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CHAPTER – II
RATE STRUCTURE OF PERSONAL AND CORPORATE
INCOME TAX IN INDIA
2.1 Introduction
2.2 Structure of Indian Tax System
2.3 Direct Taxes in India Since Independence
2.4 Classification of Taxes in India
2.5 Changes of Income Tax Structure in India
2.6 Income Tax Structure in India
2.7 Rate Structure of Personal Income tax in India
2.8 Trend of Revenue Foregone and Tax Expenditure in
India
2.9 Rate Structure of Corporate Income Tax in India
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CHAPTER – II
RATE STRUCTURE OF PERSONAL AND CORPORATE
INCOME TAX IN INDIA
2.1 Introduction:
Tax structure indicates the composition of taxes imposed by the
government of a every and each country. It also indicates the relative
importance of individual and corporate taxes imposed by the central
or federal government. Tax structure refers to the type and mix of
taxes levied by the government of a country (India) indicating the
relative importance of the constituents. The structure of individual
corporate income taxes and aggregate structure of all taxes do not
remain static in any dynamic society. It may be noted that over the
period of time tax structure of a country (India) changes in several
ways. It may be because of economic, political and social factors. The
tax structure of well developed country like the USA is different from
the tax structure of developing country like India. In other words tax
structure of all the countries in the world and the tax structure of same
country over the period of time will be not be the same (Rao, 1989).
This chapter describes the Rate structure of Personal and
corporate income Tax in India. This chapter we mentioned structure
of tax system in India, Types of tax rates, Classification of Tax,
Income Tax rates in India and comparison with other countries and
exemption limits of all categories.
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2.2 Structure of Indian Tax System :
India has a well developed tax structure with a three-tier federal
structure, comprising the union government, the state governments
and the Urban Rural Local Bodies. The power to levy taxes and duties
is distributed among the three-tiers of governments, in accordance
with the provisions of the Indian constitution (article 246) and seventh
schedules.
The main taxes /duties that the union government is empowered
to levy are income tax (personal and corporate income). Customs
duties, central Excise duty, sales tax and service tax. The principal
taxes levied by the state governments are sales (tax on intra state sale
of goods), stamp duty (duty on transfer of property), State Excise
(duty on manufacture of alcohol), Land Revenue (levy on ) agri/ or
non-agricultural purposes). Duty on Entertainment and Tax on
professions and Callings. The Local Bodies are empowered to levy
tax on properties (buildings, etc), octroi (tax on entry of goods) for use
consumption within areas of the local Bodies, tax on markets and tax
user charges for utilities like water supply, drainage etc.
(Kaushik,2012).
2.3 Direct Taxes in India Since Independence :
• Indian tax structure after independence: The period after
independence was quite challenging for the tax planners. An
enormous black economy set in both due to second world war and
increases in economic activity after Independence savings and
investment were encouraged through the different taxation laws
by the way of incentives . There was a requirement for generating
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huge amount of (Tax or Non-tax) to fund the economic growth of
the country. The tax department of the country. The tax
department took great care to plan the tax structure not only with
the aspect to widen the income tax base but also to look for
alternate taxes and to eliminate tax avoidance. The department
was harshly tested due to the high volumes of work.
Some of the prominent taxes that came into existence were:
• Business profits tax (1947)
• Capital Gains (1946-48 to 1956)
• Estate Duty (1953)
• Expenditure Tax (1957)
• Gift Tax (1958)
To check the growth of black money high denomination notes
were demonetized in 1946. In 1961 the income tax act was
remodified, replacing the outdated law of 1922 (Kaushik, 2012).
• Post - Liberalization Direct tax structure in India:
The wave of tax reforms that started across the world in the
second half of 1980's found its way into India. As part of its policy of
liberalization, India introduced tax reforms in the 1990's.The reforms
introduced in the Indian tax structure are various in comparison to
other countries. In India, The tax reforms took place independent of
interference from any external multilateral agency unlike some other
countries. But the tax reforms took place in such a way as to ensure its
obedience to the prevailing international trends.
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India has a well developed taxation structure. The post reforms
tax system in India is mainly a three tier system which is based
between the union, state governments and the local government
organizations.
2.4 Classification of Taxes in India:
The classifications have been made on different base and
naturally the results have also been different.
Different bases adopted by the economists to classify taxes are
the forms, nature aims and methods of taxation. Economists have
classified taxes from different angles thereby providing us a long list
of direct and indirect taxes. The various taxes or tax rates may be
classified under following major heads (Chand, 2008).
2.4.1 Direct Taxes Classification:
Direct taxes can be classified on the basis of the degree of
progression or distribution of their burdon on the tax payers.
According to this classification, taxes may be classified as
proportional, progressive, regressive and digressive.
i. Proportional Tax:
In the proportional tax system, all incomes are taxed at a single
uniform rate and it does not matter if the tax payer's income is high or
low. A proportional tax has the following characteristics:
a) It is fixed and its proportion does not change with the
change in tax-payer's income and wealth.
b) It is fixed in amount and it is never levied in varying
percentages.
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c) The tax does not alter the proportion of difference of income
after the payment of tax has been made.
ii. Progressive Tax :
A progressive tax is the tax which varies with the change in the
income of individual and the rate of tax becomes gradually higher for
the increasing incomes and lower for the lower incomes. According to
Taylor, "As taxable incomes rise under progressive taxation, the
effective rate of tax rises for marginal increments of income, subject
to higher tax rates". This means that the raise in tax liability is more
them proportional to the rise income. Accordingly, the amount of tax
paid will increase at higher rate than the increase in the tax base.
Personal income taxes in the USA are progressive and so,
people with higher income pay a higher percentage of their income in
taxes. On the other hand people with lower income, pay a smaller
percentage of their income in taxes.
Pros (merits) of the Progressive Tax System:
Progressive taxation has become popular in all the nations of
the world today. The reasons for it's popularity are the benefits which
accrue to the community for it the following are the important pros
(merits) of progressive taxation.
i) Progressive Taxation is based on the logic of ' 'ability to pay'
principle.
ii) The distribution of income and wealth in society can be
made more equitable under progressive taxation because
under it the richer persons or required to pay the tax at a
higher rate than the poorer persons.
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iii) Progressive tax can be advocated on the basis of social
justice.
iii) Regressive Tax:
Regressive tax is just the opposite of the progressive tax.
