BUSINESS AND TAX LAWS

INC GUNTUR PUTTU GURU PRASAD

Classification of taxes
Direct tax Income tax Wealth tax Estate tax Indirect tax Excise duty Custom duties Sales tax VAT Service tax

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

Heads of income
 Income

from salaries  Income from house property  Profits and gains of business or profession  Capital gains  Other incomes

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

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

WEALTH TAX
 The

wealth tax is chargeable in respect of net wealth of every individual, HUF, and company in respect of every assessment year at the rate of 1% of the amount where the net wealth exceeds Rs.15 lakhs

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

  

CENTRAL EXCISE
 Central

excise is the duty that is collected on a product, that manufactured or produced in India, irrespective of its sale or realization value.

Applicability of duties
 The

Central Government is vested with the powers to levy excise duty by virtue schedule VII 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

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

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

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 the goods 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.

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

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 local sales tax law, for filling the sales tax returns. It is usually a quarter and in some states it is monthly

CUSTOMS DUTY
 Customs

duty is collected by the central government on every product that is exported or 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 from India.

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 12 nautical 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

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.,

Types of customs duty
 Basic

duty  Countervailing duty  Anti dumping duty  Protective duty  Duty on bounty fed articles  Export duty  Import duty

Exemptions from customs duty
 Goods

derelict , wreck etc.,  Remission of duty on lost, destroyed or abandoned goods  Denaturing or mutilation of goods

VALUE ADDED TAX
 VAT

is a form of sales tax collected by the government of the destination state ( that is state 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 VAT is self explanatory and brings forth the nature of the tax.

VALUE ADDED TAX

It is the tax at the final or retail point of sale which is collected at each stage of sale when there is a value addition to the goods. It is a tax on retail sales collected in stages on multipoint sales basis in different stages of products and trade levied in such a manner that it is added in each stage and is taxed once and only once with a view to avoid cascading or tax on tax effect so that the burden to the final consumer not more than what it is intended by the prescribed rate of tax.

VALUE ADDED TAX
 Sales

tax is generally the single point tax levy while VAT is the multipoint levy. In sales tax no tax is being levied on the value edition on the subsequent sales. In VAT full set off of the tax is paid at the earlier stage is granted thus VAT eliminated tax cascading

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 its members 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

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 by identifying new service sectors. These providers has to collect tax from their customers and pay to government .

objectives
 To

determine the turnovers of the unorganized 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

FRINGE BENEFIT TAX
 Perquisites

are the benefits are the benefits both monitory and non monitory provide by the 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 well performing employees .

FRINGE BENEFIT TAX

        

The tax on these fringe benefits or perquisites is called fringe benefit tax (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

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