Summer Internship Project Report

On

TAXATION
In

A Private Sector Enterprise

At

INDO ASIAN FUSEGEAR LTD.:

2 SIDCUL

Plot no.2 Sector

HARIDWAR
(Submitted For the Partial Fulfillment of the Requirement for the Degree of Master in Business Administration) Project Guide: Submitted By: Mr. Atul Mittal Pooja Kuckreja Sr. Manager Finance & Accounting, MBA. (2009-11) INDO ASIAN FUSEGEAR LTD. Uttrakhand Technical University Dehradun

ACKNOWLEDGEMENT

Any work is not complete and perfect without the sincere help and guidance from various people who affect our life directly as well as indirectly. This training report of mine would not have reached its fulfillment hadnt it been for the guidance and support given to me by various people whom I came across in the organization. This report is the result of cooperation of the officials of the various departments in the organization, without which this project wouldnt have been completed. So I would like to extend my sincere gratitude to all those people who have helped me in completion of this report. My sincere thanks to the Management of INDO ASIAN FUSEGEAR Ltd for

providing me the opportunity to complete my Summer Internship Project in their esteemed organization. I wholeheartedly acknowledge the intellectual stimulation of my esteem guide Mr. Atul Mittal for his continuous help and guidance throughout the training duration in spite of his busy schedule. I would also like to thank my faculty guide Mr. Ranit Kishore of College Of Engineering Roorkee for his immense help in guiding me and preparing this report. Lastly I would like to thank College Of Engineering Roorkee for providing me with a wonderful opportunity to expose myself to the corporate world and learn the intricacies of running a business and letting the manager within me to grow substantially. Thank you.

DECLARATION

I Pooja Kuckreja, a student of MBA of College Of Engineering Roorkee, under Uttarakhand Technical University, Dehradun, uttarakhand, (2009 11) do hereby declare that the Summer Project Report entitled A study on Standard Costing is the outcome of my own work and the same has not been submitted to any University/Institute for the award of any Degree/Diploma. Under the guidance of: Prepared by: Mr. Ranit Kishore Pooja Kuckreja MBA (2009-2011) Place: COER School of Management

PREFACE
Practical work experience is the integral part of individual learning. An individual

who is learning management concept has to undergo this practical experience to be a future executive. Master of Business Administration (MBA) is two year program which inserts management knowledge in an individual and to make individual completely practical, so practical experience is must. INDOASIAN FUSEGEAR Ltd offered me a project on TAXATION to understand taxation concept of an individual & of the organization.

CONTENTS

Page No. Acknowledgement 2 Certificate 3 Preface 4 Declaration 5 Chapters a) Company Profile b) Process of a production company c) Finance Department d) Taxation i) Income Tax ii) Service Tax iii) Sales Tax e) Research Methodology f) Bibliography

Objectives
1. To compute the tax liability for the individual member of the company. 2. To find out the sales tax liability of the company for depositing it within the time limit. 3. To find out the service tax liability of the company for depositing it within the time limit. 4. To find out the excise tax liability of the company for depositing it within the

time limit.

CHAPTER 1 COMPANY PROFILE

COMPANY PROFILE
NAME OF THE COMPANY: INDO ASIAN FUSEGEAR LTD. ADDRESS OF THE PLANT: Plot no.2 Sector 2 SIDCUL HARIDWAR Products manufactured by the Haridwar plant: MCBs: Miniature circuit breakers RCCBs: Residual current circuit breakers MCCBs: Moulded Case Circuit Breakers ACBs: Automatic Circuit Breaker TOTAL UNITS OF THE PLANT: UNIT1: Wire UNIT2: Switchgear UNIT3: EDGP UNIT4: Trading HEADOFFICE OF THE COMPANY: 51 K.M. G.T.Kamal
Road, MURTHAL Distt. Sonepat Haryana, INDIA

CORPORATE OFFICE: B88, Sector 83, NOIDA BOARD OF DIRECTORS: Chairman-cum-Managing Director: V. P Mahendru Non-Executive Director : R. C. Bansal

Non-Executive Director : Dr. Sal Ramachandran Non-Executive Director : A. K. Ghosh Joint Managing Director : P. K. Renade Executive Director : Vinay Mahendru AVP (Legal) & Company Secretary : Rakesh Dhody Auditors J. C. Bhalla & Co. Noida Bankers State Bank of Patiala State Bank of India Standard Chartered BanK Punjab national Bank