Regressive tax is a tax imposed in such a manner that the tax rate
decreases as the amount of taxable income increases. The higher
income group pays less in taxes than the lower income group.
Regressive taxes impose greater tax burden on the poor relative to the
rich. In case of regressive taxes there is an inverse relationship
between the tax rate and the tax payer's ability to pay. People with low
income and low ability to pay will pay higher taxes. Tabacco ad
gasoline taxes are highly regressive. If a person with 50 dollar income
pays 5 dollar in gasoline tax, it is 10% of his income in taxes.
iv) Digressive Tax:
This tax can be called mild progressive tax. In case of
digressive tax, the rate of progression does not increase in the same
proportion as the income. The rate of tax increases up to a certain
limit beyond which a uniform rate is charged. Thus, the digressive tax
is a blend of progressive and proportional taxation.
From the above analysis, we can conclude that a progressive
system of taxation is best system of any other system of taxation.
Most advanced countries of the world, nowadays, follow this system
of taxation. India is also gradually adopting progressive system of
taxation.
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2.4.2 Indirect Taxes Classification :
Indirect tax can be classified into four parts viz. specific tax.
Ad. volorem tax single tax, and multiple tax.
i. Specific Tax: When the tax is imposed on a commodity
according to its weight, size or measurement, it is called a
specific tax. A specific tax is when specific amount is imposed
upon a good, for example $ 10 on each mobile phone sold.
ii. Ad. Valorem Tax: When the tax is imposed on a commodity
according to its value, it is called Ad valorem tax. It is
expressed as a percentage of the selling price e.g. 12% of the
sales, this tax collected is more at higher prices then at lower
prices (Keen, 1998).
iii. Single Tax: A Single tax occurs in a system in which the taxes
are levied only on one subject, there is only one tax which
constitutes the source of public revenue. For example tax on
land.
iv. Multiple Tax: Multiple taxation implies that there should be
all types of taxes so that every citizen can contribute to the
state revenue. In other words, multiple tax system is generally
preferable to the other tax systems as single tax system, direct
taxes , indirect taxes etc. because modern economy is not one or
single objective economy. It has to go forward along with the
paths of growth, equitable distribution of income and wealth,
economic stabilization etc. Therefore, multiple tax system is the
most suitable form to get sufficient resources to meet the
requirements of the economy. Prof. Arthur supported the
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multiple tax system by saying that, '' If I were to define a good
tax system , it would be that of bearing lightly on infinite
number of points, heavily on none''.
v. Double Taxes : If a person pays taxes two times for the same
service, it is called as double taxes. Double taxes arise in the
following circumstances :
(i) Tax levied by to administrators. The situation of double
taxation arises when they are levied by two
administrators. For instance, if a person gets revenue in
foreign country, he has to pay tax on foreign country, as
well as in India on the same income. It is know as double
taxation.
(ii) By One Administrator . Double tax situation can arouse
when it is levied twice by the same administrator, e.g.a
tax on company income and on income of shareholders.
2.5 Changes of Income Tax Structures in India:
Since the year 1991, the Indian income tax system structure has
undergone some significant changes. These changes were made in
accordance with the country's world trade organization (WTO)
commitments as well as the liberal financial policies. Some of the
major changes in the structure of income taxation in India's are as
follows:
• Widening the tax base
• Lowering the tax rate on income
• Toning up the administration of taxation
• Reforms in the personal income tax structure in the form of
broadening the exemption limits
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• Reorganizing the different income tax slabs and simplify
overall tax procedure
So that people could be encouraged for compliance of tax laws
(Gupta, 2013).
1.9.1 Changing Structure of Personal Income tax
The bellow mentioned table provides information about the
different slabs for the imposition of income tax.
Sr. No. Total Personal Income Rate of Personal
Income tax
1 UP to INR 250000 0.00%
2. INR 2.50000 to INR 500000 10.00%
3. INR 500000 to INR 1000000 20.00%
4. Above INR 10, 00000 30.00%
Source: Union Budget documents.
2.5.2 Changing Structure of Corporate income Tax
The imposition of such a tax various form of a domestic
company to a organization. Given below are the rates of corporate tax
which is levied on different companies:
Corporate Tax in India
Type of company Total income more than INR 10
million
Domestic company 30% +5% surcharge
Foreign organization or company 40% +5% surcharge
Source : Union Budget documents.
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In case of domestic companies: corporate income tax is levied
at the rate of 30 percent with an additional 5 percent surcharge.
In case of foreign organization: Corporate tax is calculated at
the rate of 40 percent with a 5 percent surcharge. However, An Indian
registered organization that is a foreign companies' subsidiary is
considered to be a domestic company for the computation of corporate
taxes (http:// business. mapsofindia.ocm.)
2.10 Income Tax Structure in India :
Income tax is a central subject. Income tax can be categorized
into two main parts viz. (i) Personal Income Tax and ii) Corporate
Income tax. The bellow mentioned table or diagram shows structure
of personal and corporate income tax
Structure of Income Tax
Income Tax
Personal Income Tax (PIT) Corporate Income Tax (CIT)
i) Individuals i) Domestic company
ii) Hindu Undivided Family (HUF's )
ii) Foreign company
iii) Firms and Association of persons (Aop's)
iv) Body of Individuals (BoI's )
v) Artificial Juridical Persons
vi) A Local Authority
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2.6.1 Structure of Personal Income Tax :
The structure of personal income tax in India can be described
under the broad heading of (a) Individuals b) HUFs (c) Aops' d) BOI's
and last (e) Artificial juridical persons etc.
i) Individuals: An " Individual' means a natural person ie.a human
being. "Individual ' would include a male, female, minor child, and a
lunatic. In the case of a minor or lunatic in representative capacity
(under sec. 160 1).
An individual is taxed not only his total income but in certain
cases he may also be assessable on incomes of other persons
(under sec. 60 to 64). In order to compute taxable income of an
individual three types of incomes are aggregated.
i) Incomes earned by his individual capacity under different
heads e.g. income from salary, interest on securities, house
propriety, income from business or profession.
ii) Income by virtue of his membership in other institutions.
e.g. A member of HUF, registered and unregistered form,
AOA's and company.
iii) Income of other persons but included in his total income.
iii) Hindu Undivided Families (HUF):
A Hindu undivided family is assessed to income tax as a
distinct unit of assessment apart from the members who compose
it. Earlier it enjoyed concessional treatment in taxation but in
recent years the tax not has come very close to it. A Hindu
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undivided family is subject higher rates of taxation if it has at least
one member with taxable income of his own.
iv) Firms and Association of Persons (Aops ):
Income tax Act does not indicate what is a firm but sec. 2 (23)
provides that " firm", "partner" and "partnership" have the meanings
respectively assigned to them in the Indian partnership Act, 1932. Sec.
