taxation.pptlaslskdjasjldlasjdjslajdljaldlajldalsdjalsjdljasldjlasjldjlajdklasjkljdklsjdkljaskldjklajdkljsklajdklajskldjaskljkjaskljdklajkdjskljdklasjkdjklasjdklasjkdjklasjdklasjkldjklsjdklasjkldjskaljdklaskdkasljdklaskldjklasjlksdjasjdaskljdasjkl...

7/27/2019 TAXATION.pptlaslskdjasjldlasjdjslajdljaldlajldalsdjalsjdljasldjlasjldjlajdklasjkljdklsjdkljaskldjklajdkljsklajdklajskldjaskljkjaskljdklajkdjskljdklasjkdjklasjdklasjkdjklasjdklasjkldjklsjdklasjkldj

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TAXATION LAWS



TAXATION

The word Tax was derived from the latinword Taxore.

The meaning of taxo is to estimate,

appreciate or value.



Definitions ---Tax is the amount paid by persons staying within a territorial

limit of a sovereign state and is levied on individuals, goods,

property, business, services etc. Tax constitutes government

revenue.

---Tax may also be defined as compulsory/exaction of money by

public authorities for public purposes enforceable by law and

doesnt mean payment for services rendered.

Taxes are compulsory contributions imposed by the

government on its citizens to meet its general expenses incurred

for the common good, without any corresponding benefits to the

tax payer.



Tax is levied by the state by virtue of its sovereign powers. Both

the Union Parliament and the State legislatures are empowered under

the constitution to make laws for the levy and collection of taxes.

Tax Revenue: A fund raised through the various taxes is referred to as

tax revenues

FEATURES OF A TAX

Compulsory payment. Refusal to pay a tax is offence

No direct relation b/w tax payer & public authority. Tax payer cannot

claim reciprocal benefits against the taxes paid .Reciprocation istowards the society in terms of public interest not towards the individual

interest as such .

Tax is a payment for an indirect service made by the government to

the community as a whole

Tax is payable periodically & regularly determined by the taxing



Tax Vs Fees

Tax is a compulsory charge or payment levied or

imposed by a public authority on an individual. Fees are

charged for rendering services to the beneficiaries.Generally the amount of the fee depends upon the cost of

services rendered e.g. court fees, license fees etc.

Taxes Vs Penalties:A tax is compulsory contribution made by a tax

payer. Fines and penalties are the payments made for the

contravention of law.

A public authority impose taxes mainly to obtainrevenue and imposes penalties mainly to punish people for

violating certain laws.



Principles of Taxation:

Canons or principles of taxation relate to the administrative

aspects of a tax i.e. rate, amount, method of levy and collection of

Tax. A good tax system must have a proper combination of allkinds of taxes having cannons like canon of equality, economy,

convenience, certainty, productivity etc.

Requisite Features of Good Tax System:

Good tax system should ensure maximum social advantageand the allocation of taxes among tax payers is to made according

to the ability to pay. Taxes should be universally applicable in the

sense that persons with same ability to pay are treated in the

same way without any discrimination whatsoever. A good tax

system should have built in flexibility, so that changes are possible

according to the changing conditions of a dynamic economy.

.



Last not the least is that a good tax system

should be simple implying the absence of any

unnecessary and avoidable complexities. It should

also help in the rapid economic development of thecountry

TYPES OF TAXATION

Taxes have been classified in various ways ondifferent bases such as the form, nature, aim and

method of taxation. The most important

classifications are:-

1. Progressive,Taxes.

2. Direct and Indirect taxes



DIRECT TAXES

Direct tax is a tax which is paid by a person on whom it is legallyimposed and the burden of which cannot be shifted to any person

---- Dalton

Thus, impact, i.e., the initial or first burden, and the incidence, th

ultimate burden of a direct tax- is on the same person. The tax

payer is the tax bearer.

A TAX WHICH CANNOT BE SHIFTED IS DIRECT AND ONE WHICH CAN

SHIFTED IS INDIRECT

Ex. Income tax, wealth tax,



Advantages of Direct Tax

1. Justifiable:- based on the taxable capacity and burden is

justifiably distributed

2. Progressive :- as higher rate of taxes on higher income groups

and vice-versa. Poor people are exempted from direct tax.

3. Certain:- Assesses is certain about the amount of income tax

4. Elastic: Higher proceeds are possible by increasing the rate of

these taxes

5. Distributive justice;- as they help in reducing the glaring

inequalities of income & wealth.


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Disadvantages

Arbitrary:- fixed by the govt. as it depends upon the

political will.

Evasion:- conceal their income by maintaining the

bogus accounts.

Reduce saving:- as major chunk is taken away in the

form of taxes. It effects the capital formation.

Limited tax base:- reach only salaried people,

businessman avoid and evade tax



INDIRECT TAXES

An indirect tax is imposed on one person but is paid partly or

wholly by another.

Indirect taxes are those taxes the burden of which by nature is

shifted & which are paidby the tax payer indirectly i.e. while

purchasing goods & commodities, paying for services etc.1. Taxes are paid only when goods are purchased, so tax

payer does not feel the burden of tax

2. This tax is convenient as govt. collects it directly from

producers or importers.

Ex. sales tax,



FEATURES OF INDIRECT TAXATION

Shifting of tax burden

Tax payerdoesn't receive a direct pinch

Tax evasion is comparatively less in case of organized sector

Tax imposed on commodities directly effects the prices of commodities.

MERITS

Convenient:- to pay as tax payer doesn't feel the burden directly

Disguised (hidden):-announcement doesn't provoke resentment as tax payer i

in the dark about the amount of tax.

Not easily evadable:- as they are merged with the prices.

Broad based:- people who are exempted from direct tax, caught in the net of

indirect tax according to the ability to pay tax.

Social Value;- discourage consumption of some harmful commodities as

intoxicants, tobacco, etc



Forced saving:-moving the saving potential into the hands of govt. who

utilises it for public interest.

Complementary:- Additional revenue can be generated by introducing an

indirect tax rather than a direct tax.

Progressive:-Indirect taxes on luxuries and semi- luxuries are progressive

as they fall on rich peoples outlays.

DEMERITS

In equitability;- charged at a proportional rate in case of general

commodities, not paid according to the principle of ability to pay.

Less productive;- as this tax involves many stages, so cost of collection is

high comparative to revenue yielded.

Inflationary potentially

Disincentive effect on saving;- discourages savings due to high prices of

commodities.



Government of every country mobilizes resources through taxes to meet

requirements of maintaining law & order, protecting economy from external aggression,.

TAXATION SYSTEM HAS BEEN STRUCTURED WITH FOLLOWING

OBJECTIVES IN VIEW:

Mobilization of resources for economic development

Reduction of inequality in distribution of income & wealth

Controlling consumption of particular commodities and consumption pattern

Protecting domestic industries against foreign competition

Encouraging saving & investment and promotion of capital formation



THE INDIAN TAX SYSTEM

a) Taxes on income:-

i) Personal income tax

b) Taxes on property and capital transactions:-

(i) wealth tax

c) Taxes on commodities:

(i) Excise duties (ii) Customs duties (iii) Sales tax

taxation.pptlaslskdjasjldlasjdjslajdljaldlajldalsdjalsjdljasldjlasjldjlajdklasjkljdklsjdkljaskldjklajdkljsklajdklajskldjaskljkjaskljdklajkdjskljdklasjkdjklasjdklasjkdjklasjdklasjkldjklsjdklasjkldjskaljdklaskdkasljdklaskldjklasjlksdjasjdaskljdasjkl...

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