COMPANY DETAILS

Plants Nine Marketing Offices 30 across India, 8 warehouses Total Manpower 3,000 Depots 12 Marketing Team 275 Channel Partners 500 Retail Outlets 15000 Customers 54 Countries Educated to Class XII All (Minimum Qualification) International Certifications ASTA, VDE, TUV, CB,ISO-9000 National certifications BIS (ISI Mark), NABL,CPRI/ERDA IT Backbone Dedicated Fiber Optics Connectivity With All Plants/ Offices/Branches. Using Online Order Booking System & Production Planning System Test Facility Short Circuit Lab to IEC 17025 (15 kA)

Plant Locations: Switchgear Plants:

1. 51 Kms. G.T. Karnal Road, Murthal, Distt. Sonepat, Haryana-131027

2. By-Lane, Nakodar Road, Jallandhar 144 003 ( Punjab). 3. B-200, Phase II, Noida, Distt. Gautam Budh Nagar, U.P. 201 305. 4. Plot No. 21-23 Sector No. 5, Parwanoo, Distt. Solan, Himachal Pradesh 173 220. 5. Plot No. 2, Sector 2, SIDCUL, Ranipur, Haridwar, Uttarakhand.

CFL Lighting Plants :

1. A-39, Hosiery Complex, Phase II Extension, Noida, Distt. Gautam Budh Nagar, U.P. 201305. 2. Plot No. 10, Sector 4, SIDCUL, Ranipur, Haridwar, Uttarakhand.

Wires & Cables Plant:

1. Plot No. 2, Sector 2, SIDCUL, Ranipur, Haridwar, Uttarakhand.

LOCATION OF THE DIFFERENT PLANTS OF THE COMPANY

Haridwar Lighting Plant: Plot No. 10,Sector-4,Integrated Industrial Estate,Sidcul,Haridwar-249 402 (Uttaranchal) Tel.: +91-1334-320862, 322107-08 Noida Lighting Plant: A-39, Hosiery Complex, Phase-II Extn., Noida-201 305(UP) Tel: +91-120-3042222 Fax:+91-120-2563442 Email:sales@indoasian.com See Route Direction Haridwar Switchgear & Wire Plant: Black-B,Ptot No.2,Sector-2,Integrated Industrial Estate,Sidcul, Haridwar-249 402(Uttranchal) Tel.: +91-1334-235464-65 Jalandhar Switchgear Plant By Lane, Nakodar Road, Jalandhar-144 003 (Punjab) Tel: +91-181 -4639900 Fax: +91-181-4639925 Email:jalandhar@indoasian.com Murthal Switchgear Plant:

51 Km., G.T. Karnal Road, Murthal-131 027 (Haryana) Tel.: +91-130-3058101,3058129 Fax:+91-1302482422 Noida Switchgear Plant: B-200, Phase-II,Noida-201 305(UP) Tel.: +91-120-3042222 Fax:+91-120-2563422 Email: sales@indoasian.com See Route Direction Indo Simon Plant Haridwar Plot No. 26, Sector-4 SIDCUL Haridwar - 249 403 (Uttarakhand) Tel: +91-1334-329801 Noida Corporate Office B-88,Sector-83. Noida-201305,U.P Tel.: +91 120 3042222,Fax: +91 120 3096800/ 874, Email: sales@indoasian.com See Route Direction

Segment Information Information about Business segments Primary Business Segments

The company has considered business segment as the primary segment for disclosure. The products included in each of the reported business segments are as follows :Switchgear includes MCBs, HRC Fuses, Feeder Pillars, RCCBs, Distribution Boards, Switches etc. Lighting includes Compact Fluorescent Lamps, Fluorescent TubeLights and Luminaires etc. Cable and Wires includes Wires and Cables etc. The Cable & Wires segment has been identified as a reportable segment in the current year. Segment Revenue relating to each of the above business segments includes Other Income, where applicable.

The above business segments have been identified considering: a) The nature of products and services b) The differing risks and returns c) The organization structure, and d) The internal financial reporting systems.

MISSION
The mission has now expanded and evolved further to include exciting new products, new markets. It also involves a far greater responsibility to mankind and to our increasingly vulnerable planet.

VISION

Our Vision "enriching quality of life by ensuring safe, efficient and convenient use of electricity" has been our guiding force for development of new and better products. The culture of innovation and constant change has played a key role in our success.

PRODUCTS OF THE COMPANY

ACBs MCCBs Changeover Switches Switch Disconnector Fuses HRC Fuses & Fuse Bases Rewirable Switches Feeder Pillars MPCBs Contactors Certificates 1st BIS and DIN HRC Fuses in India. 1st Rewirable Switches in deep drawn enclosures in India. 1st MCB with 9kA breaking capacity. 1st to produce RCCMs in India. 1st Switchgears Company to receive ISO 9001. 1st to manufacture CFLs in India. 1st to offer B certified MCBs.

