income sales tax

7/25/2019 Income Sales Tax

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Income taxAn income taxis a taxlevied on the incomeof individuals or businesses

(corporations or other legal entities).

Various income tax systems exist, with varying degrees of tax incidence.

Income taxation can be progressive, proportional or regressive.

When the tax is levied on the income of companies, it is often called acorporate tax, corporate income tax, or prot tax.

Individual income taxes often tax the total income of the individual (with

some deductions permitted), while corporate income taxes often tax netincome (the di!erence between gross receipts, expenses, and additionalwrite"o!s).

Various systems dene income di!erently, and often allow notional reductionsof income (such as a reduction based on number of children supported).


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TypesPersonal

Corporate

Payroll

Inheritance

Capital gains tax


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Personal Income TaxA personal or individual income tax is levied on the total income

of the individual(with some deductions permitted).

It is often collected on a pay"as"you"earn basis, with smallcorrections made soon after the end of the tax year.

#hese corrections ta$e one of two forms%payments to the government, for taxpayers who have not paid

enough during the tax year&

and tax refundsfrom the government for those who have overpaid.

Income tax systems will often have deductions available thatlessen the total tax liability by reducing total taxable income.

#hey may allow losses from one type of income to be countedagainst another. 'or example, a loss on the stoc$ mar$et maybe deducted against taxes paid on wages.


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Corporate Income Taxorporate tax refers to a direct tax levied on

the protsmade by companies or associationsand often includes capital gains of a company.

arnings are generally considered grossrevenue minus expenses.

orporate expenses related to capital

expenditures are usually deducted in full overtheir useful lives by using percentage ratesbased on the class of asset they belong to.


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Payroll Income TaxA payroll tax generally refers to two $inds of taxes% employee and employer

payroll taxes.

mployee payroll tax%

mployee payroll taxes are taxes which employers are re*uired to withhold fromemployees+ pay, also $nown as withholding, pay"as"you"earn(A-) or pay"as"you"go(A-) tax.

#hese withholdings contribute to the payment of an employee+s personal income taxobligation&

if the payments exceed this obligation, the employee may be eligible for a tax"refundor carry forward to future periods.

mployer payroll taxes% mployer payroll taxes are paid from the employer+s own funds, either as a xed

charge per employee or as a percentage of each employee+s pay.

ayroll taxes often cover government social insurance programs, such as socialsecurity, health care, unemployment and disability.

#hese payments do not count toward the income taxes of employees and employers,

but are normally deductible by the employer as a business expense.
http://en.wikipedia.org/wiki/Wagehttp://en.wikipedia.org/wiki/Wage


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Inheritance Tax

#he inheritance tax, estate tax and deathduty are the names given to various taxeswhich arise on the death of an individual.

In international tax law, there is a distinctionbetween an estate tax and an inheritance tax%the former taxes the personal representatives

of the deceased, while the latter taxes thebeneciaries of the estate.


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Capital gains taxA capital gains tax is the tax levied on prots

from the sale of capital assets.

In many cases, the amount of a capital gainistreated as income and sub/ect to the marginalrate of income tax.
http://en.wikipedia.org/wiki/Capital_gainhttp://en.wikipedia.org/wiki/Capital_gain


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Sales TaxA sales taxis a consumption taxcharged at the point of

purchasefor certain goods and services.

#he tax amount is usually calculated by applying a percentagerate to the taxable price of a sale.

A portion of the sale may be exempt from the calculation of tax,because sales tax laws usually contain a list of exemptions. 0awsgoverning the tax may re*uire it to be included in the price (tax"inclusive) or added to the price at the point of sale.