4 of this Act defines the term "Partnership" as the "relationship
between persons who have agreed to share the profit of a business
carried on by all. Persons who have entered in to partnership with one
another are called "partners" and collectively a "firm." Other hand an
AOP means a group of persons (whether individuals, HUF,
companies, firms etc.) who join together for common purposes. Every
combination of person cannot be termed as Aop. It is only when they
associate themselves in an income producing activity then they
become Aop.
v) Body of Individuals (BOI):
BOI means a group of individual only) who join together for
common purposes whether or not to earn income. In case of BOI,
only individuals can be the members and in case of Aop, such
common will may or may not be present.
vi) Artificial Judicial Persons:
An "artificial person" is a legal entity like a corporation,
partnership, trust, government sovereign, charitable organization or
other formally recognized entity allowed standing by courts to have
power to sue or be used in the same sense of an individual also called
judicial persons, or legal person.
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vii) A Local Authority :
A local authority an administrative body in local government or
the group of people responsible for the government of a particular
area town or city in the India.
2.6.2 Structure of Corporate Income Tax:
There are many types of companies in Indias but given below
discussion of Main two companies, one is domestic company and
second is foreign company.
i) Domestic Company :
A domestic company or any other company with respect to its
income, liable to tax under the income tax Act, has made the
prescribed arrangements for the declaration and payment within India,
of the dividends (including dividends on preference shares) payable
out of such income. Thus, all Indians company are treated as domestic
company but all Domestic company are not Indian company.
If a foreign company makes prescribed arrangements for
payment of dividends in India it shall be treated as domestic company
and on domestic companies corporate income tax is levied at the rate
of 30 in 2014-15 percent with an additional surcharges.
ii) Foreign Company (sec. 2 (23 A):
It means a company which is not a domestic company, i.e. a
company registered outside India in nay other foreign company. The
foreign company may be treated as domestic company if such
company makes prescribed arrangement in India as per rule 27.
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Foreign company is treated as resident in India. if its control
and management is located wholly in India. Foreign company is
treated as non-resident in India if its control and management located
wholly or partially outside India.
In case of foreign company or organizations, corporate income
tax is calculated at the rate of 40 percent with a 5 percent surcharge
(Ahuja & Gupta, 2015).
2.7. Rate Structure of Personal Income Tax in India:
Personal income tax is an usually the most discussed
component in Indian tax steam. In India every tax has an explicitly
defined tax base, In defining the tax base, the tax authorities have to
categorically state what is to be taxed and what is to be included and
excluded in the tax base. Besides, some elements of the tax base may
have to be permitted as deduction and some parts of the tax base may
have to be exempted from tax, once the tax base has been defined, the
tax rates are to be specified.
Tax base and tax rates both are principle components of
personal income tax system in India. If the base is broader than a
target amount of revenue may be raised by choosing a lower average
tax rate. There is also a close interaction between the tax base and the
tax rate schedule. A higher marginal tax rate usually has the effect of
reducing in individuals incentives to earn incomes for leisure would
then appear to be more attractive at the margin . A higher marginal tax
rate also increases the tendency on the part of individuals to evasion
conceal their income. So reduction of income tax rate is better for in
any countries (Nayak & Paul, 1989).
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The structure of personal income taxation in India can be
described under the broad headings (Gandhi 1970) of (i) Tax base
and Tax rates over the period of time (ii) the deductions, concession
and exemptions iii) Surcharges of Income tax (iv) the concept of the
taxable income and (v) Income tax slabs.
2.7.1 Personal Income Tax Rates Before 1991 :
Any "person" in India having a taxable income excess of the
exemption limit is required to fill in the tax return, the "person" is
defined to include individuals, HUFs, a company, a firm or an
association of persons, a local authority and artificial juridical person.
The rates of personal income tax in India as Table 2.01 shows,
are year wise or decided wise highest income tax rates with surcharge
during the period of 1950-51 to 1992-93.
Table No. 2.1
Personal Income Tax Rates in India during 1950-51 to 1992-93
Year / Decades Highest Income tax rates with
surcharge
1950-51 25.00%
1960-61 88.00%
1971-72 93.50%
1973-74 97.75%
1980-81 72.00%
1986-87 50.00%
1992-93 44.80%
Source: Department of revenue & report of task force on
Implementation of the FRBM Act, 2003.
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Figure No, 2.1
Personal Income Tax Rates in India during 1950-51 to 1992-93
The above table shows personal income tax rates in India
during the period of 1950-51 to 1992-93. Study shows that personal
income tax levels in India were very high during 1950-1980. In 1971-
72 there were 11 tax slabs with highest income tax rate being 93.50%
including surcharge. In 1973-74 highest income tax rate with
surcharge) was 97.75%. But to reduce tax evasion income tax rates
were reduced later on, by 1992-93 maximum income tax rates were
reduced to 40 per cent.
25.00%
88.00%93.50%
97.75%
72.00%
50.00%44.80%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
1950-51 1960-61 1971-72 1973-74 1980-81 1986-87 1992-93
Pe
rce
nta
ge
Year/ Decades
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Table No. 2.2
Minimum, Maximum Income for tax and income tax rates in
India during 1990-91 to 2014-15.
Financial
year
Minimum
Income
for Tax
(in.Rs)
Lowest
Tax
Rate or
(Entry
rate )
Income at
which
highest
tax rate
starts
(in.Rs)
Highest
tax rate
or (peak
rate)
Highest
tax
including
surcharge
1990-91 22000 20% 100000 50% 56.0%
1991-92 22000 20% 100000 50% 56.0% 1992-93 28000 20% 100000 40% 44.8% 1993-94 30000 20% 100000 40% 44.8%
1994-95 35000 20% 120000 40% 44.8% 1995-96 40000 20% 120000 40% 40.0% 1996-97 40000 20% 120000 40% 40.0 %
1997-98 40000 10% 150000 30% 30.0 % 1998-99 50000 10% 150000 30% 30.0 % 1999-00 50000 10% 150000 30% 34.5%
2000-01 50000 10% 150000 30% 30.6% 2001-02 50000 10% 150000 30% 31.5% 2002-03 50000 10% 150000 30% 33.0% 2003-04 50000 10% 150000 30% 33.6%
2004-05 50000 10% 150000 30% 33.6% 2005-06 50000 10% 150000 30% 33.6% 2006-07 50000 10% 150000 30% 33.6%
2007-08 110000 10% 250000 30% 33.9% 2008-09 110000 10% 250000 30% 33.9% 2009-10 160000 10% 500000 30% 33.9%
2010-11 160000 10% 500000 30% 30.9% 2011-12 160000 10% 800000 30% 30.9% 2012-13 200000 10% 1000000 30% 30.9%
2013-14 200000 10% 1000000 30% 33.99% 2014-15 250000 10% 1000000 30% 33.99%
Source: Income Tax slabs History in India http: // apnaplan.com.