1st to get ISO 9001 for all plants under one certificate. 1st to get ISO 9001 for all plants under one certificate

Department of the company:

HR department Accounts department Production department Store department Purchase department Quality department

INDO ASIAN FUSEGEARS SWITCHGEAR PLANT IS ACQUIRE BY LEGRAND:

FRENCH electrical products maker legrand was acquired the switchgear business of DELHI based INDO ASIAN FUSEGEAR for Rs.600 crore. Both companies will keep their current network. We intend to accelerate the growth rate of both the companies by continuing sustained growth investments in launching new products, said by Yves Martinez Managing Director of LEGRAND India. INDO ASIAN FUSEGEAR shares ended 5% higher at Rs.108.75 on the Bombay Stock Exchange on Friday 23, July 2010. This is the second big acquisition of an Indian electrical products companys business by a global major. Japans Panasonic bought an 80% stake in the privately held Anchor electricals for Rs.2000 crore three years ago.

PROCESS OF A PRODUCTION COMPANY

PLANNING TO PRODUCE ; DECISION TO PURCHASE ISSUE PURHASE ORDER TO VENDOR RECEIVE THE RAW MATERIAL IN STORE

REQUIREMENT BY THE SHOP FLOOR ISSUE TO SHOP FLOOR PRODUCTION FINISHED GOODS (BY MATERIAL MOVEMENT REQUIREMENT) ORDER RCEIVED SALE

TAXES:

A fee charged ("levied") by a government on a product, income, or activity. TAXES are also imposed by many subnational entities. Taxes consist of direct tax or indirect tax, and may be paid in money or as its labour equivalent (often but not always unpaid labour). A tax may be defined as a "pecuniary burden laid upon individuals or property owners to support the government, a payment exacted by legislative authority." A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government, whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."

CHARACTERISTICS OF TAXES:

1. A charge or burden laid upon persons or property for the support of a government. 2. A lesson to be learned; a task. 3. To charge; to accuse; also, to censure; -- often followed by with, rarely by of before an indirect object; as, to tax a man with pride. 4. To assess, fix, or determine judicially, the amount of; as, to tax the cost of an action in court. 5. Charge; censure.

6. A sum imposed or levied upon the members of a society to defray its expenses. 7. A charge, especially a pecuniary burden which is imposed by authority. 8. To subject to the payment of a tax or taxes; to impose a tax upon; to lay a burden upon; especially, to exact money from for the support of government. 9. A task exacted from one who is under control; a contribution or service, the rendering of which is imposed upon a subject. 10.Especially, the sum laid upon specific things, as upon polls, lands, houses, income, etc.; as, a land tax; a window tax; a tax on carriages, and the like. A charge levied by the government upon property, which is determined by its financial worth.

TYPES OF TAXES: a) Direct taxes b) Indirect taxes DIRECT TAXES: The term direct tax generally means a
tax paid directly to the government by the persons on whom it is imposed. Examples include some income taxes, wealth tax some corporate taxes and transfer taxes such as estate (inheritance) tax and gift tax. In this sense, a direct tax is contrasted with an indirect tax or "collected" tax (such as sales tax or value added tax (VAT)); a "collected" tax is one which is collected by intermediaries who turn over the proceeds to the government and file the related tax return. INDIRECT TAXES: In the colloquial sense, an indirect tax (such as sales tax,

value added tax (VAT), or good and services tax (GST) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customer). The intermediary later files a tax return and forwards the tax proceeds to government with the return. In this sense, the term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed. Some commentators have argued that "a direct tax is one that cannot be shifted by the taxpayer to someone else, whereas an indirect tax can be." An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products. Examples would be fuel, liquor, and cigarette taxes. An excise duty on motor cars is paid in the first instance by the manufacturer of the cars; ultimately the manufacturer transfers the burden of this duty to the buyer of the car in form of a higher price. Thus, an indirect tax is such which can be shifted or passed on.

