Annual charge levied on both earned
The Income Tax Law comprises The Income Tax
Act 1961, Income Tax Rules 1962, issued by
central board of direct taxes(cbdt)
7. BASIC TYPES OF INCOME TAXES
income tax, levied on income of
tax is a tax payable, at the rate
enacted by the Union Budget (Finance
Act) for every Assessment Year, on the
Total Income earned in the Previous Year
by every Person
9. Corporation income tax
Corporation income tax, levied on profits
of incorporated firms. However, presence of
tax loopholes (whose number increases in
direct proportion to the complexity of tax code)
may allow some wealthy persons to escape higher
taxes without violating the letter of the tax laws.
10. Heads of income
The total income of a person is segregated into five
heads:1. Income from salaries
2. Income from house property
3. Profits and gains of business or profession
4. Capital gains and
5. Income from other sources
11. Sales Tax was charged on sale of Goods under the Sale
Of Goods Act,1930. Central Sales Tax is payable on the
sale of all goods by a dealer in the course of
inter- state trade or commerce;
Outside a state or ;
In the course of import into or export from India.
Sales tax is levied on the sale of movable goods.
The levy of sales tax on intangibles has been marred by
12. TAXATION – SALES TAX
Controversies in taxing intangible assets
In case of interstate transaction, Sec 3, 4 and 5 makes taxing of
Physical location of asset is basic criteria for imposing sales tax by a
state government. Controversy of location determination arises in case of
assignment of patent, trade mark or copy right.
Section 3 and Section 5
Actual physical movement of goods is necessary from one state to
another or from outside India to inside or from inside India to outside
in order to be charged under CST. Such physical movement may be
absent in the case of intangibles.
Sale of Goods Act,1930 – [section 2(7)]
“Goods” means every kind of movable property other
than actionable claims and money……
Both corporal and incorporeal
Both tangible and intangible
Central Sales Tax Act ,1956 - [section 2 (d)]
“Goods” includes all materials, articles, commodities and all
other kinds of movable property, but does not include
newspapers, actionable claims, stocks, shares and securities.
15. TEST TO DETERMINE “GOODS”
India the test to determine whether a
property is ‘goods’ for the purpose of sales
tax, is not whether the property is tangible or
intangible or incorporeal. The test is whether
the item concerned is capable of abstraction,
consumption and use and whether it can be
transmitted, transferred, delivered, stored,
This necessarily implies that states have the
right to tax transfer of IP.
16. INTER- STATE TRANSFER IN CASE OF
As per sec 3&4 of the CST Act if goods moving in
pursuance of contract:
Taxable in the state where the movement commences
In case of goods not moving pursuance of the contract,
then taxable in the state where the appropiation is made.
Intangibles like patents, copyrights, trademarks since
there is no movement of goods as such, transfer thereof
is taxable in the State where agreement is made.
A comprehensive IP tax regime should be
Uniform IP tax policy should be adopted.
Provisions of IP need to be codified for
better assessment and administration.
No mechanism in India to monitor the
movement of IPR’s inter – state for the
purpose of taxing.
18. Wealth Tax is a tax on the value of wealth
owned by a person, levied under the Wealth
Tax Act, 1957.
It is one of the direct taxes.
It is an annual tax.
Wealth is a tax on “Assets”.
Wealth Tax is charged on “Net Wealth”
Net Wealth = Total Assets - Total Debts
Wealth Tax is paid by
The tax is levied @ 1 per cent on the amount of
wealth as on 31st March of every year, where
such amount exceeds Rs.30,00,000.
20. Building and Land Appurtenant
to the Building
Articles made up of gold,
silver or any other precious metal
Cash in Hand
up to 50,000: exempt
Recorded amount: exempt
Unrecorded amount: taxable
Yachts, Boats & Aircrafts
22. ASSETS EXEMPTED FROM
Property held under a trust.
Interest in the property of HUF for a family
Residential building of an ex-ruler.
Jewellery of an ex-ruler.
Any house or plot of an individual.
or HUF up to 500 sq meters.
23. The revenue from wealth tax is negligible
as compared to the revenue from income
The expenses incurred in collection of the
wealth tax is very high compared to the
It fails to bridge the gap between the rich
and the poor, as the tax rate is extremely
24. It is a tax which is payable on
services provided by the service
The tax came into effect in 1994
and was introduced by the then
Finance Minister Dr. Manmohan
119 services are taxable services in
India. These taxable services are
specified in Section 65(105) of the
Finance Act,1994. Section 64 of the
Finance Act, 1994.
The current service tax rate is 12%
(+) Education Cess@ 2% = 0.2%
Senior & Higher Education Cess @ 1% =
Effective Service Tax Rate = 12.36%
relation to telecommunication service.
In relation to general insurance business.
In relation to insurance auxiliary service by an
insurance agent .
In relation to transport of goods by road in a goods
carriage, where the consignor or consignee of
In relation to Business Auxiliary Service of
distribution of mutual fund by a mutual fund
distributer or an agent.
In relation to sponsorship service provided to any
body corporate or firm located in India;