91
Figure No. 2.2
Lowest, Highest and Highest Tax Including surcharges Rates in India 1990-91 to 2014-15
0
10
20
30
40
50
60
Pe
rce
nta
ge
Lowest Tax Rate or (Entry rate ) Highest tax rate or (peak rate) Highest tax including surcharge
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The Table No. 2.02 Shows the composition of minimum
income for tax, income at which highest tax rate starts, lowest tax
rates, highest income tax rate and highest income tax rates including
surcharge, during the year 1990-91 to 2014-15. In order to minimum
Income tax, the exemption limit for income tax has also increased 11
times from Rs. 22000 in F.Y. 1990-91 to Rs. 250000 in F. 2014-15.
Even the lowest from 20 percent to 10 percent and Highest income tax
rates also has gone down from 50 percent to 30 percent in same
period. Finally, in order to Highest Income tax rats including
surcharge has come down from 56 percent in F.Y. 1990-91 to 33.99
percent in FY 2014-15.
2.7.2 Exemption Limits in India:
Tax exemptions is the most important component in the Indian
personal Income tax rate structure system. The basic exemption limit,
also called the threshold limit, refers to the limit of total taxable
income up to which an individual or other taxable entities would not
have to pay any tax.
The payment of tax begins only after the taxable income crosses
this limit. There is a theoretical rationale for prescribing a minimum
exemption limit. It is not administratively feasible to assess small
income earners because in their cases the cost of collection is likely to
be much higher than the revenue yield. As a result tax revenue might
fall. Further, the marginal utility as income for smaller income groups
is much higher than the marginal utility of income for higher income
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groups. Therefore, small income earners need to left out of the tax net.
However, the exact cut off or exemption limit need to be decided on
the basis of the governments prescription of the minimum income
required to support family the economic scenario prevailing in the
country, administrative cost of collection and the compliance burden
of the smallest taxpayers.
• History of Exemption Limits in India Before 1991.
The attempt of the Indian Government has always been to keep
the incidence of tax at a relatively low level for small income group
people. Hence, provision of exemption limit has been made. The
exemption limit was Rs. 2000 for the assessment years 1939-40 to
1946-47 except for the years 1942-43 and 1943-44 when it was
reduced to Rs. 1500 to raise more revenue for the war. For the
assessment year 1949-50, special status of the HUF was recognized
and its exemption limit was placed at Rs. 5000. The exemption limit
was increased to Rs.6000 by the Finance Act, 1974, to Rs. 8000 by
the Finance Act, 1975, to Rs. 10000 by the Finance Act, 1980 to Rs.
15000 by the finance Act, 1981 and Rs. 18000 by the finance Act,
1985. During the financial year 1990-91 (assessment year 1991-92).
The exemption limit was prescribed at Rs. 22000 by the finance Act,
1990 (Jain and Jain, 2007).
94
• Budget wise exemptions / Concessions for Men, women and
senior citizen since 2005-06.
Table No. 2.3
Budget-wise Income Exempted for Men, Women and Senior
Citizen.
Financial
year
Income
Exempted for
men
( In Rupees)
Weather any
concession
for women
(In Rupees )
Weather any
concession
for senior
citizen
( In Rupees)
2005-06 100000 135000 185000
2006-07 100000 135000 185000
2007-08 110000 145000 195000
2008-09 150000 180000 225000
2009-10 160000 190000 240000
2010-11 160000 190000 240000
2011-12 180000 190000 250000
2012-13 200000 200000 250000
2013-14 200000 200000 250000
2014-15 200000 200000 250000
2015-16 250000 250000 300000
Source : Indiabudget.nic. in and union Budget documents for various
(2005-06 to 2015-16)
Budget-wise inc
Table. No.2
limit for Men, wo
appears from 2005
citizens are taken
income. Since bud
0
50000
100000
150000
200000
250000
300000
Inco
me
in
Rs
Me
95
Figure No. 2.3
income Exempted for Men, Women, seni
2005-06
2.3 shows the position of Budget-wise
women and senior citizens. In India gende
05-06 budget and from this budget women
ken in to account for exemption limit
udget, 2005-06 the exemption limit for m
Fincial Year
Men Women Senior Citizen
nior citizen
ise exemption
der budgeting
en and senior
t in personal
men, women
96
and senior citizens were increased Rs. 100000 Rs. 135000 and 185000
from the year 2005-06 to Rs. 250000, 250000 and Rs. 300000
sequently to the assesment year 2015-16. Finally, above the analysis
shows that limit of exemption for men, women and senior citizen has
been shown upward trend from union budgets for 2005-06 to 2015-16.
2.7.3 Income Tax Slab Rates:
Bellow we have discussed the income tax slab rates for 1990-91
to 2015-16. The Income tax slab rates are different for different
categories at taxpayers. The income tax slab rates can be divided in
the following categories:
a) Individuals and HUF
1. For male individuals below 60 years of age and HUF
2. For female individuals below 60 years of age.
3. For all super senior citizen above 80 years of age.
B. Business:
1. Firms, Local Authorities and Domestic Company
2. Foreign / International Company.
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Table No. 2.4
Income tax slab / Rates for men F.Y. 1990-91 to 2015-16
Financial
year
20% slab
applicable
for income
above (Rs.)
30% slab
applicable for
income above
(Rs.)
40% slab
applicable
income
above (Rs.)
56% slab
applicable
income
above (Rs.)
