FOOTNOTES ON TAXATION
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FOOTNOTES ON TAXATION

 
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FOOTNOTES ON TAXATION

             -Musafir Sharma

As public expenditure is necessary for the government to perform its various functions for the welfare of the society. So it requires public revenue. Public revenue holds the same position in study of public finance, which production holds in the study of economics. Just as production is the means of consumption. Public revenue is the means for public expenditure. To maintained public expenditure it is now an important problem of every government to secure adequate amount of public revenue to finance its expenditure. Temporary revenue may be obtained by borrowing, but eventually loans must be repaid. Some revenues are secured from government enterprises, administrative and judicial activities and from other sources, but the great bulk or revenue comes from TAXATAION. Not until recently, however, have government depended up on taxation on the vital source of revenue.

TAX ADMINISTRATION STRUCTURE ORGANISED IN INDIA

India has a three-tier structure of tax administration, with the power and authority to levy various kinds of Taxes being distribution among union Government, State Governments and the local body Governments. The Union Government levies taxes or income (except tax on agriculture income), customs duties, Central Excise and service tax. The state Governments levy value added tax, (VAT), stamp duty, state excise, land revenue and profession tax : while the local bodies Governments are empowered to levy tax on properties, actroi, and for utilities like water supply, drainage etc.

What are direct and indirect tax :-

Direct taxes that the import or immediate money burden and the incidence or the ultimate money burden are in the one and the same person, (individual) and organization without third party involvement. These include, income tax, corporate tax wealth tax.

Indirect tax, is imposed on one person, but paid party or wholly by another owing to a consequential change in the terms of some contract or bargaining between them. Hence, the impact and incidence of tax are on different persons/organization. Custom, and excise, duty,, sales tax, VAT. For example when a customer purchases a particular commodity he is the ultimately tax payer, but the retail store act as a collector. In India manufacturing final consumption. Trading and exports every thing falls within the ambit of indirect taxes.

Corporate taxes.

Corporate tax is a direct tax levied on the income of a company or Association. The rate of such tax depends on the company's domicile. Indian companies are taxable in India on their would wide income, while foreign companies are taxable on income that arises out of their Indian operations or, income that is deemed to arise in India. The different kinds of taxes associated with a company are :-

Minimum alternative tax (MAT) profits of a company are computed in terms of the companies Act. while is taxable income is collected in terms of the income tax Act. There are companies called the zero tax companies, which show book profits in terms of the former Act, but no taxable income, in terms of the letter. MAT was introduced to bring in such companies into the tax base. Companies whose total taxable income is less than 30 percent of its book profits are required to pay income tax on 10.05 percent of their book profits.

Dividend distribution tax-this is the tax levied by the Indian Government on companies according to the dividend paid to company's investments (investors).

Fring benefit tax (PBT) this is an additional tax payable by the employers, on value of frings benefits provided on deemed to have been done away with in the current budget.

Banking cash transaction tax introduce in 2006 and abolished from April 2009. The Banking cash transaction was levied at the rate of 0.1% on cash withdrawals of more than Rs. 50,000 (individuals) and Rs. 1,00,000 for other in a single day from non saving bank account Maintained with any scheduled bank. BCTT served as an extremely useful tool to track unaccounted monies.

Securities transaction tax or turnover tax, is in tax that is levied on the sale/purchases of financial securities like equity shares, units of equity oriented mutual funds, derivatives and other securities as defined under section 2(h) of the securities contracts act 1956 (SCRA).

Cognital gain Tax - A type of tax levied on capital guins incurred by individuals and corporations. Capital gains are the profit that an investor realized when he or she sells the capital assets for a price that is higher than the purchase price.

How is income tax administered :

Income tax is a direct tax. Collected annually by the union government on all forms of income (other than agriculture income) and then shared with the states. Union Government levies income tax on the taxable income of individual. Hindu undivided family (Huf), corporate, co-operative society and Trusto. According to income tax Act. 1961 under section 2(24), A person whose total income surpasses a certain predetermined exemption limit. Shall be required to pay a certain amount of income tax at the rate or rates as prescribed in the finance Act. Apart from remuneration for work i.e. income from salary, an individual may be charged income tax on income from house property. Business or profession or from capital gains. personal income tax is levied by union Government and is administered  by Central Board of Direct taxed (CBDT) under ministry of finance in accordance with the provision of the income tax Act.

