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Meenal Gupta (827)
Rahul Kumar (835)
Taxation
Taxation refers to the practice of a government collecting
money from its citizens or a legal entities to pay for public
services. This money is collected by imposing taxes on
individual or a corporate entities. Tax is the basis for taxation.
Tax
 Tax is a financial charges imposed on individual or
company by a CG or SG .
 Collected Tax amount is used for building nation
(infrastructure & other development ) to increase arms
and ammunition for defense of country and for other
welfare related work.
 That’s why it is said that “Taxes are paid nation are
made”
Significance of taxation
 Primary purpose:- generates funds and
revenues use to defray expenses incurred by the
government in promoting the general welfare of
its citizen.
 Other purpose:-
 To equitably contribute to the wealth of nation
 To promote new industries
 To protect local bodies
Types of Tax :
 On the Basis of Volume
 Single Tax System
 Multiple Tax System
 On the Basis of Form
 Direct Tax
 Indirect Tax
 On the Basis of Income/Consumption Method
Proportional Tax
 Progressive Tax
 Regressive Tax
 Degressive Tax
On the Basis of Volume
 Single Tax System
Single tax mean that only one kind of tax. It does not mean tax on
only one person. In other words, a tax on one thing, i.e., on one
class of things or one class of people.
 Multiple Tax System
A multiple tax refers to the tax system in which taxes are levied on
various items. A modern economy is not one objective economy. It
tries to forge ahead simultaneously along the paths of growth,
equitable distribution of income & wealth, economic stabilization
and soon.
On the Basis of Income/Consumption Method
 Proportional Tax
Proportional tax is the mechanism in which the taxing authority
charges the same rate of tax from each taxpayer, irrespective of
income. This means that lower, middle or upper class people pay
same amount of tax.
Progressive Tax
A progressive tax is one in which the tax authority charges more
taxes as the income of the taxpayer increases. A higher tax is
collected from the taxpayers who earn more & lower taxes from
taxpayers earnings less.
 Regressive Tax
Regressive tax is a tax that takes a larger percentage from low-
income people than from high-income people. A regressive tax is
generally a tax that is applied uniformaly.
 Degressive Tax
A degressive tax is one on which tax is progressive up to a
certain limit, after that it is proportional, i.e., charged at flat
rate.
On the Basis of Form
 Direct Taxes
Direct tax are those which are paid by the person on whom these are imposed
and real burden is also borne by them, such as taxes on income, wealth,
consumption, gift, expenditure etc.
 Income Tax
Capital Gain Tax
Securities Transaction Tax(STT)
Perquisite Tax
 Corporation Tax
Gift Tax
Expenditure Tax
 Wealth Tax
 Income Tax
 Income tax act came into force w.e.f 1st april, 1961.
 Income tax is charged on the total income of every person for
the privous year.
 Every individual whose total income exceeds taxable limit has
to pay income tax based on prevalling rates applicable time to
time.
 It is levied and collected by the central government.
 Income tax is a very important source of income of the central
government.
For male and female
Income Tax Rate
Up to Rs 2,50,000/- Nil
Rs 2,50,001/- to Rs 5,00,000/- 5%
Rs 5,00,001/- to Rs 10,00,000/- 20%
Rs 10,00,001/- to Rs 100,00,000/- 30%
Rs 100,00,000 above 30%+surcharge
For resident individual of 60 Years and above
Up to Rs 3,00,000/- Nil
Rs 3,00,001/- to Rs 5,00,000/- 5%
Rs 5,00,001/- to Rs 10,00,000/- 20%
Rs 10,00,001/- to Rs 100,00,000/- 30%
Rs 100,00,000 above 30%+surcharge
For FY 2017-2018 income tax rates are :
Income Tax Slabs For 2017-18
 Capital Gain Tax
Capital Gain tax as name suggests it is tax on gain in capital.
If you sale property, shares, bonds & precious material etc. &
earn profit on it within predefined time frame you are supposed
to pay capital gain tax. The capital gain is the difference between
the money received from selling the asset & the price paid for it.
 Securities Transaction Tax(STT)
STT which is applicable on every transaction done at stock
exchange. That means if you buy or sell equity shares or
derivative instruments this tax is applicable.
 Perquisite Tax
Earlier to perquisite Tax we had tax called FBT ( Fringe Benefit Tax)
which was abolished in 2009 this tax is on benefit gives by employer
to employee.
eg: if your company provides you non –monetary benefit like car
with driver , club membership , ESOP (employee stock ownership
plan) etc.