1ost sales taxes are collected from the buyer by the seller, who

remits the tax to a government agency.2ales taxes are commonly charged on sales of goods, but many

sales taxes are also charged on sales of services. Ideally, a salestax would have a high compliance rate, be di3cult to avoid, andbe simple to calculate and collect.
http://en.wikipedia.org/wiki/Tax_exemptionhttp://en.wikipedia.org/wiki/Tax-inclusivehttp://en.wikipedia.org/wiki/Tax-inclusivehttp://en.wikipedia.org/wiki/Tax_exemption


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Types of sales taxGross receipts taxes,levied on all sales of a business. #his tax has been

critici4ed for its 5cascading5 or 5pyramiding5 e!ect, in which an item is taxedmore than once as it ma$es its way from production to nal retail sale.

Excise taxes, applied to a narrow range of products, such as gasoline or alcohol,usually imposed on the producer or wholesaler rather than the retail seller.

Use tax, imposed directly on the consumer of goods purchased without salestax, generally items purchased from a vendor in another state and delivered tothe purchaser by mail or common carrier. 6se taxes are commonly imposed bystates with a sales tax, but are di3cult to enforce on consumers, except for largeitems such as automobiles and boats.

Securities turnover excise tax, a tax on the trade of securities.

Value added taxes, in which tax is charged on all sales, thus avoiding the need

for a system of resale certicates. #ax cascading is avoided by applying the taxonly to the di!erence (5value added5) between the price paid by the rstpurchaser and the price paid by each subse*uent purchaser of the same item.

Turnover tax, similar to a sales tax, but applied to intermediate and possiblycapital goods as an indirect tax.


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Excise Dutyentral xcise duty is an indirect tax levied on those goods

which are manufactured in India and are meant for homeconsumption.

#he taxable event is +manufacture+ and the liability ofcentral excise duty arises as soon as the goods aremanufactured.

It is a tax on manufacturing, which is paid by amanufacturer, who passes its incidence on to the

customers.#he term 5excisable goods5 means the goods which are

specied in the 'irst 2chedule and the 2econd 2chedule tothe entral xcise #ari! Act,789: , as being sub/ect to aduty of excise and includes salt.


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Importance of Central Excise

Dutyentral excise revenue is the biggest single source of revenue for

the overnment of India.

#he 6nion overnment tries to achieve di!erent socio"economicob/ectives by ma$ing suitable ad/ustments in the scope and

*uantum of levy of entral xcise duty.#he scheme of entral xcise levy is suitably adapted and modied

to serve di!erent purposes of price control, su3cient supply ofessential commodities, industrial growth, promotion of small scaleindustries and li$e Authority for collecting the entral xcise duty.

Article ;: as adopted by entry 9= of 0ist I of theseventh 2chedule of the onstitution of India. harging section is2ection > of the entral xcises and 2alt Act,78==.


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ia!ility to pay Central Excise

Duty2ection > of the entral excises and 2alt Act,78== provides

that there shall be levied and collected in such manner asmay be prescribed, duties of excise on all excisable goodsother than salt which are produced or manufactured in India atthe rates set forth in the schedule to the entral excise #ari!Act,789:.

it is therefore clear that as soon as the goods in *uestion areproduced or manufactured, they will be liable to payment ofxcise duty.

?owever for convenience duty is collected at the time ofremoval of the goods. While 2ection > of the entral xcisesand salt Act,78== lays down the taxable event, @ules 8 and =8of the entral excise @ules,78== provides for the collection ofduty.


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#here are three types of entral xcise duties collected in Indianamely%

"asic Excise Duty#his is the duty charged under section > of the entralxcises and 2alt Act,78== on all excisable goods other thansalt which are produced or manufactured in India at the ratesset forth in the schedule to the entral xcise tari! Act,789:.

#dditional Duty of Excise2ection > of the Additional duties of xcise (goods of specialimportance) Act,78: authorises the levy and collection inrespect of the goods described in the 2chedule to this Act.

#his is levied in lieu of sales #ax and shared between entraland 2tate overnments. #hese are levied under di!erentenactment+s li$e medicinal and toilet preparations, sugar etc.and other industries development etc.