Wealth Tax :

Wealth tax is a tax on the benefits derived from property ownership. The tax is to be paid year after year on the some property on its market value, whether or not such property yield any income. The tax can be changed in respect of an individual, HUF or company. The assets chargeable to wealth tax are guest house, residential house, Commercial building. Motor Car, Jewellery, Bullion, utensils of Gold, Silver, yachts, boats and aircraft, urban land hoarded cash in excess of Rs. 50,000 held by individual or HUFs. Wealth tax is not levied on productive assets, hence investments in shares, debentures, UTI. Mutual Funds, are exempted from wealth tax.

Some important Nature of Indirect Tax :

All these things emphasis that indirect tax are good taxes in a tax system when they are productive, convenient and approximately equitable. They are paid with less irritation than direct taxes. Revenue can be raised in multifarious ways by means of indirect taxation and the basis of taxation is the broad based. Hence we can quote some important sources of indirect taxes.

Excise Duty :

This is a term of indirect tax that is levied on the manufacture or production of certain goods within the country. Unlike sales tax, while calls for tax payment on the basis of sale of goods, excise duty is a tax imposed on the act of manufacturing of producing a particular commodity. State Governments control or regulate excise duty related to alcoholic preparations and other narcotic substances. Thus it is also known as state excise duty. Other commodities come under the Central Excise duty and union Government is liable for the collection of excise duty associated with them. There are three types of Central Excise duties. Collected in India namely basic excise duty charged under section 3 of the Central Excise and Salt Act. 1944 on all excisable goods other than salt which are produced or manufactured in India at the rates set forth in the schedule to the Central Excise tariff Act. 1985; Additional Duty of Excise levied in lieu of sales tax and shared between union and State Governments. Those are levied under different enactments like medicinal and toilet preparations, sugar etc. and special excise duty attracted on all excisable goods on which there is a levy of basic excise duty under the Central Excise and salt Act. 1944 and for which each year the relevant provision of the finance Act. specifies whether the special Excise Duty shall be or shall not be levied and collected during the relevant year.

Custom Duty :

This is a tax which a State Collects on goods imported or exported out of the boundaries of the country. In India. Custom duties are levied on the goods and at the rates specified in the schedules to the custom tariff act, 1975, with the objective of restricting imports for conserving foreign exchange, protecting Indian Industry from undue competition, prohibiting imports and exports of certain goods, regulating exports and co-ordinating legal provisions with other laws dealing with foreign exchange. The various types of duties levied under this include basic duty countervailing duty or CVD which is equal to excise duty levied on a like product manufactured on producted in India. Anti dumping duty on goods being imported at very cheap rates with a view to capturing India markets, protective duty on specified goods, Duty on Bounty fed articles in cases where a foreign country. Subsidizes its exporters for exporting to India; and Export duty on goods such us skin and leather, whose export we wish to restrict.

Central Sales Tax :

Sales tax is charged at the point of purchases for certain goods and services. It is set as a percentage by the government charging the tax and can be included in the price or added at the point of sale. Most sales taxes are collected by the seller, who pays the tax over to the government, but the economic burden of the tax usually falls on the purchaser.

Value Added Tax (VAT)

Tax is a multi stage tax on goods that is levied across various stages of producing and supply with credit given for tax paid at each stage of various addition. Instead to taking the total cost at the time an item is sold to the consumer, a value added tax occurs at each stage of production but only taxes the charge in value at each stage. The state level VAT has replaced the existing state sales tax.

Service Tax :

This is a tax levied on providers of specified services. It was introduced in India in 1994 and started with 3 basis services i.e. general insurance, stock working and telephone. Today there are over 100 services subject to the tax service tax is now levied at the rate of 10.06% inplce of 12% of the gross value of taxable services whose turnover is more than 10 lacs.

Conclusion :

The Government of India is fully responsible to the Parliament. All the control and guidance provide time to time to the finance department. Through Parliament, on this guidelines the Government Particularly finance Department. Department planning themself to the tax structure and administrated through the Central Board of Direct Taxes (CBDT). In India Government Collected the revenue through taxation on the policy of Bees and Nectar.  The structure of the Indian economy has changed rapidly in the last ten years. It's growing integration with the word economy had brought new opportunities and challenges. It was, therefore, imperative that union and State Governments Co-operate for economic recovery and growth. The Government had provided three fiscal stimulus packages to counter the negative fallout of the global necession.

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