INCOME TAX:
Income of previous year is chargeable to tax in the immediately following assessment year. Tax incidence, however, depends upon residential status of a taxpayer. RESIDENT STATUS OF AN INDIVIDUAL: a) Resident and ordinary resident [section 6(1), 6(6)(a)] b) Resident but not ordinary resident c) Non resident Annual tax levied by the Federal government, most states, and some local

governments, on an individual's or corporations net profit. Surcharge and Education Cess Levy of surcharge has been withdrawn for personal income tax payers . Earlier surcharge was levied at 10% having total income exceeding Rs. 10,00,000/- on such cases. Education Cess on Income-tax and Secondary and Higher Education Cess on income-tax shall continue to be levied at the rate of two per cent and one per cent respectively of income-tax. India Income tax slabs for assessment year 2010-2011 for Men
Income tax slab (in Rs.) Tax Upto 1,60,000 No tax 1,60,001 to 3,00,000 10% of (Total income 1,60,000) 3,00,001 to 5,00,000 14,000 + 20% of (Total income 3,00,000) Above 5,00,000 54,000 + 30% of (Total income 5,00,000)

India Income tax slabs for assessment year 2010-2011 for women
Income tax slab(in Rs.) Tax Upto 1,90,000 No tax 1,90,001 to 3,00,000 10% of (Total income 1,90,000) 3,00,001 to 5,00,000 11000 + 20% of (Total income 3,00,000) Above 5,00,000 51,000 + 30% of (Total income 5,00,000)

India Income tax slabs for assessment year 2010-2011 for Senior citizen
Income tax slab(in Rs.) Tax 0 to 2,40,000 No tax 2,40,001 to 3,00,000 10% of (Total income 2,40,000) 3,00,001 to 5,00,000 6,000 + 20% of (Total income 3,00,000) Above 5,00,000 46,000 + 30% of (Total income 5,00,000)

India Income tax slabs for assessment year2011-2012 for Men

Income tax slab (in Rs.) Tax Upto 1,60,000 No tax 1,60,001 to 5,00,000 10% of (Total income 1,60,000) 5,00,001 to 8,00,000 34,000 + 20% of (Total income 5,00,000) Above 8,00,000 94,000 + 30% of (Total income 8,00,000)

India Income tax slabs for assessment year 2011-2012 for women

Income tax slab(in Rs.) Tax Upto 1,90,000 No tax 1,90,001 to 5,00,000 10% of (Total income 1,90,000) 5,00,001 to 8,00,000 31000 + 20% of (Total income 5,00,000) Above 8,00,000 91,000 + 30% of (Total income 8,00,000)

India Income tax slabs for assessment year 2011-2012 for Senior citizen
Income tax slab(in Rs.) Tax 0 to 2,40,000 No tax 2,40,001 to 5,00,000 10% of (Total income 2,40,000) 5,00,001 to 8,00,000 26,000 + 20% of (Total income 5,00,000) Above 8,00,000 86,000 + 30% of (Total income 8,00,000)

Assessment year [Sec 2(9)]:

Assessment year means the period of 12 months commencing on first day of April every year. Assessment year may be defined as a year in which the income of the previous year is to be assessed. In some countries it is called tax payer.

Previous year [Sec 3]:

Income of the previous year is taxed in the immediately following assessment year. In some countries it is called income year.

TAX LIABILITY :- How to find out Details Amount

1)find out gross total income 2)less: deductions under sec 80C to 80U 3) Find out net income (1 - 2) 4)divide the net income into following a) Income subject to special tax b) Remaining income subject to normal tax 5) find out income tax on net income a) Tax on income according to the rate b) Tax on remaining income at normal rate 6) Add: Surcharge -

7) find total [(5) + (6)] 8) Add: Education Cess (2%) 9) Add: Secondary & higher education cess 10) Find out total [(7) + (8) + (9)] 11) Deduct: Rebate under section 86, 89, 90, 90A, or 91 12) Tax liability [(10) + (11)] 13) Add: Interest/penalty etc. 14) Less: Pre-Paid taxes (i.e. Advance tax; Self assessment tax; TDS; TCS) 15) Tax Payable [(12 + 13) (14)] -

HEADS OF THE INCOMES [Sec 14] / GROSS TOTAL INCOME:

1. 2. 3. 4. 5. Salaries Income from house property Profits & gains of business or professions Capital gains Income from other sources

Total income = Gross total income deductions u/s 80

{Sec 2(45)} {sec 80B(5)}

MEANING OF SALARY [Sec 17(1)]:

The term salary is included the following items: a) Wages b) Any annuity or pension; c) Any gratuity d) Any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; e) Any advance of salary; f) Any payment received by an employee in respect of any period of leave not availed by him.

