This document discusses various taxes including income tax, sales tax, and value added tax. It defines taxes as compulsory exactions of money by public authorities for public purposes. Sales tax is classified as an indirect tax on the sale of goods, while income tax and wealth tax are direct taxes. The Central Sales Tax Act of 1956 establishes principles for determining when inter-state sale or purchase of goods occurs. Value added tax is levied on the value added at each stage of production or distribution and aims to eliminate cascading of taxes.

1. UNIT IV
INCOME TAX AND SALES TAX ACT

2. TAX
The term tax may be defined as compulsory
exaction of money by public authorities for
public enforceable by law and is not payment for
services.

3. CLASSIFICATION OF TAXES
• DIRECT TAX
Income tax
wealth tax
• INDIRECT TAX
sales tax
customs duty
excise duty

4. TAX PLANNING
• Corporate tax planning has got a very wide
scope.
• In case of a company there is ample scope of
tax planning in respect

5. SCOPE OR AREAS OFTAX PLANNING
• Choice of form of business organizations
• choice of business
• Choice of area location
• Choice of proper capital structure
• Capital budgeting
• Expansion and new business
• Choice of accounting year
• Depreciation and the investment allowance
• Capital gains
• Merger of business units

6. SALES TAX
• Sales tax is a tax on the sale of goods.
• It is an indirect tax.

7. CLASSIFICATION OF SALES TAX
• Selective sales tax
• General sales tax

8. CENTRAL SALES TAX ACT, 1956
• The act formulates principles for determining
to when a sale or purchase of goods takes
place
a) in the course of inter – state trade of
commerce
b) outside a state
c) in the course of import in to or export from
India

9. OBJECTIVES OF CST
• To formulate principles for determining to
when a sale or purchase of goods takes place
• To provide for the levy, collection and
distribution of taxes on sale of goods
• To declare certain goods to be of special
importance
• To specify the restrictions and conditions

10. SCOPE OF THE ACT
• Inter state sales
• Sale or purchase in the course of export and
import
• Liability and charge to sales tax
• Registration of dealers
• Determination of taxable turnover
• Levy and collection of tax
• Offences
• Declared goods

11. SALE OR PURCHASE OF GOODS IN THE
COURSE OF INTER-STATE TRADE
• Occasions the movement of goods from one
state to another state.
• Is effected by a transfer of the documents of
title to the goods during their movement from
one state to another.

12. SALE OR PURCHASE OF GOODS
OUTSIDE A STATE
• A sale which takes place in one state is said to
take place outside all other states i.e., once
the place of sale fixed in a particular state, it
shall be deemed to be outside all other states.

13. SALE/PURCHASE IN THE COURSE OF
EXPORT OR IMPORT
• A sale or purchase of goods shall be deemed
to take place in the course of export of goods
out of territory of India only if the sale or
purchase is effected by a transfer of
documents of title to the goods after the
goods have crossed the customs frontiers of
India.

14. SALE FOR EXPORT AND SALE IN THE
COURSE OF EXPORT - DISTINGUISHED
• Where the sale is effected by the seller and he
is not connected with the export of those
goods which actually takes place, it is known
as sale for export.
• In the case of sale in the course of export, the
seller would be definite that the goods sold to
the buyer are mainly for export.

15. VALUE ADDED TAX
• Value added tax is a method of taxation
whereby the tax is levied on the value added
at each stage of the production/ distribution
chain.

16. OBJECTIVES OF VAT
• Eliminates multiplicity of taxes.
• Prevents double taxation
• Eliminates inter-state tax.
• Rationalizes all tax burden in the case of goods and
services.
• Replaces existing system of inspection by built in
assessment by dealers and internal auditing.
• Makes tax structure simple, efficient and
transparent.
• Improves tax compliance
• Coordinates revenue growth with development by ad
valorem rate of tax.
• Development of fair and healthy competition.

17. ADVANTAGES OF VAT
• Removes the cascading of taxes
• Widening of tax base and reduction in rates of
tax
• Does not distort trade and production methods
• Encourages better compliance
• Improves economic efficiency
• Improves export competitiveness
• Creates an audit trial

18. METHODS OF VAT CALCULATION
• ADDITION METHOD
• SUBTRACTION METHOD
• TAX CREDIT METHOD