience in development. 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. 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 .

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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? .

collection and distribution of taxes ´ To declare certain goods .OBJECTS OF SALES TAX ´ To formulate principles for determining ´ To provide for levy.

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 .

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 .WHAT IS INTERSTATE SALE According To S3.

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 ´ .

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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.

1958 ´ . 1959 ´ The Maharashtra Sales Tax On The Transfer Of Right To Use Any Goods ´ Bombay Sales Of Motor Spirit Taxation Act.IS VAT YET ANOTHER TAX It Will Replace The Following Four Existing Taxes: The Bombay Sales Tax Act.

.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.5% ´ Reduction In The Effective Tax Rate For Many Goods ´ Elimination Of ´Tax On Taxµ Existing In The Sales Tax System ´ Simplification Of Tax Forms And Procedures ´ . Transparent And Progressive ´ Business Friendly System Of Taxation ´ Reduction In The Number Of Tax Rates To Only Two Main Rates ² 4% And 12.

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 .

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. . Vegetables Books are Not Subject To Vat. ´ Foodgrains Including Pulses. Milk.WHAT IS RATE OF VAT? Under The Vat.

100 Manufacturer Sales Price Rs.180 Vat Payable 180180-150=30 Retailer Sales Price Rs. 2.200 Vat Payable 200200-180=20 .500 Total Vat Rs.150 Vat Payable 150150-100=50 Consumer Wholesaler Sales Price Rs.1.000 Total Vat Rs.1. 1.800 Total Vat Rs.Raw Material Producer Sale Price Rs.000 Vat Rs.

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DEFINITION OF INCOME TAX ´ ´An income tax is tax levied on financial income of person co-operation or coother legal entity.µ .

HISTORY

PRINCIPLES
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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 ³Previous Year´ Income How Computed? Income Computed According To Provisions Of Income Tax Act .

000 Up To 1.000.45.10.000 1.000 1.95.000.001 ± 2.001 Upwards Rate (%) Nil 10 20 30 30* .50.PERSONAL TAX RATES For Individuals. Huf.001 ± 1.50.000 (For Resident Individual Of 65 Years Or Above) 1.000 ± 1. Association Of Persons (Aop) And Body Of Individuals (Boi): For the Assessment Year 2007-08 Taxable Income Slab (Rs.000 2.50.10.) Up To 1.000 (For Women) Up To 1.50.

05 .05.06.97 But Before 01.05 .@ 10% 10% Royalty Fees Or Technical Fees Interest On FCCB . Income Received In Respect Of Units Purchased In Foreign Currency 20% 20% Rate* 20% For Agreements Entered Into: yAfter 31.Tax Rates for NRI Name Of Income Dividend** Interest Received On Loans Made In Foreign Currency To An Indian Concern Or Government Of India.@ 20% yAfter 01.06.

8% Telephone Bills 20% 6.8% Employee Stock Options (Difference Between Market Value And Purchase Price On Vesting Date) 100% 33.99% .FRINGE BENEFIT TAX Fringe Benefit Medical Reimbursements Taxable Percentage 20% Effective Tax Rate 6.

48.33% 10% .29% 24% .22% 0% .13% 0% .32% 13% .63% 0% .49% 0% .29% 3% .24% 44% .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% .33% 0% .5% 16% .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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