No of
slabs'
1990-91 22000 28000 50000 100000 4
1991-92 22000 28000 50000 100000 4
1992-93 28000 50000 100000 - 3
1993-94 30000 50000 100000 - 3
1994-95 35000 60000 120000 - 3
1995-96 40000 60000 120000 - 3
1996-97 40000 60000 120000 - 3
Year 10%slab
applicable
for Income
above
20% slab
applicable for
income above
30% slab
applicable
for income
above
- -
1997-98 to 2004-05
50000 60000 150000 - 3
2005-06 100000 150000 250000 - 3
2006-07 100000 150000 250000 - 3
2007-08 110000 150000 250000 - 3
2008-09 150000 300000 500000 - 3
2009-10 160000 300000 500000 - 3
2010-11 160000 500000 800000 - 3
2011-12 180000 500000 800000 - 3
2012-13 200000 500000 1000000 - 3
2013-14 200000 500000 1000000 - 3
2014-15 250000 500000 1000000 - 3
2015-16 250000 500000 1000000 - 3
Source: www.http:// charteredclub.nic.in 2. Union Budget documents for various years. Note: From 2012-13, women were also a part of the general slab. rates.
98
Table no. 2.4 shows the position of income tax brackets and
slab rates for men during the period of 1990-91 to 2015-16.
In India, during 1990-91 to 1991-92, the four slabs rates are
available or exist. The entry rate was 20 Percent and peak rate was 56
percent. Number of slab rates reduced from 4 to three in the year
1992-93. This slab tax rates were sequentially, 20 Percent, 30 Percent,
40 Percent. These tax rates were continuing till up to the budget year
1996-97. From 1997-98 to 2015-16 there were some changes in
associate tax brackets but tax slab rates remained stable. (10 Percent)
(20 Percent, 30 Percent).
In order to men the limit for 20% slab applicable for income
above, 30%, 40% slab applicable for income above has been increased
from Rs. 22000 Rs. 28000 and Rs. 50000 in 1990-91 to Rs. 40000 Rs.
60000 and Rs. 120000 sequentially in 1996-97. Then after 1996-97
slab rate has reduced from 20, 30, 40, to 10, 20, 30%. The limit for
10%, 20%, 30%, slab applicable for income above has been increased
from Rs. 50000, Rs. 60000 and Rs. 150000 in 1997-98 to Rs. 250000,
Rs. 500000 and Rs. 1000000 sequentially from the financial year
2015-16..
With the help of above analysis we can conclude that the limit
for all income tax slabs rates (10, 20, 30%) slab applicable for income
above for men has shown upward/increased trend during the study
period.
99
Table No. 2.5
Income Tax Brackets and Slab rates for Women since F.Y. 2005-06
Financial
year
10% slab
applicable for
income above
20% slab
applicable for
Income above
30% slab
applicable fro
income above
2005-06 125000 1,50,000 2,50,000
2006-07 135000 1,50,000 2,50,000
2007-08 145000 1,50,000 2,50,000
2008-09 180000 3,00,000 5,00,000
2009-10 190000 3,00,000 5,00,000
2010-11 190000 5,00,000 8,00,000
2011-12 190000 5,00,000 8,00,000
2012-13 200000 5,00,000 10,00,000
2013-14 200000 5,00,000 10,00,000
2014-15 250000 5,00,000 10,00,000
2015-16 2,50,000 5,00,000 10,00,000
Source: www.http:// indiaincometax.gov.in
Note: From 2012-13 onwards, the same slab rates will apply for Men
and women.
100
Figure No. 2.4
Income Tax Brackets and Slab rates for Women since
F.Y. 2005-06
Table No. 2.5 explains income tax slabs brackets rates for
women since the financial year 2005-06. In order to women the limit
for 10%, 20% and 30% slab applicable for income above was
increased from Rs. 125000, Rs. 150000 and 250000 for the financial
yeas 2005-06 to Rs. 250000 , Rs. 5 lakh and 10 lakh from the sequent
financial years 2015-16.
Finally conclude that the limit for all income tax slab rates
applicable for income above for women also upward trend during
study period.
0
200000
400000
600000
800000
1000000
1200000
Inco
me
In
Rs.
Finacial year
10% slab applicable for income above 20% slab applicable for Income above
30% slab applicable fro income above
101
Table No. 2.6
Income tax slab rates for senior citizens since F.Y. 2005-06
(bellow 80 years)
Financial
year
10% slab
applicable for
income above
20% slab
applicable for
Income above
30% slab
applicable fro
income above
2005-06 1,85,000 3,00,000 5,00,000
2006-07 1,85,000 3,00,000 5,00,000
2007-08 1,95,000 3,00,000 5,00,000
2008-09 2,25,000 3,00,000 5,00,000
2009-10 2,40,000 3,00,000 5,00,000
2010-11 2,40,000 5,00,000 8,00,000
2011-12 2,50,000 5,00,000 8,00,000
2012-13 2,50,000 5,00,000 10,00,000
2013-14 2,50,000 5,00,000 10,00,000
2014-15 3,00,000 5,00,000 10,00,000
2015-16 3,00,000 5,00,000 10,00,000
Source: Union budgets for various years
Note : From 2011-12, the age of senior citizen was reduced
from 65 years to 60 years.
102
Figure No. 2.5
Income tax slab rates for senior citizens since F.Y. 2005-06
(bellow 80 years)
Table no. 2.6 shows the income tax slab rates for senior citizens
since F.Y. 2005-06. In order to senior citizens, the income tax limit
for 10%, 20% and 30% slab applicable for income above was
increased from Rs. 185000, Rs. 3 lakh and Rs. 5 lakh for the financial
year 2005-06. to Rs. 3 lakh, Rs. 5 lakh and Rs. 10 lakh from the
financial years sequentlly 2015-16.
With the help of above analysis for income tax slab rates for
senior citizens also all slabs (10%, 20%, 30%) applicable for income
above has shown upward trend during 2005-06 to 2015-16.
0
200000
400000
600000
800000
1000000
1200000
Inco
me
in R
s.
