ZARA

1711332
BBA-5B
LAW & TAXATION
ASSIGNMENT -02
DATE: 21-05-2020
 QNO#01

The possible disadvantages and causes of taxation may be are as follows;

Reduce purchasing power, Taxation especially when the tax rate are high has the tendency of
reducing the disposable income of an individual which subsequently reduce the purchasing
power.

Discourage investment, Heavy tax rate on firm profit become disincentive for investor to invest
on particular sector instead investors will opt to invest in other sector which their tax rate is of
reasonable value.

The another disadvantages of a direct tax is that it is liable to be evaded. By submitting false
returns, many people try to evade income tax. Unless the civic sense of the people is well —
developed and there is spread of education among them, the administration of direct taxes is very
difficult.

People’s Indifference: When a man directly bears the burden of a tax, he tries to know how the
government spends that money. Those who are not directly affected by the burden of taxation
remain indifferent as to the way the public expenditure is incurred.

Since not everybody has to pay direct taxes, it is often responsible for creating social conflict
amongst societies. It also leads to crimes, social injustice and a sense of inferiority among
different groups of people.

Taxation can increase the expenses that businesses face, which makes it more difficult for them
to achieve profitability. Businesses pay numerous taxes, such as payroll taxes on employee
wages, property taxes, business taxes and fees for permits and licenses. Business-related taxes
leave less money for expanding businesses through investment and hiring. High business taxes
may encourage outsourcing of operations abroad.

Direct tax gives mental pinch to the taxpayers as they have to curtail their income to pay to the
government.

The main problem of using taxation to redistribute income is the possibility of ridiculously high
effective tax rates. Though one might think that high effective tax rates would equate to more tax
revenue, a high tax rate would give citizens a disincentive to work.

No Civic Consciousness: These taxes do not only develop civic consciousness, because many
times the tax-payer does not even know that he is paying tax. The tax is concealed in the price.

They discourage industries if raw materials are taxed. This will raise the cost of production and
impair their competitive capacity.
Raising Prices Unduly: They causes the price of an article to rise more than the tax. The cost of
collection is quite heavy. Every source of production has to be guarded. Large administrative
staff is required to administer such taxes.

Through anti-dumping duties, Goods produced in plenty in our country cannot be exported and
hence these goods become unusable and provides no benefits to the traders. Through heavy
custom duties thing need for the production of goods in domestic industries will not be prepared
with changing demand of customers.

Uncertain: Unless indirect taxes are imposed on necessaries, we cannot be sure of the revenue
yield. In the case of goods, with an elastic demand, the tax might not bring in much revenue. The
tax will raise the price and contract the demand. When the thing is not purchased, the question of
the tax payment does not arise.
 QNO#02

Lack of basic knowledge about Taxation:

Many people do not have any knowledge about taxation like tax systems their slabs and ups and
downs in this, what is exempted and what are advantages of being a tax filer.

Lack of documents or necessary legal papers:

Many individuals don not have proper documentation (income slips, bills or balance sheet) or all
legal authorities towards their property.

Remedies to society:

Individuals should properly manage their documents and consult a legal authoritative to manage
his/her taxation timely.

Remedies to Government:

Government should provide proper knowledge about taxation to every individual of society so
that they can calculate their taxation.

QNO#03

Government should make and keep;

Strict laws and its imposition:

Government and taxation department should encourage people to register for an NTN number
and make strict rules.

Records:

Proper keeping of records should be ensured so no one find any loophole for any transaction.

Technology improvement:

By Advance and proper technical systems it would be possible to track each and every
transaction taking place and it would be easy for collection of tax.