1. Taxation – Direct & Indirect
Taxes
Semester 4

2. What is Tax ??
• ‘Tax’ is a charge levied by the government on
its subject (i.e. individual, company and firm)
for the purpose of meeting its expenses.
• Expenses such as
1.Defence
2.Salaries of Staff
3.Maintaining and Developing Infrastructure
4.Maintenance of Roads, Sanitation and Health

3. Types of Tax
• Direct Tax
- Tax which is directly levied on the income of
the individual/ person.
Direct Tax is in following form
1.Income Tax
2.Corporation Tax
3.Gift Tax

4. Types of Tax
• Indirect Tax
- Tax where the burden is passed from one person
to another.
- Indirect Tax is in following form
1. Custom Duty
2. Excise Duty
3. Service Tax
4.VAT/CST
5. Octroi Duty

5. Some More Concepts
• Income
Profit & Gains from Business & Profession.
Dividend
Voluntary Contribution received by a trust
Perquisite or Profit in Lieu of Salary
Any special allowance or benefit granted to meet
expenses in performance of duty
Export Incentives.
Value of any Benefit or Perquisite to businessman
or professional.
contd…….

6. Interest, Salary, Bonus, Commission or
Remuneration received by partner or partnership
firm
Capital Gains
Profits of Insurance Business.
Winning of Lottery, Crossword puzzles, horse
races and card games.
Sum received under Keyman Insurance Policy
Sum received under an agreement for not
carrying out an activity
Gifts exceeding Rs. 50,000 received by Individual

7. Previous Year - 2(34)
• Previous Year means the previous year as defined in
Section 3
• Section 3 states:
Previous Year is the financial year immediately
preceding the assessment year.
For E.g. For A.Y. 2011-12, previous year starts from
1st April 2010 and ends on 31st March 2011.

8. Exception:
• Previous year for a Newly set up Business:-
In the case of a newly set up business or profession or a new
source of income during the financial year, the previous
year will begin from the date of setting up or coming into
existence of the new business, profession or new source of
income and will end on immediately following 31st March.
• For e.g. Business starts on 01/02/11
Previous Year 01/02/11 to 31/03/11

9. Assessee: 2(7):-
Assessee means a person by whom any tax or any other
sum of money is payable under the Act. The term
Assessee includes:
• Every person in respect of whom any proceeding under
this act has been taken for the assessment of his income
or loss or the amount of refund due to him
• Every person who is deemed to be an assessee under any
provisions of this Act.
• Every person who is deemed to be an Assessee in default
under the provisions of this Act.

10. Assessment Year u/s 2 (9)
• Assessment year means the period of
twelve months commencing on the 1st day of
April every year
• For Previous Year 2010-11, corresponding
Assessment Year is 2011-2012

11. Person u/s 2(31)
Person includes:
• Individual
• HUF
• Company
• Firm
• Association of Person or Body of Individuals
• Local Authority
• Artificial Juridical person (not falling within
any of the above category)

12. Company
• any Indian company, or
• any body corporate incorporated by or under the laws of a
country outside India, or
• any institution, association or body which is or was assessable
or was assessed as a company for any assessment year under
the Indian Income-tax Act, 1922 (11 of 1922), or which is or
was assessable or was assessed under this Act as a company
for any assessment year commencing on or before the 1st
day of April, 1970, or
• any institution, association or body, whether incorporated or
not and whether Indian or non-Indian, which is declared by
general or special order of the Board to be a company :

13. Thank You