2. What is TAX
Taxes represent the amount of money we pay to the Government
at predefined rates and periodicity. Taxes are the basic source of
revenue to the Government using which it provides various kinds
of services to the tax payers
3. Direct Taxes
1-Income tax
2-Wealth tax
3-Capital Gain tax
4-Gift Tax/
Inheritance or Estate Tax
5-Corporate Tax
Indirect Tax
1-Service Tax
2-Custom Duty
3-Excise Duty
4-Sales Tax and VAT
5-Security Transaction Tax
5. 1 Income
tax
Tax Deducted at Source (TDS)
whosoever is earning above a
minimum amount (tax exemption
limit) has to pay income tax
Direct Tax
2012-13 - Rs 206095 crores
2013-14 - Rs 247639 crores
6. Direct Tax
2 Wealth
tax
This is in addition to the income tax
and is levied if your net wealth
exceeds Rs 30 Lakh at the rate of 1%
on the amount exceeding Rs 30 Lakh
Assests subjected to WEALTH TAX
• Commercial buildings and the nearby land
• Jewellery, furniture, utensils, and other articles
• Residential buildings and the nearby land
• Cash in hand assets - (a) For individuals and HUFs any amount over INR 50 thousand, and (b)
for others any cash amount that has not been recorded in accounts. Motor cars – cars operated
on hire or on a stock-in-trade basis will be exempted from taxes
2012-13 – Rs 866 crores
2013-14 – Rs 950 crores
7. Direct Tax
3 Capital
Gain tax
This is levied on the capital gains arrived
by selling property and stocks. Tax rates
are different for long term and short term
capital gains.
8. Direct Tax
4 Gift Tax
Amount exceeding Rs. 50000 received
without consideration by an individual/HUF
from any person is subjected to gift tax as
income under “other sources”.
• There are exemptions like money received from relatives is not taxable
• Any amount received as Wedding Gift is not taxable
• No tax on the amount received through WILL or Inheritance
9. Direct Tax
5 Corporate
Tax
Companies operating in India are taxed
as per the corporate tax rate on their
income. This tax is one of the major
sources of revenue for government
10. Indirect Tax
1 Service
Tax
Service providers in India are subject to service
tax, which is charged on the aggregate amount
received by the service provider. Services like
leasing, internet/voice, transport, etc are
subject to service tax
12. Indirect Tax
3 Excise
Duty
Excise duties are indirect taxes
which are levied on goods
manufactured in India for domestic
consumption
13. Indirect Tax
4
Sales Tax
& VAT
Sales tax is levied by the government on sale and
purchase of products in Indian market. As
customers, whatever you buy from the market,
you pay sales tax on it. . Now, sales tax is
supplemented with new Value Added Tax so
as to make it uniform across country.
14. Indirect Tax
5
Security
Transaction
Tax (STT)
STT is levied on transactions (sale/purchase)
done through the stock exchanges. STT is
applicable on purchase or sale of various
financial products like stocks, derivatives,
mutual funds etc
15. Defects in tax system
Limited coverage of direct taxation
More reliance on Indirect Taxes
Inequitable and hence regressive
Non-Productive, irrational, inconsistent nature of tax system
16. Defects in tax system
Uncertainty in tax rates
Inelastic nature i.e. tax revenue does not change with change in income
Multiplicity of Taxes, hence Uneconomical
Complex nature of taxes hence difficult to understand for a common person
Tax laws open for different interpretation
17. Effects of complex tax system
• People are naturally inclined to evade tax
• As percentage of tax overheads is higher, business and industry sector gives
more focus on tax management rather than carrying out R & D activities and
maintaining quality standards.
• Negative impact on creativity and innovativeness of the work force
• Ever-thinning employment creation potential of the Industry, (with frightening
increase in unemployment levels)
• Total dependence on imported know-how and technology
18. Effects of complex tax system
• Invasion of the Indian market by foreign industries
• Increasing import-export trade gap
• Inability of the government to respond effectively to natural and man-made
calamities like flood, draught, war etc., due to poor revenue base
• Indirect promotion of anti-social businesses and industries like liquor, cigarette,
tobacco, lottery etc. Very high excise duties levied on these products make them
guaranteed revenue sources, hence can not be banned
• Creation of a huge amount of black money (money generated due to tax evasion)
resulting in the formation of a parallel economy in the country
19. “Goods and Service Tax (GST) is a comprehensive tax levy on manufacture, sale
and consumption of goods and service at a national level
20. Model of GST
The dual GST model proposed by the Empowered Committee and accepted by the Centre will have
dual system for imposing the tax. GST shall have two components i.e.