RELIEFS UNDER SECTION 89

If an individual receives any portion of his salary in arrears or in advance, or receives profit in lieu of salary, in can claim in term of section 89. The relief is also available in respect of family pension received in arrears. Computation of relief when salary or family pension has been received in arrears or in advance [Rule 21A (2)]The relief on salary received in arrears or in advance (to be referred as the additional salary) is computed in the manner laid down in rule 21A(2) as under: 1) Calculate the tax payable on the total income, including the additional salary of the relevant previous year in which the same is received. 2) Calculate the tax payable on the total income, excluding the additional salary of the relevant previous year in which the same is received. 3) Find out the difference between the tax at (1) and (2). 4) Compute the tax on the total income after excluding the additional salary in the previous year to which such salary relates. 5) Compute the tax on the total income after including the additional salary in the previous year to which such salary

relates. 6) Find out the difference between the tax at (4) and (5). 7) The excess of tax computed at (3) over the tax computed at (6) is the amount of relief admissible under section 89 (1). No relief is, however, admissible if the tax computed at (3) is less than the tax computed at (6). In such a case, the assessee employee need not apply for relief. DEDUCTIONS (Under SEC 80C to 80U) DEDUCTIONS UNDER SECTION 80C:
a) Deduction is available to an individual or a HUF only. b) The maximum amount under this section is Rs. 1,00,000. Deduction under 80C = The whole of gross qualifying amount (OR) Rs. 1,00,000 [whichever is less]

GROSS QUALIFYING AMOUNT: a) Life Insurance Premium

Payment made by government employees to central government employees insurance schemes Jeewan Mitra, Jeewan Balya or Jeewan Sathi or other whole life or endowment policies of LIC etc.

b) Contribution towards the following funds:

Statutory provident fund. Recognized provident fund. Public provident fund. (Rs.100 to Rs.70000 pa)

c) Payment towards the cost of the purchase or construction of a residential house.,

Any sum paid as tuition fee. Any sum deposited as 5 year time deposit in an account

under the post office time deposit rules, 1981.

DEDUCTIONS UNDER SECTION 80CCC:

Deduction in respect of contribution to certain pension funds.

DEDUCTIONS UNDER SECTION 80CCD:

Deduction in respect of contribution to pension scheme notified by central government. Deductible amount The whole of such amount paid or deposited (Or) 10% of his salary (whichever is less)

DEDUCTIONS UNDER SECTION 80CCF:

Deductions in respect of subscription to long term infrastructure bonds (Sec 80CCF) Section 80CCF has been introduced for the assessment year 2011-12. Under this section, an individual or a HUF can claim a deduction of whole of the amount paid or deposited during the previous year 2010-11 as subscription to notified long-term infrastructure bonds. Deduction under this section will be available only for the assessment year 2011-12 and the quantum of deduction cannot exceed Rs.20000. this deduction will be over & above the existing overall limit of deduction on savings of up to Rs. 1 lakh under sections 80C, 80CCC & 80CCD.

DEDUCTIONS UNDER SECTION 80D:

Deduction in respect of medical insurance premium: Fixed Rs.15000/Rs.20000 (In case of senior citizen) The aforesaid premium can be paid by any mode other than cash.

DEDUCTIONS UNDER SECTION 80DDB:

Deduction in respect of medical treatment of specified

diseases or aliments. The amount of deduction is Rs. 40000 or the amount actually paid; Whichever is less.

DEDUCTIONS UNDER SECTION 80DD:

Deduction in respect of maintenance including medical treatment of a handicapped dependent who is a person with disability.

Fixed Rs.50000/ Rs.75000 Rs.100000 (2010-11) : In case of disability of 80% or

above

Deductions under sec 80E:

Deduction in respect of repayment of loan taken for higher education. Loan for spouse/ or any child. Tax payer is a legal guardian. Such amount is paid out of his income chargeable to tax.

The amount deductible is:

The amount paid during the year by way of repayment of loan &/or interest thereon. Rs. 40000 Whichever is lower. The deduction is available for a maximum 8 years or till the principal amount of such loan together with interest is liquated, whichever is earlier.

Deductions under 80G:

Deduction in respect of donations to certain funds, charitable institutions etc.

Return of income (SEC 139) Return form: ITR 1 for individuals having income from salary &
interest. ITR 2 for individuals & HUFs not having business/professional income.

ITR 3 for individuals/ HUFs being partners in firms

& not carrying out business or profession. ITR 4 for individuals & HUFs having income from a properitary business or profession. ITR 5 for firms, AOPs, & BOIs. ITR 6 for companies other than companies claiming exemption under SEC 11. ITR 7 for persons including companies required to furnish return under SEC 139 (4A)/ (4B)/ (4C) / (4D) ITR 8 return for Fringe Benefits.