 Corporation Tax
Corporate taxes are annual taxes payable on the income of the
corporate operating in India. For the purpose of taxation, companies
in India are broadly classified into domestic companies and foreign
companies.
 Gift Tax
Gift tax in India is regulated by the Gift Tax Act which was
constituted on 1st April, 1958. If you receive gift form someone it is
clubbed with your income and you need to pay tax on it .
 Expenditure Tax(consumption tax)
It is a tax which is assessed on expenditure or amount spend . It is
defined as a fee which is charged & collected by govt. on a
commodity , activity or income.
 Wealth Tax
It is imposed on property of individual depending upon the value of
property.
 Indirect Tax
Indirect tax is a tax collected by an intermediary (such as a
retail store) from the person who bears the ultimate economic
burden of the tax (such as the customers). This tax is shifted
by the taxpayer to someone else. An indirect tax may increase
the price of a good so that consumers are actually paying the
tax by paying more for the products.
 Central Sales Tax
 Entertainment Tax
 Customs Duty
 Central Excise Duty
 Service Tax
 Value Added Tax(VAT)
 Central Sales Tax
 Central Sales Tax came into force on 1.7.1957.
 Central Sales Tax is applied to whole of the India including Jammu
and Kashmir.
 Central Sales Tax in India is a form of tax that is imposed by the
Government on the sale or purchase of a particular commodity
within the country.
 Central Sales Tax is imposed under both, CG and SG.
 Rate of CST is 2% or less.
 Eg: prices of comoditity
Entertainment Tax
 It is charged form cinema owners, who recover it
form cinema viewers.
 In other words tax imposed by SG on every financial
transaction that is related to entertainment.
 Tax rates vary from state to state from 0%-110%.
 Eg: Movies ticket , Show exhibition , Cable Services
, DTH service.
 The Customs Duty(1962)
 It applicable on goods imported into India and exported
from India.
 It is levied by the central government.
 It is applicable to whole of the India.
 One has to pay duty on goods import form a foreign
country into India.
 That tax payable at the port of entry( like the airport) .
 Its main purpose is to prevent illegal import and export
of goods.
 This duty rate various based on nature of item.
Central Excise Duty
 It falls under the Excise Duty Act, 1944.
 It is charged on such excisable goods that are
manufactured in India for domestic consumption.
 It is paid by the producer of goods , who recovers it
form wholesalers & retailers.
 It also knows CENVAT (Central Value Added Tax).
 Excise is a duty not tax.
 Tax rate varies from product to product.
Service Tax (sec. 67)
 Service tax is levied on aggregate amount charged by the
service provider on the receiver.
 The tax is permitted to be paid on value received.
 It is applicable to whole India except J&K.
 It has no separate act. It falls under the Finance act, 1994.
 It was imposed by Dr. Manmohar Singh.
 The service tax rate was 15%.
Value Added Tax (VAT)
 It was introduced under Indian taxation system on 1
april,2005.
 The Value Added Tax or VAT , is a tax on the added value of
a good as it moves through the supply chain to the end
consumer.
 In effect , the tax is levied on the gross margin at each point in
the manufacturing – distribution – sales process.
 It is charged by registered VAT business.
 The tax rate varies from nil – 12.5%.
 Other Tax
 Toll Tax
 Stamp Duty , Registration fees , Transfer Tax
 Education Cess , Surcharge
 Dividend Distribution Tax
NEW
GST
 GST is comprehensive tax mechanism where in all major
indirect taxes are clubbed into one, whether they are levied
on services(service tax) or goods(excise and vat).
 One of the aims of introducing GST is to reduce the
cascading effects of taxes which is the primary focus of VAT
but vat system is not comprehensive enough to do so.
 Goods and service tax (GST) is a comprehensive tax levy
on from manufacture to final consumption of goods and
service at a national level.
 GST would basically be a destination based tax will make
life easier for businesses in India.
 GST is levied on 1st July 2017 in India.
Direct Tax vs. Indirect Tax
Direct Tax
 Which is paid by the person
to whom it is levied .
 DT can’t be shifted.
 Direct tax is levied on
person individual,
Company, firm etc.
 It is progressive.
 Levied on income.
 Eg:- Income tax, Capital
gain tax etc.
Indirect Tax
 Which is paid by the
taxpayer indirectly.
 IT can be shifted.
 Indirect Tax is levied on the
consumers of goods &
services.