Fincial year
10% slab applicable for income above 20% slab applicable for Income above
30% slab applicable fro income above
Income Tax Sla
Financial
year a
i
2011-12
2012-13
2013-14
2014-15
2015-16
Source: http:// c
Note : Above th
Income Ta
0
200000
400000
600000
800000
1000000
2011
10% slab applicab
30% slab applicab
103
Table No. 2.7
lab Rates for super senior citizens since F
12 (80 + age)
10% slab
applicable for
income above
20% slab
applicable for
Income above
30%
applic
incom
5,00,000 5,00,000 8,00
5,00,000 5,00,000 10,0
5,00,000 5,00,000 10,0
5,00,000 5,00,000 10,0
5,00,000 5,00,000 10,0
// charteredclub.nic.in and Unions Budgets.
this slab has been introduced from 2011-1
Figure No.2.6
Tax Slab Rates for super senior citizens s
F.Y. 2011-12 (80 + age)
011-12 2012-13 2013-14 2014-15 2015-16
licable for income above 20% slab applicable for Incom
licable fro income above
e F.Y. 2011-
0% slab
licable fro
me above
,00,000
,00,000
,00,000
,00,000
,00,000
ts.
12.
s since
16
come above
104
The above No. 2.07 shows income tax slab rates for super
senior citizens (80 + age) since financial years 2011-12. In order to
super senior citizens , in the year 2011-12, a new category called
''very senior citizen" has been added for people above 80 years. Now
we have two types of senior citizens " Senior citizen" up to 60 years
of age and ''very senior citizens in the age of 80 years or above. The
threshold limit of income exempted from tax for newly created
category of assesses in Rs. 500000 thereafter they have to pay tax
according to prevailing tax rates. The income limit for 20% and 30%
slab applicable for income above, was increased from Rs. 5 lakh and 8
lakh for the F.Y. 2011-12 to Rs. 5 lakh and 10 lakh from the F.Y.
sequent 2015-16.
2.7.4 Surcharge on Income Tax :
It is pertinent to note that surcharge is levied on the total
income tax of the individual and not on the income of the individual.
The Finance Act 2013 introduced the levy of surcharge on Income tax
@ 10% on all categories of taxpayers earning income above Rs. 1
crore. Earlier this was levied only on companies but now surcharges
on income tax is levied on everyone who has income above Rs. 1
crore.
However, the rats of surcharge on Income very for different
categories of taxpayers and the current rates of surcharge are as
follows:
105
Category of Taxpayer Surcharge on Income tax
Individual HUF, P..Firm, LLi etc.
10%
Domestic Company 5%
Foreign company 2%
The rate of surcharge on Income tax on Demostic and foreign
companies is less as compared to surcharge on Individuals as
domestic and foreign companies are already being charged a higher
rate of income tax as compared to individuals.
Once the income tax has been computed, surcharge would be
levied on the income tax.
The following flowchart has been prepared for understanding of the
applicability of surcharge.
Surcharge on Income Tax
Income is less 1 crore Income is more than 1 crore
Surcharge not applicable Surcharge applicable
Commute the income tax payable
levy surcharge @ 10% on the Income tax payable
106
Table No. 2.8
Year -Wise Rate of Surcharge & Income at which Surcharge is
levied.
Year Income at which
surcharge is levied (In.
Rs)
Rate of
surcharge (%)
1990-91 50000 8
1991-92 75000 12
1992-93 75000 12
1993-94 100000 12
1994-95 100000 12
1995-96 Nil Nil
1996-97 Nil Nil
1997-98 Nil Nil
1998-99 Nil Nil
1999-00 60000 Nil
2000-01 60000 10
2001-02 60,000 02
2002-03 60,000 5
2003-04 60,000 10
2004-05 8,50,000 10
2005-06 8,50,000 10
2006-07 1,00,00,000 10
2007-08 1,00,00,000 10
2008-09 1,00,00,000 10
2009-10 1,00,00,000 10
2010-11 Nil Nil
2011-12 Nil Nil
2012-13 Nil Nil
2013-14 1,00,00,000 10
2014-15 1,00,00,000 10
2015-16 1,00,00,000 10
Source: http://indiabudget.nic.in
107
Table No. 2.8 explains year wise position of rate of surcharge
and income at which surcharge as levied since 1991. The income at
which surcharge is levied (in Rs) was largely increased from Rs.
50,000 in 1990-91 to from Rs. 10000000 in the year 2015-16. The rate
of surcharge was 8% in 1990-91 to increased 10% in 2015-16.
Finally above the analysis, we conclude that the income at
which surcharge as levied for personal income has shown increased
trend during the study period. but rate of surcharge has shown
fluctuated trend since 1991.
2.8 Trends of Revenue Foregone or Tax expenditure in India.
Terms of tax Expenditure :
Tax expenditure become part of the lexicon of the economist
toward the end of the 1960s. These expenditures or more correctly,
non expendetures are made when a government does not collect tone
monies because ahouse hold or firm has taken deduction or credit for
an expenditure they have made, thus reduce there income tax liability.
Rather than directly subsidize certain non profit organization via
transfer payments a government permits citizen to make contributions
that are tax deductible. The Government in effect participates in the
contribution by not raising revenue, thus reducing the out of pocket
expense of the contribution to the donor. Income tax deduction could
be eliminated; with an Unchanged schedule of tax rates a government
would then have greater receipts that could be utilized to make direct
expenditures (Davie and Duncombe, 1972).
108
2.8.1 Revenue Foregone Due to Exemptions in the Central Tax
System in India
In the Indian Context, there could be a number of reasons for
exemptions to be given in different kinds of taxes, such as,
• encouraging individual savings (by providing tax reliefs to
various savings schemes),
• Providing a boost to exports,
• achieving balanced regional development,
• encouraging infrastructure development
• increasing employment , and
• providing more resources for education, rural development and
cooperatives etc.
However, as stated earlier, a periodic review of such
exemptions by the government would be necessary to eliminate
excessive exemptions/ incentives of superfluous tax breaks to
investors for preventing the loss of public revenue.
2.8.2 Estimates of Revenue Foregone due to Exemptions in the
Central Tax System:
Starting with the Union Budget for 2006-07, the Union
Government of India has been publishing a Statement of Revenue
foregone under the Central Tax System as part of the Union Budget
documents every year. This document presents a discussion on the
exemption in major taxes levied by the Union government or the
109
Centre and an estimation of the potential tax revenue lost or foregone
due to the same.
In this statement, the various kinds of exemptions in the Central
tax system are categorized under the following broad heads:
Direct Taxes: Corporate Sector, Non Corporate sector, and
individual Taxpayers; and
Indirect Taxes : Excise Duties, and Customs Duties.
Table 2.09 presents tax category wise estimates of revenue
foregone due to the exemptions in the Central tax system, i.e.
estimated amounts of revenue foregone due to exemptions for
corporate section corporate income Tax CIT, exemptions for
individual taxpayers in Personal Income Tax PIT, and due to
exemptions in indirect taxes Customs Duty and Excise Duty and
Excise Duty). These estimates, provided by the Union Finance
Ministry, are for 2005-06 to 2012-13.