TIME OF FILLING RETURN OF INCOME [SEC 139(1)]

Different situation Due date of submission of return Where the assesse is a company September 30 In a case where accounts of the assesse are required to be audited under any law September 30 Where the assesse is a working partner in a firm whose account are required to be audited under any law September 30 In any other cases July 31

Service tax

SECTION 67 of FINANCE ACT, 1944 contains provisions for valuation of taxable services for charging service tax. Service tax is a form of indirect tax imposed on specified services called "taxable services". Service tax cannot be levied on any service which

is not included in the list of taxable services. Over the past few years, Service tax been expanded to cover new services. The objective behind levying Service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. The intention of the government is to gradually increase the list of taxable services until most services fall within the scope of Service tax. For the purpose of levying Service tax, the value of any taxable Service should be the gross amount charged by the Service provider for the Service rendered by him. Service tax was first brought into force with effect from 1 July 1994. All Service providers in India, except those in the state of Jammu and Kashmir, are required to pay a Service tax in India. Initially only three services were brought under the net of Service tax and the tax rate was 5%. Gradually more services came under the ambit of Service tax. The rate of tax was increased from 5% to 8% w.e.f 14 May 2003. From 10 September 2004 the rate of Service tax was enhanced to 10% from 8%. Besides this 2% education cess on the amount of Service tax was also introduced. In the Union Budget of India for the year 20062007, Service tax was increased from 10% to 12%. On February 24, 2009 in order to give relief to the industry reeling under the impact of economic recession, The rate of Service tax was reduced from 12 per cent to 10 per cent. Some of the major services that come under the ambit of Service tax are:

Telephone Stockbroker General Insurance Advertising agencies Courier agencies Consulting engineers Custom house agents Steamer agents Clearing & forwarding agents Air travel agents Tour operators Rent-a-Cab Operators Manpower recruitment Agency Mandap Keepers Architects Interior Decorators Management Consultants Practicing Chartered Accountants Practicing Company Secretaries Practicing Cost Accountants Real Estates Agents/Consultants Credit Rating Agencies Private Security Agencies Market Research Agencies Underwriters Agencies Scientific and technical consultancy services Photography Convention Telegraph Telex Facsimile Online information and database access or retrieval Video-tape production Sound recording Broadcasting Insurance auxiliary activity Banking and other financial services Port Authorised Service Stations

Leased circuits Services Auxiliary services to life insurance Cargo handling Storage and warehousing services Event Management Cable operators Beauty parlours Health and fitness centres Fashion designer Rail travel agents Dry cleaning services Maintenance & repair services Commission and Installation Services Internet caf Franchise Services Outdoor Caterers service Airport Services Transport of Goods by Air Services Business Exhibition Services Intellectual Property Services Opinion Poll Services TV or Radio Programme Services Survey and Exploration of Minerals Services Travel Agent's Services other than Rail and Air travel agents Forward Contract Services Transport of goods through pipe line or other conduit service Site preparation & clearance Services Dredging Services Survey & Mapmaking Services Cleaning Services Membership of Clubs & Associations Packaging Services Mailing list compilation & Mailing Services SMALL SERVICE PROVIDER: Small units whose turnover less than Rs. 10 lakh p.a. are exempt from service tax.

SALES TAX

Sales Tax is one of the most important Indirect Tax for purpose of taxation by State Governments. Revenue from CST goes to State from which movement of goods commences. Restrictions on powers of taxation Restrictions on power of State Government on imposition of tax on sale or purchase of goods are provided in Article 286 of Constitution of India, as follows : State Government cannot impose tax on sale or purchase during imports or exports; or tax on sale outside the State. [Art 286(1)] Parliament is authorised to formulate principles for determining when a sale or purchase takes place (a) outside the State (b) in the course of import and export. [Article 286(2)] Parliament can place restrictions on tax on sale or purchase of goods declared as goods of special importance and State Government can tax such declared goods only subject to these restrictions [Article 286(3)]. Under these powers, CST Act has defined the terms sale outside a State and sale during export/import. Provisions for declared goods have also been made in the CST Act. Charging section of CST As per the Constitution, tax on Inter State sale/purchase can be levied only by Union Government. CST Act has been enacted for this purpose. Section 6(1) of CST Act provides that subject to other provisions of the CST Act, every dealer shall be liable to pay tax under this Act on all sale of goods (other than electrical energy) effected by him in the course of InterState trade or