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Special Excise Duty

As per the 2ection > of the 'inanceAct,789 2pecial excise Buty was attracted on

all excisable goods on which there is a levy ofCasic excise Buty under the entral xcisesand 2alt Act,78==.2ince then each year therelevant provisions of the 'inance Act

species that the 2pecial xcise Buty shall beor shall not be levied and collected during therelevant nancial year.


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ustom Buties#he ustoms Act was formulated in 78


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Types of custom

duties"asic Duty$#his is the basic duty levied under the ustoms Act. #he rate varies for

di!erent items from :D to =ED.

#dditional Duty %Countervailing Duty& %CVD&$#his additional duty is levied under section > (7) of the ustom #ari! Act and

is e*ual to excise duty levied on a li$e product manufactured or produced inIndia.

If a li$e product is not manufactured or produced in India, the excise duty that

would be leviable on that product had it been manufactured or produced inIndia is the duty payable.

Additional Buty to compensate duty on inputs used by Indian manufacturers.

#his Additional Buty is levied under section >(>) of the ustoms Act. It can be

charged on all goods by the central government to counter balance exciseduty leviable to raw materials, components and other inputs similar to thoseused in the production of such good.


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Types of custom duties

#nti'dumping Duty$

2ometimes, foreign sellers abroad may export into India goodsat prices below the amounts charged by them in theirdomestic mar$ets in order to capture Indian mar$ets to the

detriment of Indian industry. #his is $nown as dumping.In order to prevent dumping, the entral overnment may

levy additional duty e*ual to the margin of dumping on sucharticles, if the goods have been sold at less than normal value.

Bumping duty can be imposed even when goods are imported

indirectly or after changing the condition of goods.Bumping duty can be levied on imports on such countries only

if the entral overnment proves that import of such goods inIndia at such low prices causes material in/ury to Indianindustry.


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Types of custom dutiesProtective Duty$If the #ari! ommission set up by law recommends that in order

to protect the interests of Indian industry, the entral overnmentmay levy protective anti"dumping duties at the raterecommended on specied goods.

#he notication for levy of such duties must be introduced in thearliament in the next session by way of a bill or in the samesession if arliament is in session.

If the bill is not passed within six months of introduction inarliament, the notication ceases to have force but the actionalready underta$en under the notication remains valid.

2uch duty will be payable up to the date specied in thenotication.

rotective duty may be cancelled or varied by notication. 2uchnotication must also be placed before arliament for approval asabove.


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Duty on "ounty (ed #rticles$In case a foreign country subsidies its exporters for exporting goods to

India, the entral overnment may import additional import duty e*ualto the amount of such subsidy or bounty.

If the amount of subsidy or bounty cannot be clearly deter minedimmediately, additional duty may be collected on a provisional basis and

after nal determination, di!erence may be collected or refunded, as thecase may be.

Export Duty$2uch duty is levied on export of goods. At present very few articles such

as s$ins and leather are sub/ect to export duty. #he main purpose of thisduty is to restrict exports of certain goods.

#he entral overnment has been granted emergency powers toincrease import or export duties if the need so arises. 2uch increase induty must be by way of notication which is to be placed in thearliament within the session and if it is not in session, it should beplaced within seven days when the next session starts. Foticationshould be approved within 7: days.


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What do you mean by customs duty G excise dutyH

ustoms duty is levied on goods imported in India. It is levied on orts. Ifgoods are imported by illegal means and B is not paid then thesegoods are called smuggled goods and liable for prosecution.

nly permitted goods can be imported into the country. #here are

restrictions on *uantity and value also so that foreign countries shouldnot dump their cheaper goods here and create unhealthy competition tolocal manufacturers.

xcise duty is levied on goods manufactured in India. It is levied whenthe goods are ready to go out of the factory.

1od vat is available in case of excisable goods that is to say excise paid oninputs is being given credit of before paying excise duty.

#here are concessions given to small scale industrialist (22I) and mediumscale industrialists and normally the 22I (turnover below > crores I guess ormay be some other criteria are there) need not pay any excise duty(accordingly they do not get modvat credit also)..


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#han$ -ou

income sales tax

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