 It is regressive.
 Levied on sale/ purchase.
 Eg:- Sale tax, Entertainment
tax etc.
Taxation system of india

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Taxation system of india

  • 1. Presented By : Meenal Gupta (827) Rahul Kumar (835)
  • 2. Taxation Taxation refers to the practice of a government collecting money from its citizens or a legal entities to pay for public services. This money is collected by imposing taxes on individual or a corporate entities. Tax is the basis for taxation.
  • 3. Tax  Tax is a financial charges imposed on individual or company by a CG or SG .  Collected Tax amount is used for building nation (infrastructure & other development ) to increase arms and ammunition for defense of country and for other welfare related work.  That’s why it is said that “Taxes are paid nation are made”
  • 4. Significance of taxation  Primary purpose:- generates funds and revenues use to defray expenses incurred by the government in promoting the general welfare of its citizen.  Other purpose:-  To equitably contribute to the wealth of nation  To promote new industries  To protect local bodies
  • 5. Types of Tax :  On the Basis of Volume  Single Tax System  Multiple Tax System  On the Basis of Form  Direct Tax  Indirect Tax
  • 6.  On the Basis of Income/Consumption Method Proportional Tax  Progressive Tax  Regressive Tax  Degressive Tax
  • 7. On the Basis of Volume  Single Tax System Single tax mean that only one kind of tax. It does not mean tax on only one person. In other words, a tax on one thing, i.e., on one class of things or one class of people.  Multiple Tax System A multiple tax refers to the tax system in which taxes are levied on various items. A modern economy is not one objective economy. It tries to forge ahead simultaneously along the paths of growth, equitable distribution of income & wealth, economic stabilization and soon.
  • 8. On the Basis of Income/Consumption Method  Proportional Tax Proportional tax is the mechanism in which the taxing authority charges the same rate of tax from each taxpayer, irrespective of income. This means that lower, middle or upper class people pay same amount of tax. Progressive Tax A progressive tax is one in which the tax authority charges more taxes as the income of the taxpayer increases. A higher tax is collected from the taxpayers who earn more & lower taxes from taxpayers earnings less.
  • 9.  Regressive Tax Regressive tax is a tax that takes a larger percentage from low- income people than from high-income people. A regressive tax is generally a tax that is applied uniformaly.  Degressive Tax A degressive tax is one on which tax is progressive up to a certain limit, after that it is proportional, i.e., charged at flat rate.
  • 10.
  • 11. On the Basis of Form  Direct Taxes Direct tax are those which are paid by the person on whom these are imposed and real burden is also borne by them, such as taxes on income, wealth, consumption, gift, expenditure etc.  Income Tax Capital Gain Tax Securities Transaction Tax(STT) Perquisite Tax  Corporation Tax Gift Tax Expenditure Tax  Wealth Tax
  • 12.  Income Tax  Income tax act came into force w.e.f 1st april, 1961.  Income tax is charged on the total income of every person for the privous year.  Every individual whose total income exceeds taxable limit has to pay income tax based on prevalling rates applicable time to time.  It is levied and collected by the central government.  Income tax is a very important source of income of the central government.
  • 13. For male and female Income Tax Rate Up to Rs 2,50,000/- Nil Rs 2,50,001/- to Rs 5,00,000/- 5% Rs 5,00,001/- to Rs 10,00,000/- 20% Rs 10,00,001/- to Rs 100,00,000/- 30% Rs 100,00,000 above 30%+surcharge For resident individual of 60 Years and above Up to Rs 3,00,000/- Nil Rs 3,00,001/- to Rs 5,00,000/- 5% Rs 5,00,001/- to Rs 10,00,000/- 20% Rs 10,00,001/- to Rs 100,00,000/- 30% Rs 100,00,000 above 30%+surcharge For FY 2017-2018 income tax rates are : Income Tax Slabs For 2017-18
  • 14.  Capital Gain Tax Capital Gain tax as name suggests it is tax on gain in capital. If you sale property, shares, bonds & precious material etc. & earn profit on it within predefined time frame you are supposed to pay capital gain tax. The capital gain is the difference between the money received from selling the asset & the price paid for it.  Securities Transaction Tax(STT) STT which is applicable on every transaction done at stock exchange. That means if you buy or sell equity shares or derivative instruments this tax is applicable.