110
Table 2.9
Revenue Foregone due to Exemptions in the Central Government
Tax System
Items Corporate
Income
tax
Personal
income
Tax
Excise
Duty
Customs
Duty
Total Less
Export
credit
related
Grand
total =
total
Export
Credit
related)
Revenue Foregone in 2005-06 (In Rs. Core)
34618 (0.9)
13550 (0.4)
66760 (1.8)
127730 (3.5)
242658 (6.6)
37590 (1.0)
205068 (5.6)
Revenue Foregone in 2006-07 (in Rs. Core)
50075 (1.2)
15512 (0.4)
99690 (2.3)
123682 (2.9)
288959 (6.7)
53768 (1.3)
235191 (5.5)
Revenue Foregone in 2007-08 (in Rs. Core)
62199 (1.2)
38057 (0.8)
87468 (1.8)
153593 (3.1)
341317 (6.8)
56265 (1.1)
285052 (5.7)
Revenue Foregone in 2008-09 (in Rs. Core)
66901 (1.2)
37570 (0.7)
128293 (2.3)
225752 (4.0)
458516 (8.2)
44417 (0.8)
414099 (7.4)
Revenue Foregone in 2009-10 (in Rs. Core)
72881 (1.1)
45142 (0.7)
169121 (2.6)
195288 (3.0)
482432 (7.4)
N.A. (N.A)
482432 (7.4)
Revenue Foregone in 2010-11 (in Rs. Core)
57912 (0.8)
36826 (0.5)
192227 (2.5)
172740 (2.3)
459705 (6.0)
N.A. (N.A)
459705 (6.0)
Revenue Foregone in 2011-12 (in Rs. Core)
61765 (0.7)
39375 (0.4)
195590 (2.2)
236852 (2.6)
533583 (5.9)
- (-)
533583 (5.9)
Projected Revenue
Foregone in 2012-13
(In Rs. Core)
67995.0 (0.7)
45480.12 (0.5)
206188.0 (2.1)
253967.0 (2.5)
573630.1 (5.7)
- (-)
573630 (5.7)
Source: Compiled by author from statement of revenue foregone, Union budget
2006-07 to 2013-14, Ministry of Finance, Govt. of India.
111
Note:
1. 2005-06 figures are provisional and 2006-07 figures are estimates in
brackets are indicates revenue foregone as % of GDP.
2. For 2005-06 and 2006-07, Cooperative Sector exemptions figures are also
available, which is however not available for the later years.
3. The ratios to GDP at current market prices are based on the central statistics
office's national Accounts 2004-05 series
The Estimates of revenue foregone due to exemptions in the
Central tax system have caught the attention of many stakeholders
over the last few years mainly because of the very high magnitudes of
tax revenue involved in the same. As can be seen from table 1, the
total estimated amount of revenue foregone due to all kinds of
exemptions to all sectors. i.e. individuals, organizations and
enterprises) stood at Rs. 2.05 lakh crore or 5.6% of GDP for the
financial year 2005-06, which by the financial year 2012-13 has risen
in absolute terms to Rs.5.73 lakh crore or 5.7% of GDP.
As a result, many people have focused on the key finding in the
statement of revenue foregone, which is that the total magnitude of tax
revenue foregone due to exemptions deductions incentives in the
Central government tax system is estimated by the Union Ministry of
finance to be Rs. 5.33 Lakh crore in 2011-12 and Rs. 5.73 lakh crore
in 2012.13. What it implies is that the estimated amount of additional
tax revenue that could have been collected by the Union Government,
if all exemptions deductions incentives both in direct and indirect
taxes in the central tax system had been eliminated, is a staggering
5.9% of GDP for 2011-12 and 5.7% of GDP for 2012-13.
112
Figure No. 2.7 A
Revenue foregone of central Taxes in India
Figure 2.6 A shows the tax category wise revenue foregone
figures as proportions of total revenue foregone due to exemptions in
the central tax system in the financial year 2011-12
Figure 2.6 A Revenue foregone in corporate income tax,
personal income tax, Excise duty and customs duty as % of total
revenue foregone in financial year 2011-12 .
Excise Duty, 37%
Customs Duty
, 44%
Personal Income
, 7%
Corporate
Income Tax
, 12%
113
Figure No. 2.7 B
Figure 2.6 B shows the tax category-wise projected revenue foregone
figures as proportions of total revenue foregone due to exemptions in
the central tax system in the financial year 2012-13
Figure 2 .6 B Projected revenue foregone (in corporate income Tax,
personal income tax, Excise duty and customs Duty ) as % of Total
revenue foregone in financial year 2012.13)
We find that the proportion of tax revenue foregone is the
highest at 44% of (total revenue foregone) in case of exemptions in
customs duties, followed by an almost equally high proportion of
revenue foregone around 37 % in case of exemptions in Excise
Duties, Exemptions in Corporate income tax have accounted for a
much smaller 12% of the total revenue foregone, while that in
Excise Duty, 37%
Customs Duty
, 44%
Personal Income
, 8%
Corporate
Income Tax
, 12%
114
personal income Tax have accounted for 8% of the total revenue
foregone in the figures pertaining to financial year 2012-13.
According to, Report of FFC (Fourteenth Finance Commission)
Revenue foregone of CIT and PIT has increasing trend from 2005-06
onwards (Report of FFC-XIV, 2013).
However, given that the total magnitude of revenue foregone
for 2012-13 is stunning 5.7 % of GDP, even 12% of this (i.e. revenue
foregone on account of exemptions in corporate income tax is 0.7%
of GDP of approximately Rs.. 68000 crore in absolute terms. This is a
figure too high to ignore when we have to explore the possibilities for
the government to increase tax revenue (Bandyopadhyay, 2013).
2.9 Rate Structure of Corporate Income Tax in India:
Corporation tax in India is levied on the" total corporate
income" profit excluding agricultural income, of a company
(Suresh&khan, 2011). In the case of resident companies", total
income", is the" total world income" while in the case of non-resident
companies it is the "total Indian income". The rates of taxation of
corporate income in India are determined by the annual finance Acts.
If the growth of the rate structure of the taxes affecting corporations
is examined, it will become abundantly clear that the evaluation has
proceeded from a comparatively simple to an increasingly complex
scheme of taxation with more and more proliferating qualifications
and exceptions.
