Insight About taxation in India and tax slabs

2. Franklin D. Roosevelt
Taxes are paid in the sweat of every man who labors.
James M. Wayne
The payment of taxes gives a right to protection.

3. • Annual charge levied on both earned
income(salaries, wages, commission) and
unearned income(dividend, interest, rent). In
addition to financing Government operations,
income taxation is designed to distribute
wealth more evenly in a population and to
serve automatic fiscal stabilizer to cushion
the effect of Economic cycles.
MEANING
• A direct tax that Government
imposes on income generated by the
entities within his jurisdiction.
DEFINITION

4. The whole concept in taxing and income is a modern aspect. It requisites many thing
as accurate account, money economy, expenses and profit and orderly society with
reliable records.
ANCIENT HISTORY
There is enough evidences to show that taxes are levied in India since ancient times.
In Kautilya’s Arthashatra written 2300 years ago also evidence for income tax is found.
Taxes are levied at that times also in terms of kinds like..gold, cattle, grains, forest
resources etc. Principles behind these taxes were also laid down by “Manu” The Great
law giver of our country in his book Manusmriti. He describes as” “the leech, the calf, the
bees take their food little by little even so must the kind draw from his realm moderate
annual taxes.”
According to kautilya” power of government depends upon the strength of treasury” He
states” From the treasury comes the power of government. He regards taxes as the
earning of the sovereign for the services rendered by him to the people affording
them protection and maintaining law and order. He emphasized taxes reward for
the state for giving protection and law to the people by the king.
HISTORY OF INCOME TAX

5. MODERN HISTORY OF INCOME TAX IN INDIA
After the establishment of British rule in India. Due to mutiny in 1857 the British faced an
acute financial crisis . To come out from this crisis they started filling their treasury and for
this they introduced Income Tax Act, This act was introduced by James Wilson who became
British India’s first finance minister, This act came into existence by the ascent of Governor
General on 24th July 1860.This act was divided into 21 parts with more than 259 sections.
Features
of income
tax act
1860
Income
from
landed
property
Income
from
professio
n/ trade
Income
from
salaries and
pensions
Income
from
securities,
dividends,
annuities

6. After 1860’s in 1886 a separate Income Tax act came into
existence.
1917- super tax was introduced.
1918-Income tax act 1918 was passed.
1919-Act X of 1919 imposed duly on excess profit.
1920-Act X of 1919 was abolished.
1922- In come tax act 1922 was introduced.
1939-substantial amendment to Income tax act 1922 was made.
1961-A new act titled” Income Tax Act 1961 came into existence.
1963- Central Board of Revenue Act , 1963 passed under which
CBDT was constituted.
1997-Establishment of tax reforms committee under chairmanship
of Dr. Raja. J. Chelliah
2003-Kelkar task force which followed outsourcing of PAN/TAN,
exemption of dividend income compensated by levy of dividend
distributed tax to be paid by company

7. CLASSIFICATION OF TAXATION
TAXATION
PROPORTIONAL PROGRESSIVE REGRESSIVE

8. PROPORTIONAL TAXATION
If the tax is imposed at the same rate on the persons of different income level, it is
called proportional tax. This tax has qualities like easy to comprehend, easy to pay,
simplicity and continuity of same level of distribution of income. But this tax lacks
the quality of equality
PROGRESSIVE TAXATION
If the rate of tax changes with change in income, it is called progressive tax. Hence,
the rich should pay more and the poor should pay less. The progressive tax has the
qualities of flexibility, economy, more income earning, reduce income inequality,
based on ability to pay. But this tax has demerits like tendency of evasion; conceal
income, arbitrariness, adverse effects on saving and investment. Dalton has
supported the progressive tax in these Words —“The heaviest burden should be
placed upon the broadest backs”
REGRESSIVE TAXATION
If the high rate of tax is levied to the poor and low rate is levied to the rich, it is
called regressive tax. The tax rate decreases with increases in income.
DEGRESSIVE TAXATION
Tax which is mildly progressive is known as degressive tax. Tax may increase as
income rises, but the rate of increase in tax is not in the same proportion as the
increase in income

9. IMPORTANCE OF INCOME TAX

10. Tax slab rate Tax slab rate Tax slab rate
0-2,00,000 NIL 0-2,00,000 NIL 0-2,50,000 NIL
2,00,001-
5,00,000
10% 2,00,001-
5,00,000
10% 2,50,001-
5,00,000
10%
5,00,001-
10,00,000
20% 5,00,001-
10,00,000
20% 5,00,001-
10,00,000
205
Above
10,00,000
30% Above
10,00,000
30% Above
10,00,000
30%
MEN WOMEN SENIOR CITIZENS
TAX SLAB

11. Central Board for Direct Taxes(CBDT)
The CBDT is a part of Department of Revenue in the Ministry of Finance.
On one hand, CBDT provides essential inputs for policy and planning of
direct taxes in India, at same time it is also responsible for administration
of direct tax laws through the Income Tax Department. The Central Board
of Direct Taxes is a statutory authority functioning under the Central
Board of Revenue Act, 1963. The officials of the Board in their ex-officio
capacity also function as a Division of the Ministry dealing with matters
relating to levy and collection of direct taxes.
The Central Board of Revenue as the Department apex
body charged with the administration of taxes came into existence as a
result of the Central Board of Revenue Act, 1924. Initially the Board was
in charge of both direct and indirect taxes. However, when the
administration of taxes became too unwieldy for one Board to handle, the
Board was split up into two, namely the Central Board of Direct Taxes

12. What are the "HEADS OF INCOME”??

13. SALARY
HOUSE PROPERTY
CAPITAL GAIN
PROFESSION
OTHER SOURCES

14. 0
200
400
600
800
1000
1200
Population Tax Payers
1,155.35
35.00
307.00655
144.103375
billions
INDIA
USA
In India only 3% of total population pays the taxes
Interesting
facts!!

16. CONSEQUENCES Of
EVASION

17. SECTIO
N
DEFAULT CHARGE PENALTY
221(1) Failure to pay tax arrears
271(1)(c) Concealment of particular income Tax evade 100%-300%of tax
271A Failure to maintain books u/s 44AA 25000
271AA Failure to keep and maintain docs. International
transaction
25% of
transaction
271 B Failure to get a/c audited Total sales .5% of sale or
100000 (less)
271 BA Fail to furnish report u/s 92F 100000
271C Fail to pay whole or part of tax u/s115O fail to deduct
271E Repay the deposit other than specified Repaid amt Amt to repay
271 F Fail to furnish return of income u/s 139 5000 5000
271 G Fail to furnish document or information 2% of default
272AA Fail to furnish prescribed info u/s 133B 1000
272 B Fail to apply for pan number 10000
272BB(1 Fail to apply for tax deduction a/c 10000
272BBB Fail to apply for tax collection a/c 10000
272A(2) Fail to furnish return 100 per day