(i) Central GST
(ii) State GST
Central excise duty, additional excise duty, services tax and additional duty of customs (equivalent to
excise), state VAT entertainment tax, taxes on lotteries, betting and gambling and entry tax (not levied
by local bodies)would be subsumed within GST
21. Taxable Person
It will cover all types of person carrying on business activities, i.e. manufacturer, job-
worker, trader, importer, exporter, all types of service providers, etc.
If a company is having four branches in four different states, all the four branches
will be considered as TP under each jurisdiction of SGs.
All the dealers/ business entities will have to pay both the types of taxes on all the
transactions.
23. Taxes that may or may not be
subsumed
There are few other indirect taxes that may or may not be subsumed under
the GST regime as there is no consensus among States and Centre & States
–
Purchase tax
Stamp Duty
Vehicle Tax
Electricity Duty
Other Entry taxes and Octroi
24. Benefits of GST
1. Speeds up economic union of India;
2. Better compliance and revenue buoyancy;
3. Replacing the cascading effect [tax on tax] created by existing indirect taxes;
4. Tax incidence for consumers may fall;
5. Lower transaction cost for final consumers;
6. By merging all levies on goods and services into one, GST acquires a very simple and transparent
character;
7. Uniformity in tax regime with only one or two tax rates across the supply chain as against multiple tax
structure as of present;
8. Efficiency in tax administration;
9. May widen tax base;
10. Increased tax collections due to wide coverage of goods and services; and
11. Improvement in cost competitiveness of goods and services in the international market.
Good evening everyone….
Today myself bijon & akash are here to give an overview of tax system of india…
Taxes are basically the amount of money we pay to the government at predefined rate and periodicity…
Taxes are the main source of revenue for our government using which it provides us basic sevices and amenities
So letz start with types of taxes…
The most fundamental classification of taxes is based on who collects the taxes from the tax payer.
Direct Taxes, as the name suggests, are taxes that are directly paid to the government by the taxpayer. It is a tax applied on individuals and organizations directly by the government
e.g. income tax, corporation tax, wealth tax etc.
Indirect Taxes are applied on the manufacture or sale of goods and services. These are initially paid to the government by an intermediary, who then adds the amount of the tax paid to the value of the goods / services and passes on the total amount to the end user.
Examples of these are sales tax, service tax, excise duty etc
Income tax is A tax that governments impose on financial income generated by all entities within their jurisdiction. Income tax is a key source of funds that the government uses to fund its activities and serve the public
Now explain the table
Now tell the net revenue of government through income tax
Wealth tax is a direct tax, which is charged on the net wealth of the assessee.
It is a tax on the benefits derived from ownership of property.
The tax is to be paid year after year on the same property on its market value, whether or not such property yields any income
A type of tax imposed on capital gains collected by individuals and corporations. Capital gains are the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price.
Capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. An investor can own shares that appreciate every year, but the investor does not incur a capital gains tax on the shares until they are sold.
A tax applied to an individual giving anything of value to another person. For something to be considered a gift, the receiving party cannot pay the giver full value for the gift, but may pay an amount less than its full value. It is the giver of the gift who is required to pay the gift tax. The receiver of the gift may pay the gift tax, or a percentage of it, on the giver's behalf in the event that the giver has exceeded his/her annual personal gift tax deduction limit.
Corporation tax is a tax which is imposed on the incomes of registered companies and corporations. Company whether Indian or foreign is liable to taxation, under the Income Tax Act,1961.
Taxes are divided into direct taxes and indirect taxes
There are many direct taxes levied in India. But the Union taxes remain restricted to non-agriculturists and non-agricultural income, wealth, inheritance or capital gains. As the States also do not levy any significant taxes on agricultural incomes, direct taxes are restricted to a few non-agriculturists.
A regressive tax system is one, where the proportion of tax amount to income decreases with rise in income. In India, commodity taxes on essential goods used by the poor make the system regressive.
Due to the complex nature of the tax system, checking the correctness of the information furnished by the taxpayers becomes a difficult job. Attempts to increase the number of taxpayers are hampered as assessment gets delayed due to increased workload on the staff. To solve the problem, detailed scrutiny is restricted to a small proportion of assesses. The result is, understatement of income or non-filing of tax returns
Every budget adds some provisions and deletes some. Tax rates are frequently changed. New taxes are levied and existing taxes are abolished. Long term planning becomes impossible under such conditions.
Elasticity refers to the change in tax revenue with change in income. In India, due to predominance of commodity taxes, which were until recently, mostly specific taxes, the tax revenue did not change much with change in incomes. Tax rates had to be raised to collect additional revenue.