TAXATION SYSTEM IN INDIA

Presented by: Bikash ch. Behera(25)Prasanta ku. Sethi(23)

Anchor faculty:Prof. Trilochan Jena

Plan of PresentationIntroduction Direct taxIndirect taxTreatment of agricultural incomeAdvance payment of taxTax Deducted at Source(TDS)Return of incomeVATService taxTax planningTax proposals in the union budget 2013-14

IntroductionThe term ‘Tax’ means a compulsory contribution

by people to the state revenue levied by the government on

personal income and business profits.It is a sum of money demanded by the government

for its support or for specific facilities or services.Income tax Act.1961 Generally there are two types of tax:1. Direct tax2. Indirect tax

Direct tax It is an amount of obligation, which is levied by

the government directly from an “Assessee’s” total income or wealth.

‘Direct tax’ is divided in to two types:I. Income taxII. Wealth tax

computation of Taxable IncomeIncome from Salary

*** Income from House property

***Income from PGBP

***Income from capital gain

***Income from Other sources

***Gross total income

****Less Deduction u/s 80C to 80U

(**)Net total income

***Tax on net total income **Add surcharge *Add Education cess(2%) *Add Higher education cess(1%) *Less TDS or TCS (**)Tax liability **

Income taxRates of income tax in assessment year 2013-14Applicability- Individual ,HUF ,AOP ,BOI

 

Taxable income slab(Rs.) Up to 2,00,0002,00,000 - 5,00,0005,00,000 – 10,00,00010,00,000 & above (up to 1 crore)

1 crore & above is applicable for a surcharge of 10%

RatesNil102030

Income taxRates of income tax in assessment year 2013-14Applicability-Senior Citizen(Who have at least 60

years of age) 

Taxable income slab(Rs.) Up to 2,50,0002,50,000 - 5,00,0005,00,000 – 10,00,00010,00,000 & above (up to 1 crore)

Rates

Nil102030

Income taxApplicability Other-Super Senior Citizen- Exempt Upto 500,000

(And After that Slab as usual for Individual)Firm-A Partnership Firm is taxable at the rate

30% ( No Exemption Limit)Domestic Company- Taxable at the rate 30%

or Minimum Alternative Tax at the rate 8.5% or 8%

Non-Domestic Company- Taxable at the rate 40% or Minimum Alternative Tax at the rate 8.5% .

Indirect TaxIt is the tax which is collected from assesses at

one point and Deposit it with the state Exchequer at another point.

It includes the following:VAT Service tax Excise duty Custom duty Sales tax

Agricultural IncomeAccording to income tax Act.1961 sec 10(1)

Agricultural income is Exempt from tax.Agricultural income include sec-2 (IA)Rent or Revenue derived from landIncome derived from agricultural land by

agricultural operationIncome from farm building

There are some product which is treated as partly :Tea 40%(Non Agri) 60% (Agricultural)Coffee 25% 75%

Advance payment of TaxEvery person is liable to pay advance tax ifIf tax liability is more than Rs.10,000 after

Deduction of TDS When it is paid:

On or before sept-15 of the previous year

30%

On or before Dec-15 of the previous year

30%

On or before mar-15 of the previous year

40%

Tax Deducted at Source(TDS) It is the Deduction of tax by the provider of

income before it reach to the recipient of income and Deposit the same to the govt.’s Treasury with in the stipulated time.

Followings are the payments covered by TDS scheme

• Salary• Interest on savings, FD• Deemed Dividend• Commission• Lottery winnings• Winning from Race horses• Winning from Realty Shows (KBC, Big Boss)

Cntd…Rates of TDSSalary (If it exceed the exemption limit Rs.200,000)

10%

Interest (If exceed RS.10,000) 10%Deemed Dividend (foreign company) 10%Lottery winning 30%Winning from Race horses 30%Winning from Realty Shows 30%Commission (If exceed Rs.5,000) 10%

Return of IncomeAll Person have to submit his return of income

whether it is Individual ,Firm, Company ,AOP (manually or Electronically)