  • 15.  Perquisite Tax Earlier to perquisite Tax we had tax called FBT ( Fringe Benefit Tax) which was abolished in 2009 this tax is on benefit gives by employer to employee. eg: if your company provides you non –monetary benefit like car with driver , club membership , ESOP (employee stock ownership plan) etc.  Corporation Tax Corporate taxes are annual taxes payable on the income of the corporate operating in India. For the purpose of taxation, companies in India are broadly classified into domestic companies and foreign companies.
  • 16.  Gift Tax Gift tax in India is regulated by the Gift Tax Act which was constituted on 1st April, 1958. If you receive gift form someone it is clubbed with your income and you need to pay tax on it .  Expenditure Tax(consumption tax) It is a tax which is assessed on expenditure or amount spend . It is defined as a fee which is charged & collected by govt. on a commodity , activity or income.  Wealth Tax It is imposed on property of individual depending upon the value of property.
  • 17.  Indirect Tax Indirect tax is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the customers). This tax is shifted by the taxpayer to someone else. An indirect tax may increase the price of a good so that consumers are actually paying the tax by paying more for the products.  Central Sales Tax  Entertainment Tax  Customs Duty  Central Excise Duty  Service Tax  Value Added Tax(VAT)
  • 18.  Central Sales Tax  Central Sales Tax came into force on 1.7.1957.  Central Sales Tax is applied to whole of the India including Jammu and Kashmir.  Central Sales Tax in India is a form of tax that is imposed by the Government on the sale or purchase of a particular commodity within the country.  Central Sales Tax is imposed under both, CG and SG.  Rate of CST is 2% or less.  Eg: prices of comoditity
  • 19. Entertainment Tax  It is charged form cinema owners, who recover it form cinema viewers.  In other words tax imposed by SG on every financial transaction that is related to entertainment.  Tax rates vary from state to state from 0%-110%.  Eg: Movies ticket , Show exhibition , Cable Services , DTH service.
  • 20.  The Customs Duty(1962)  It applicable on goods imported into India and exported from India.  It is levied by the central government.  It is applicable to whole of the India.  One has to pay duty on goods import form a foreign country into India.  That tax payable at the port of entry( like the airport) .  Its main purpose is to prevent illegal import and export of goods.  This duty rate various based on nature of item.
  • 21. Central Excise Duty  It falls under the Excise Duty Act, 1944.  It is charged on such excisable goods that are manufactured in India for domestic consumption.  It is paid by the producer of goods , who recovers it form wholesalers & retailers.  It also knows CENVAT (Central Value Added Tax).  Excise is a duty not tax.  Tax rate varies from product to product.
  • 22. Service Tax (sec. 67)  Service tax is levied on aggregate amount charged by the service provider on the receiver.  The tax is permitted to be paid on value received.  It is applicable to whole India except J&K.  It has no separate act. It falls under the Finance act, 1994.  It was imposed by Dr. Manmohar Singh.  The service tax rate was 15%.
  • 23. Value Added Tax (VAT)  It was introduced under Indian taxation system on 1 april,2005.  The Value Added Tax or VAT , is a tax on the added value of a good as it moves through the supply chain to the end consumer.  In effect , the tax is levied on the gross margin at each point in the manufacturing – distribution – sales process.  It is charged by registered VAT business.  The tax rate varies from nil – 12.5%.
  • 24.  Other Tax  Toll Tax  Stamp Duty , Registration fees , Transfer Tax  Education Cess , Surcharge  Dividend Distribution Tax
  • 25. NEW
  • 26.
  • 27. GST  GST is comprehensive tax mechanism where in all major indirect taxes are clubbed into one, whether they are levied on services(service tax) or goods(excise and vat).  One of the aims of introducing GST is to reduce the cascading effects of taxes which is the primary focus of VAT but vat system is not comprehensive enough to do so.  Goods and service tax (GST) is a comprehensive tax levy on from manufacture to final consumption of goods and service at a national level.  GST would basically be a destination based tax will make life easier for businesses in India.  GST is levied on 1st July 2017 in India.
  • 28.
  • 29. Direct Tax vs. Indirect Tax Direct Tax  Which is paid by the person to whom it is levied .  DT can’t be shifted.  Direct tax is levied on person individual, Company, firm etc.  It is progressive.  Levied on income.  Eg:- Income tax, Capital gain tax etc. Indirect Tax  Which is paid by the taxpayer indirectly.  IT can be shifted.  Indirect Tax is levied on the consumers of goods & services.  It is regressive.  Levied on sale/ purchase.  Eg:- Sale tax, Entertainment tax etc.