Commerce. Section 6(1) is called as Charging Section as it imposes levy on sale of goods on Inter-State sale. IMPORTANT WORDS IN CHARGING SECTION (a) Levy is on sale of goods (i.e. levy is not on purchases). Levy: An amount of money, such as tax, that you have to pay to the government or organization. They imposed 5% levy on alcohol. A new tax levied on consumers of luxury goods. (b) It is on sale as defined under section 2(g) (c) Sale should be of goods as defined in section 2(d) (d) There is no levy on electrical energy, though electrical energy is goods. [Section 6(1)] (e) Sale should be in course of inter-state Trade or commerce as defined in section 3. LIABILITY SUBJECT TO OTHER PROVISIONS OF ACT - The levy is subject to other provisions of Act, i.e. the liability is not absolute. e.g. section 8(1) prescribes lower rate of taxes in certain cases, section 6(2) exempts subsequent sales by transfer of documents during movement of goods etc. Proviso to section 6(1) exempts sale of goods in the course of exports. Thus, the levy is subject to these and other exemptions. Meaning of Inter State Sale Section 3 of CST Act defines Inter-State sale or purchase as follows: A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase (a) Occasions the movement of goods from one State to another or (b)It is affected by a transfer of documents of title to the goods during their

movement from one State to another. Thus, inter-state sale can be as per section 3(a) or section 3(b). What is Document of Title of Goods - When the goods are handed over to the carrier, he hands over a receipt to the seller. The seller sends the receipt to buyer. The buyer gets delivery of goods on submission of the receipt to the carrier at other end. The receipt of carrier is document of title of goods. The words document of title is defined under section 2(4) of Sale of Goods Act. Such document is usually called (a) Lorry Receipt - LR in case of transport by Road (b) Railway Receipt - RR - in case of transport by rail (c) Bill of Lading - BL - in case of transport by sea (d) Air Way Bill - AWB - in case of transport by air. It is called document of title as one who submits the same is entitled to get delivery of goods, if document is in his name or endorsed in his name. Transfer of Document - .Transfer of Document is a symbolic delivery of goods to the purchaser. It carries with it full ownership of goods. Delivery of document of title is equivalent to the delivery of goods themselves. Stock Transfer/Branch Transfer One of the basic and obvious conditions of Inter-State sale is that there should be a sale. If a manufacturer sends goods to his branch in other State, it is not a sale as you cannot sell to yourself. Similarly, if a dealer sends goods to his Agent in other State who stocks goods on behalf of the dealer, it is not a sale. Such agent is usually called Consignment Agent. Goods are despatched to another State on consignment basis and the person despatching goods retains

ownership of goods. Since no sale is involved, there is no Inter State Sale. In Goodyear India Ltd. v. State of Haryana - (1990) 76 STC 71 (SC) (at page 98), it was held that mere consignment of goods by a manufacturer to his own branches outside the State does not amount to sale or disposal as such; the consignment of goods is neither sale nor a purchase. This is called stock transfer or branch transfer. Here, movement of goods takes place from one State to another, but it is not an Inter State sales. When Stock Transfer is treated as Inter-State sale - Goods are despatched to branch/consignment agent in another State and then these are sold from the branch, depot or place of consignment of agent. However, if the movement of goods is occasioned on account of sale, the movement will be treated as interState Sale. One illustration will make the distinction clear. Let us assume that Tata Iron and Steel Co. Ltd. (TISCO), manufacturing Steel, has a factory at Jamshedpur, Bihar. TISCO manufactures Steel of various standard shapes and sizes. TISCO has a depot at Howrah in West Bengal. Steel plates, rods, billets etc. are sent to its depot at Howrah. When the goods are sent from Jamshedpur to Howrah, there is inter State movement, but the movement has not occasioned on account of any covenant or contract for sale. Hence, it is not an Inter-State sale but a stock transfer. Sale takes place when a customer approaches TISCO depot at Howrah and takes delivery from Howrah. Here, the sale by TISCO from its Howrah depot is an Intra-State sale

within West Bengal. However, assume that a buyer from Howrah wants Steel of a particular size and specification, which is not a standard size and specification and hence is not available in Howrah depot of TISCO. He approaches TISCO and TISCO manufactures Steel in its Jamshedpur factory in Bihar as per the specific requirements of the buyer. After manufacture, goods are sent to depot of TISCO at Howrah and goods are sold to the buyer from Howrah depot of TISCO. In such case, the movement of goods from Jamshedpur, Bihar to Howrah, West Bengal has occasioned as a necessary incident of contract and hence it is an Inter State sale, even if goods are supplied from depot of TISCO at Howrah and invoice is raised from TISCO, Howrah. Dealer will have to prove that it is not an Inter-State sale. For this purpose, he must produce a declaration from agent/branch from other State in prescribed form F. [Till 11-5-2002, production of F form was not mandatory and other proof could be produced to prove stock transfer

