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A Glance on Indian Taxation
Presented By-Utkarsh Srivastav, EN Final Year,Shri Ram Murti Smarak College Of Engg. & Tech. , unnao
SALES TAX(VAT)
SALES TAX
STATE SALES TAX CENTRAL SALES TAX
Production within state
Only SST No CST
State of manufacturing
Transportation to another
stateOnly CST
State Sales Taxation system
Central Sales Taxation System
Scheme of Sales TaxIt is optional for the firm to get CST registration, while just after a certain limit firm has to get state sales tax registration.
CST < SST
Currently in India CST is 4% or SST(whatsoever is lower). That’s why registration of CST would give significant economic advantage.
AN ENTREPRENEUR MUST KNOW-
1. Whether registration is compulsory or not.2. Rate of sales tax.3. Form ‘c’ is required for CST.4. A purchased product can be sold.5. A resold product may have zero or lower
sales tax.
Note- However , sales tax has been replaced by uniform VAT throughout the country.
Registration Under VAT
Entrepreneur’s firm
Online registration for VAT
A distinct registration number
Sample Invoice
Payment Under VAT
1. VAT registration as dealer.2. Maintenance of the required books of
account.3. Filling of periodical returns showing all sales
and purchase.4. The VAT payable is to be deposited in the
treasury(through authorised bank) with the challan in a prescribed form.
EXCISE DUTYExcise Duty is imposed by the Central Government on the production of specific goods.
It is levied on the goods cleared from the factory.
Different rates of Excise Duty is applied on different type of products.
AN ENTREPRENEUR MUST KNOW-
1. Is it compulsory for him to pay Excise duty because small entrepreneur & some specific goods are exempted from excise duty.
2. Rate of excise duty on the product manufactured by entrepreneur.
3. An entrepreneur has to familiarize himself with the procedure , records and formalities.
Note- goods are exempted if they are exported.
A GLANCE ON DIFFERENT TYPE OF GOODS & THEIR CURRENT EXCISE DUTY RATES
INCOME TAXIncome tax act, 1961 has made it manadatory for all people , whose income during the previous year is more than the prescribed exemption limit, to pay tax at prescribed limit.
Obligations of an Entrepreneur as a TAX payer
1. Maintenance of Account Books.2. Permanent account number(PAN)3. Income Tax Return4. Payment of Tax.
Computation of Income from Business
For computation of business income, the profit from the business should be determined & adjustment should be as per provisions of income tax act 1961.Deductions expressly allowed in computing business income-1. Rent rates, taxes, repairs & insurance of business
building, machinery, plant, furniture.
2. Expenditure on Scientific Research.
3. Expenditure on Patents and Copyrights.
4. Insurance premium against risk of damage or destruction of stocks.
5. Bonus and commission to employees.
6. Interest on borrowed capital.
7. Contribution to provident fund.
INCOME TAX benefits to small scale Entrepreneurs
1. Tax holiday2. Depreciation allowance3. Rehabilitation allowance4. Investment allowance
Tax Holiday
• (Section 80J of income tax act 1961), new industrial undertakings, including small scale industries, are exempted from the payment of income tax on their profit subjected to a maximum of 6% per annum of their capital employed for 5 years.
Depreciation Allowance
• (Section 32, 1961 act) A small scale industry is entitled to a deduction on depreciation account on block of assets at the prescribed rate.
• In case of small scale industry, deduction from actual cost of plant & machinery is allowed subject to a maximum of Rs. 20 lakhs.
Rehabilitation Allowance• (Section 33B, 1961 act) It is granted to the small scale
units whose business is discontinued on account of-1. Flood , Cyclone , Earthquake or other natural
calamities.2. Civil disturbance.3. Explosion or accidental fire.4. Action taken in combating an enemy.
Note- it must be used within 3 year. Only 60% of the amount of deductions allowable.
Investment Allowance• (Section 31A, 1961 act) it is allowed at the rate
of 25% of the cost of new plant installed.• In comparison to the other industries Small
Scale Industries have an advantage in claiming a deduction of investment allowance.
• It can be used in a year of installation failing which the benefit will be forfeited.
Income Tax concession to Small Scale Industries in Backward/Rural Areas
• (section 80 H & 80 HHA) the entrepreneurs are allowed in deduction of 20% on it’s profit & gains provided the unit satisfies the following conditions-
1. It must be in a backward/rural area.2. No splitting or reconstruction of an existing unit.3. Account is audited by a chartered accountant.4. 10 or more workers with aid of power or 20 or
more without aid of power.
THANK YOU