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indian tax system
- 1. Analysis of Tax System In India Presented By :- Bijon & Akash
- 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
- 4. Direct IndirectDirect Central Board of Direct Taxes (CBDT) Indirect Central Board of Excise and Customs (CBEC). Types of TAXES
- 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
- 11. Indirect Tax 2 Custom Duty Custom duties are indirect taxes which are levied on goods imported to/exported from India
- 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.
- 22. Subsuming of Existing Taxes
- 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.
- 25. THANK YOU GUYS !!!!
Editor's Notes
- 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.