Taking into consideration the history of the corporate income
tax rates falling on companies we can divide the period into five
distinct sectors. (i) Pre 1939 (ii) War-time (1939-45) (iii) Pre
Independence (1945-47) (iv) Pre-plan (1947-51) v) After 1951 (plans
115
I and II). Before 1939 we find that the income tax rates were stable at
a comparatively low level. The basic corporate income tax rate of 30
pies in rupee was adhered to till 1946 (Ambirajan,1964). Before
1991, the corporate tax structure was complicated involving difficult
tax laws, high marginal rate and high compliance costs. There was
huge tax evasion and this led to low tax collection in the country.
Economic growth was low and there was no private incentive for
investment. The tax rates were exorbitantly high. The high tax rates
reduced productivity. A need was felt to restructure the tax system and
to reduce and rationalize the top marginal rates of corporate income
tax.
* Rate structure of the corporate income tax in India since 1991
Since 1990s with opening up of the economy to the world,
there has been a drastic change in the rate structure of corporate
income tax in India.
Table No. 2.10
Income tax rates for domestic and foreign companies during
1990 to 2015
Year Domestic
company
Foreign
company
1990-91 to 1997-98 40% 55%
1998-99 to 2002-03 35% 48%
2003-04 to 2005-06 35% 40%
2006-07 to 2010-11 30% 40%
2011-12 to 2015-16 30% 40%
Source : Union Budgets of various years (1990-91 to 2015-16)
Income tax ra
Table no.2
progressively redu
percent and 40 pe
corporate tax dom
company was 55
companies 30 per
period.
0%
10%
20%
30%
40%
50%
60%
1990-91 t
1997-98
Pe
rce
nta
ge
Dom
116
Figure No. 2.8
rates for domestic and foreign companie
1990 to 2015
2.10 shows that corporate income tax
duced on both domestic and foreign comp
percent respectively In the year 1990-91,
omestic company was 40% and the rate
55 percent. It reduced to both domestic
percent and 40 percent respectively durin
91 to
98
1998-99 to
2002-03
2003-04 to
2005-06
2006-07 to
2010-11
2011-
2015
Year
Domestic company Foreign company
ies during
tax rate was
mpanies to 30
1, the rate of
te of foreign
c and foreign
ing the study
-12 to
015-16
pany
117
2.9.1 Current Important Corporate Tax Rates in India:
Following are some other important taxes for the 2015-16 that
are applicable for the business entities in addition to the corporate
taxes:
i. Minimum Alternate Tax (MAT):
MAT was introduced for the first time 1997-98 in India for
Zero tax companies and low tax paying companies. Companies are
liable to pay MAT on their adjusted book profits (other than income
from life insurance business) where the tax liability under the normal
provisions of the income tax Act, 1961 for the tax year is not more
than 18.5% excluding surcharge, cess and SHEC of such book profit.
MAT at a rate of 18.5% along with applicable for the cess and
surcharge. Fringe benefits are liable to be taxed at 30 percent along
with an additional cess of 3% on the aggregate tax amount. companies
whose turnover exceeds 10 million rupees, need to pay an extra.
Surcharge of 10% on their basic tax.
ii. Dividend Distribution Tax:
A dividend distribution tax of 16.22 percent is applicable for
the domestic companies. In case of short term capital gains, the
normal basic tax rates are applied but in case of the long terms ones,
the tax rate varies between 10 and 20 percent. short term profits,
which are made from selling equity shares or units of equity based
funds, can be taxed at 15 percent. However long term profits in these
transitions are exempted from taxes.
Dividends received by Indian companies from outside India, are
subjected to a tax rate of 30 percent along with cess and surcharge. A
118
gross tax rate of 15 percent has also been proposed in case an Indian
company has got dividends from an overseas company. It is expected
this will encourage Indian companies to repatriate their money (Union
Budgets of 2015-16).
2.9.2 Surcharge on Corporate Income Tax:
The union government had been given the right to lvey
surcharges on the taxes on corporate income by the government of
India Act of 1935 (Sec.138).
The whole surcharge revenue was to accrue only to the centre
(Union). whereas the income tax revenue was to be shared by the
centre and the states in a certain proportion .
Surcharge on corporate Assessee: (For A.Y. 1990-91)
In 1990-91, the rate of surcharge was 15 percent. It was levied
on the domestic companies having income of more than Rs. 75000.
In case of foreign companies, there was no surcharge at that
time.
Surcharge on corporate Assessee:(For A.Y. 2015-16)
Particulars Taxable income >1
crore
Taxable Income >
10 crore
Domestic company 5% of income tax payable
10% of income tax payable
Foreign company 2% of income tax payable
5% of income tax payable
Source : http: //www.incometaxindia.gov.in/pages/default.aspx.
119
In case of Domestic Companies: Surcharge is applied in the
Following cases:
• If the company has a total income less than Rs. 1 crore. then it
does not have to pay any income tax.
• If the net income of the company for that year is in the range of
Rs.10 crores then 5% surcharge is applied on its net income.
• If the net income of the company for that year exceeds Rs.10
crores then 10% surcharge is applied on its net income.
In case of Foreign companies:
• If the net income of the company for that year is in the range of
Rs. 10 crore then 2% surcharge is applied on its net income.
• If the net income for a foreign company exceeds Rs.10 crores
then the surcharge that it will have to pay will be 5 percent.
2.9.3 View of the 14th
Finance commission on cesses &
surcharge's :
Cesses and Surcharges :
Another tax related issue pertains to the levy of cesses and
surcharges on taxes by the Union Government. Article 270 of the
constitution enable the Union Government to levy and retain any cess
levied for a specific purpose. Article 271 empowers parliament to levy
a surcharge on any taxes which fall within the Union Governments'
taxing powers. The total cess and surcharges constituted over 12.4
percent of gross tax revenues in 2012-13 actual. These are excluded
from the divisible pool. Cesses are meant to be fully utilized for the
purposes for which they are levied. The comptroller and Auditor
120
General (CAG) has drawn our attention to the lack of transparency
and incomplete reporting in accounts on the utilization of amounts
collected under cesses. Similarly, surcharge are meant to be lived only
for short periods. A majority of the State Governments are of the view
that cesses and surcharges should either be eliminated or, if continued
beyond a specified period. Should form part of the divisible pool (FC-
XIV 2013).
121
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