tax laws-6

8/14/2019 TAX LAWS-6

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BUSINESS AND TAX LAWS

INCGUNTUR

PUTTU GURU

PRASAD

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Classification of taxes

Service tax

VAT

Sales taxEstate tax

Custom dutiesWealth taxExcise dutyIncome tax

Indirect taxDirect tax

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INCOME TAX

It is applicable to all persons of India

An individual A Hindu undivided family A company A firm An associate of persons local authority Every artificial juridical persons

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Heads of income

Income from salaries

Income from house property Profits and gains of business or profession

Capital gains

Other incomes

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Other sources of income

Dividends

Lotteries

Puzzles Races

Card games

Gambling

Betting

Welfare schemes Interest on securities

Income from furniture let on hire

Bonus

Sum receive under key man insurance

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Exempted incomes

Incomes of trade unions Incomes of charitable trusts Incomes from SEZ/FTZ/EPZ Incomes from political parties Incomes of local authorizes Incomes of former rulers Incomes and allowances of MLA/MP Agricultural income

Receipts by an individual from HUF Share of profit of a partnership firm Any sun from life insurance policy Scholarships granted to meet the cost of education Income by way of interest on notified securities Any long term capital gain arising out of transfer in a listed company as

equity

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WEALTH TAX

The wealth tax is chargeable in respect of net

wealth of every individual, HUF, andcompany in respect of every assessment

year at the rate of 1% of the amount where

the net wealth exceeds Rs.15 lakhs

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Assets that are exempted

Agricultural land, crops, grass, standing trees

Building owned or occupied by a cultivator

Animals

A right to annuity

Deemed assets

Assets transferred by one spouse to another Assets held by minor child

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CENTRAL EXCISE

Central excise is the duty that is collected on

a product, that manufactured or produced inIndia, irrespective of its sale or realization

value.

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Applicability of duties

The Central Government is vested with the

powers to levy excise duty by virtue scheduleVII of the constitution of India. However the

C.G has no power to impose duty on

Alcoholic liquors for human consumption

Opium, Indian hemp and other narcotic drugs

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SALES TAX

Sales tax was being levied by states even if one of the following

ingredients was present:

The goods are present or in existence in the state at the time of sale

The manufacturer has taken place in the state

The property in the goods is transferred in the state for a price

There has been a payment of price and title in the goods has

been passed

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SALES TAX

Applicability of central sales tax

Tax is levied on interstate sales Sales thus collected is retained by the

collecting state

Sales tax under the scheme is payable in the

state from where movement of goods begin

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Rates to various categories

Sale to government :- the sales tax on sale to government is

charged at 4% general sale tax rate for sale within the state

whichever is lower. Government department that purchases thegoods has to issue certificate in D form.

Sale to Registered dealer :- is taxed at 4% or sales tax rate for

sale within the state which ever lower, provided the goods are

eligible as per section 8(3), and these are specified in the

registration certificate issued to the purchasing dealer.Purchasing dealer has to submit the declaration in C form.

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Rates to various categories

Sale to unregistered dealers:-

Declared goods- it is twice the rate applicable to sale or

purchase of such goods with in the state other than declared goods- as applicable for sale inside the

state or 10% which ever is higher

If local sales tax rate is nil CST will also be nil, if sale is to

unregistered dealer

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Calculation of sales turnover

Sales tax is payable on sale turnover of a period. Rate of tax is

determine as per sec 8 and turnover is determined as per sec

2(J). Turnover :- the sales turnover (taxable turnover) is the

aggregate of the sale price received and receivable by the

dealer in respect of sales of any goods in the course of

interstate trade or commerce during any prescribed period

Prescribed period means the period that stipulated by the localsales tax law, for filling the sales tax returns. It is usually a

quarter and in some states it is monthly

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CUSTOMS DUTY

Customs duty is collected by the central

government on every product that is exportedor imported from India. This duty is governed

by the customs act 1962. this duty is levied

as a percentage on the assessed value of

the product that is exported or imported fromIndia.

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Customs duty

Customs duty is applicable on transporting of goods

by land , air , and water including the Indian territorial

waters. Indian territorial waters spread around 12nautical miles from the seacoast of India. The

jurisdiction of customs authorities extends up to

border of Indian waters. If they found illegal transit is

going on the authorities has the powers to search,confiscate arrest and even shoot out the vessel if it

is not stopped

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The objective of levying customs duty

To restrict imports to preserve foreign exchange To protect Indian industry from undue competition To prohibit imports and exports of goods for

achieving the policy of the government To regulate exports To coordinate legal provisions with other laws

dealing with foreign exchanges such as foreign trade(development and regulation act) FEMA,conservation of foreign exchange prevention of smuggling act etc.,

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Types of customs duty

Basic duty

Countervailing duty Anti dumping duty

Protective duty

Duty on bounty fed articles Export duty

Import duty

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Exemptions from customs duty

Goods derelict , wreck etc.,

Remission of duty on lost, destroyed or abandoned goods

Denaturing or mutilation of goods

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VALUE ADDED TAX

VAT is a form of sales tax collected by the

government of the destination state ( that isstate in which the final consumer is located)

on consumer expenditure, it collected

through business transitions involving the

sale of goods within the state. The term VATis self explanatory and brings forth the nature

of the tax.

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VALUE ADDED TAX

It is the tax at the final or retail point of sale which iscollected at each stage of sale when there is a value

addition to the goods. It is a tax on retail salescollected in stages on multipoint sales basis indifferent stages of products and trade levied in sucha manner that it is added in each stage and is taxedonce and only once with a view to avoid cascading

or tax on tax effect so that the burden to the finalconsumer not more than what it is intended by theprescribed rate of tax.

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VALUE ADDED TAX

Definition of Sale under the VAT:- The conventional sale, i.e. transfer of property in goods

Supply of goods by a society, club, firm and company to itsmembers Transfer of property in goods involved in execution of works

contract Delivery of any goods on hire purchase or any other system of

payment by installments

Transfer of right to use any goods for any purpose whether or not a specific period Supply by way of as part of any service on I any other manner

what so ever, of goods being food or any other article for human consumption on any drink

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SERVICE TAX

The service tax is applicable to several service providers right

from transport operators to the hospitality sector. Every year

the C.G enhances or adds new services to the existing list byidentifying new service sectors. These providers has to collect

tax from their customers and pay to government .

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objectives

To determine the turnovers of the un-

organized service sectors To bring unorganized under tax purview

To make part in the Government revenue by

imposing tax the service sector is the major

contributor to the GDP

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FRINGE BENEFIT TAX

Perquisites are the benefits are the benefits

both monitory and non monitory provide bythe employer to his employees in addition to

the cash salary or wages. These perquisites

are often called as Fringe Benefits. These

benefits are paid to encourage the wellperforming employees .

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FRINGE BENEFIT TAX

The tax on these fringe benefits or perquisites is called fringe benefittax (FBT) usually these perquisites are taxed in the hands of employees but this tax is collected from the hands of employer . It

means the employer has to bear the tax on payment of fringe benefits. Entertainment Festival celebrations Gifts Use of club facilitates Employee welfare

Hotel boarding and lodging Repair , running and maintenance of motor cars, aero planes Use of telephones Scholarships to the children of the employees

tax laws-6

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