But the followings are the conditions where it is not mandatory :

If his taxable income does ’t exceed Rs. 200,000The Individual who has no claim of refund of

TDSAny Income from agriculture In case of the persons having Income more than Rs.500,000

E-filling is mandatory www.incometaxindiaefilling.gov.in

Cntd…These are the forms given bellow:ITR-1 Individual having income from salaryITR-2 Individual and HUF not having Business &

professional incomeITR-3 Individual & HUF being partner in firmsITR-4 Individual & HUF having income from proprietary

businessITR-5 For firms, AOPs, BOIsITR-7 For companiesITR-V For those having no Digital Signature CertificateFor companies Sept-30

For assesses are required to be Audited under any law

Sept-30

For whose A/Cs are not Audited or Any other cases

July-31

VAULE ADDED TAX (VAT)Imposed on the value of goods or commodities

at Each stage of Sale i.e from raw-materials to finish product.

Introduced in the year 1999Applied in some states from 2005

At present VAT is 13.5% and 5% depend on the nature of commodities.

Benefits of VATPrevent Cascading effect by providing input

rebatePrices will be generally fallTax Evasion will be reducedMore TransparencyHigher Revenue GrowthSet-off will be given for input taxOther taxes i.e. Turnover Tax, Surcharges

etc. will be abolished

Demerits of VAT

Ultimately it rises the burden of the Final Consumers

Increases the Administration cost of the State Govt

General rate 13.5% is too highIt doesn’t cover goods as well as servicesIt Differ State to State

Service Tax (1st July 1994)There are two Approaches to taxation of

Service:Selective ApproachComprehensive approachFeatures of Service tax:Uniform rate(12.36%)Not applicable in Jammu & KashmirIndirect taxNo separate ActNo TDSAdministered by CBECSmall service provider excluded

Negative List of Service TaxServices provided by Government/Local

AuthorityServices provided by RBIAgriculture or Agricultural ProduceTrading of GoodsAny process amounting to manufacture or

production of goodsAdvertisement(Other than Advertisement in

Radio or T.V.Way of access to a Road or a Bridge on

payment of toll charges

Cntd…..Betting ,Gambling or LotteryAdmission to Entertainment events or access

to Amusement FacilityTransmission or Distribution of ElectricityServices relating to EducationRenting of Residential Dwellings for use as

residenceFinancial SectorTransportation of PassengersTransportation of Goods

Tax PlanningA. Deduction u/s-80c (max. Rs.100,000) Amount deposited in respect of life insurance premium Payment in notified plan of LIC (jeevan dhara) Principal amount on Housing Loan Subscription towards notified scheme of Mutual Fund Any sum paid as tuition fees (at the time of admsn.) to any

college/university/Educational university Subscription to any notified scheme of NABARD Amount deposited in 5 yr. Time deposit in post office Amount deposited in Approved Debentures & Equity shares

Cntd…B. Deduction u/s-80D (upto Rs.15,000 p.a)Contribution in respect of Medical Insurance

Premium C. Deduction u/s-80E Payment of interest on loan taken for Higher

educationD. Deduction u/s-80GG (Upto Rs.24,000 p.a)Rent paid for any Residential Accommodation

Tax proposal in the union budget 2013-14Individual having income of upto Rs.500,000

entitled to a rebate of upto Rs.2,000 Surcharge @ 10% to be attracted if total

income exceeds Rs.1 croreCommodities Transaction tax(CTT) to be

levied on non-agricultural commodities All restaurants with air-conditioning or

central air heating ( including restaurants not serving liquor as well)at any time during the year liable to pay service tax

ConclusionTax structure in India plays a vital role in

development of the country. Govt. uses that amount for the welfare of the

country So the taxation system of India should be

designed in such a way that all the liable tax payers shouldn’t avoid it rather than they must pay it Voluntarily

ReferencesStudent guide to Income Tax (Dr. Vinod K.

Singhania)

Incometax.gov.in

Monthly guide to the CA News

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