VAT:
VAT is Value Added Tax. It is tax charged by the registered dealer at the time of sale of goods just like Sales Tax. A vat dealer can claim credit of vat on good purchased by him just like excise duty. While Excise is the tax on goods produced but charged at the time of its removal i.e. at the time of sale. Form C is issued by a reg. dealer (purchaser) to seller of goods in case of CST so as to charge him sales tax at lesser rate whereas the form D

isissued by the govt to the seller of goods for the same reason. Value Added Tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. It is a consumption tax because it is borne ultimately by the final consumer. It is not a charge on companies. It is charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain. It is collected fractionally, via a system of deductions whereby taxable persons can deduct from their VAT liability the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved. In other words, it is a multi-stage tax, lavied only on value added at each stage in the chain of production of goods and services with the provision of a set-off for the tax paid at earlier stages in the chain. The objective is to avoid 'cascading', which can have a snowballing effect on prices. It is assumed that due to crosschecking in a multi-staged tax, tax evasion will be checked, resulting in higher revenues to the government. Over 130 countries worldwide have introduced VAT over the past three decades and India is amongst the last few to introduce it. India already has a system of sales tax collection wherein

the tax is collected at one point (first/last) from the transactions involving the sale of goods. VAT would, however, be collected in stages (instalments) from one stage to another. The much awaited Value Added Tax (VAT) has been introduced in Indian Taxation System from April 1, 2005. Now India is a part of other 123 countries following VAT which was leaded first time by UK in 1973. It is said that 4 years is very short period in introducing VAT in the country as compared to 10 years on an average by other countries. RATE OF TAX - SCHEDULE In VAT charge SCHEDULE I contains those items which are exempt from the VAT. For example: Following articles of wood carving each valuing Rs.250 or below:(a) Agarbati stand carved (b) Chakla belan of wood carving (c) Flower pot carved (d) Fruit tray carved (e) Key hangers carved Blankets and shawal manfactured on handloom & powerloom valueing upto Rs.250 In VAT charge SCHEDULE II (A) contains those items on which 1% VAT has been charged. For example: (a) Gold, silver, platinum & other precious metal (b)Precious & semi precious stones (c) Atta, maida, suji, besan & pulses In VAT charge SCHEDULE II (B) contains those items on which 4% VAT has been charged. For example:

(a) Articles of packing including boxes, cases, cartons, jerry cans, bags made of paper, paper board. (b)Laminated jute bags (c) Bed sheets, pillow covers & other made ups. (d)Bicycles, tricycles, cycle rickshaws & parts, tyres, tubes thereof (e) Computer stationery (f) Writing instruments, geometry boxes, colour boxes, caryons, pencil sharpeners and scientific, mathematical, survey. Those products which are not covered under these schedules on those 12.5% VAT has been charged.

Various form under CST:

When you purchase goods from central ag. form-c (cst @2%) you have issue form-c quarter wise as below format April- June 1 quater July-Sep 2 quater Oct-Dec 3 quater Jan - Mar 4 quater CST = Central Sales Tax If customer issues the C-Form then 2% CST is applicable otherwise full tax is applicable that means it saves tax. After delivery of material we have to collect the C-Form from the party otherwise it is a liability during sales tax assessment. Form C is issued by the dealer for purchasing goods from the dealer out side the state in which he resides the effect can be understood by looking at following example IF Mr A Registered Dealer in Hyderabad (AP) wants to purchase goods from Mr B a registered dealer in Mumbai.Mr B who is selling the goods will charge VAT @ 4% or 12.5% on the goods if Mr A issues him "C" Form then Mr B

should Charge him CST @ 2% so Mr A is SAving Tax. Form D serves the same purpose but it has to be issued by Government. Form F will be issued on monthly basis for stock transfer & for interstate job work.

FORMS
Form 16: TDS Certificate for Salary Form 16A: TDS Certificate for other cases Form 24G: TDS / TCS Book adjustment statement (TDS Return) Form 27D: Tax collection certificate u/s 206C (TCS Return) ITR Form: Income tax return form Return Form III: Periodical turnover return of sales/purchase Form VI: Challan for payment of VAT/ commercial tax/ central sales tax Form 11: VAT purchase Form E1: Purchase by other plant but issue to other plant

RESEARCH METHODOLOGY

In this chapter review of few studies problem areas for the present study, statement of the problem, objectives, instruments of data collection, sampling, tools of analysis have been presented. STATEMENT OF THE PROBLEM- TO EVALUATE THE TAXATION PROCESS FOR THE INDIVIDUAL & THE COMPANY AT INDO ASIAN FUSEGEAR LTD. SECONDARY 1. Annual Report BIBLOGRAPHY 1. Direct Taxes Ready Reckoner Dr. Vinod K Singhania 2. Taxindiaonline.com 3. www.cbec.gov.in 4. www.indoasian.com