3 Tier Federal Arrangement Union Government State Government Local Bodies 3
Union Government Income Tax Custom Duties Central Excise Service Tax 4
State Govt. VAT Sales Tax Stamp Duty Land Revenue State Excise(for manufacture of alcohol) Professional Tax 5
Local Bodies Tax on Properties Municipal Tax Octroi 6
TAX STRUCTURE IN INDIA (understand with some daily routine questions/answers) 1) Qus. : What are you doing? Ans. : Business. Tax : PAY PROFESSIONAL TAX! 2) Qus. : What are you doing in Business? Ans. : Selling the Goods. Tax : PAY SALES TAX!! 3) Qus. : From where are you getting Goods? Ans. : From other State/Abroad Tax : PAY CENTRAL SALES TAX, CUSTOM DUTY & OCTROI! 4) Qus. : What are you getting in Selling Goods? Ans. : Profit. Tax : PAY INCOME TAX! 5) Qus. : How do you distribute profit ? Ans : By way of dividend Tax : Pay dividend distribution Tax 6) Qus. : Where you Manufacturing the Goods? Ans. : Factory. Tax : PAY EXCISE DUTY! 7) Qus.. : Do you have Office / Warehouse/ Factory? Ans. : Yes Tax : PAY MUNICIPAL & FIRE TAX! 7
8) Qus. : Do you have Staff? Ans. : Yes Tax : PAY STAFF PROFESSIONAL TAX! 9) Qus. : Doing business in Millions? Ans. : Yes Tax : PAY TURNOVER TAX! Ans : No Tax : Then pay Minimum Alternate Tax 10) Qus. : Are you taking out over 25,000 Cash from Bank? Ans. : Yes, for Salary. Tax : PAY CASH HANDLING TAX! 11) Qus.: Where are you taking your client for Lunch & Dinner? Ans. : Hotel Tax : PAY FOOD & ENTERTAINMENT TAX! 12) Qus.: Are you going Out of Station for Business? Ans. : Yes Tax : PAY FRINGE BENEFIT TAX! 13) Qus.: Have you taken or given any Service/s? Ans. : Yes Tax : PAY SERVICE TAX! 14) Qus.: How come you got such a Big Amount? Ans.. : Gift on birthday. Tax : PAY GIFT TAX! 15) Qus.: Do you have any Wealth? Ans. : Yes Tax : PAY WEALTH TAX! 16) Qus.: To reduce Tension, for entertainment, where are you going? Ans. : Cinema or Resort. Tax : PAY ENTERTAINMENT TAX! 8
17) Qus.: Have you purchased House? Ans. : Yes Tax : PAY STAMP DUTY & REGISTRATION FEE ! 18) Qus.: How you Travel? Ans. : Bus Tax : PAY SURCHARGE! 19) Qus.: Any Additional Tax? Ans. : Yes Tax : PAY EDUCATIONAL, ADDITIONAL EDUCATIONAL & SURCHARGE ON ALL THE CENTRAL GOVT.'s TAX !!! 20) Qus.: Delayed any time Paying Any Tax? Ans. : Yes Tax : PAY INTEREST & PENALTY! 9
21) INDIAN :: can I die now?? Ans :: Wait, we are about to launch the funeral tax!!! 10
12 DIFFERENT TYPES OF PERSONS WHO ARE TAXABLE ENTITY UNDER INCOME TAX LAW 1.INDIVIDUAL 2.H.U.F 3.PARTNERSHIP FIRM 4.COMPANY 5.TRUST, SOCIETY ETC. 6.ASSOCIATION OF PERSONS
13 OBLIGATIONS OF THESE PERSONS UNDER INCOME TAX LAW 1.To File Return of Income (i) In the case of individual/ H.U.F if their income exceeds the exemption limit of Rs.150000/- (ii) In the case of Company and Firm filing of return is mandatory under income tax law even in case of loss. 2.To Maintain Books of Accounts and other records as prescribed under income tax law. 3. To furnish information as required by income tax officials under the provisions of law.
14 4In case of assessment proceedings, make representation before the assessing officer and furnish the information and evidences as required by him time to time. 5Co-operating the income tax officials during the investigation process i.e. survey and search conducted by the Income Tax Department. 6To deduct Tax as per law (TDS) and deposit the same with Government. 7To pay taxes including advance tax and self assessment tax if any.
15 TAX PAYABLE ON DEEMED BASIS (DEEMING PROVISIONS) 1.Loan, Gift etc received during the year. 2.Clubbing of Income. 3.Rental value of more than one house. 4.Income taxable on the basis of method of accounting (for example FD interest taxable on accrual basis) 5.Acceptance or repayment of loan in cash exceeding the prescribed limit of Rs.20,000/-. 6.Payment of expenditure in cash in excess of Rs.20,000/-. 7.Default in deduction of TDS. 8.MAT (Minimum Alternative Tax) in the case of Companies. 9.Transfer pricing.
16 INCOME TAX AUTHORITIES (EXECUTIVES OF INCOME TAX LAW) CBDT CHAIRMAN MEMBERS CHIEF COMMISSIONER OF INCOME TAX COMMISSIOENR OF INCOME TAX ADDITIONAL COMMISSIONER OF INCOME TAX
17 JOINT COMMISSIONER OF INCOME TAX DEPUTY COMMISSIONER OF INCOME TAX ASSTT. COMMISISONER OF INCOME TAX INCOME TAX OFFICER INCOME TAX INSPECTOR SUBORDINATE STAFF i,.e. TAX ASSISTANT, CLERK, SUPERITENDENT, RECORD KEEPER ETC.
18 DIFFERENT LAYERS OF INCOME TAX PROCEEDINGS FILING OF RETURN PROCEESSING OF RETURN ASSESSMENT PROCEEDINGS (SCRUITNY) FIRST APPEAL BEFORE CIT(A) SECOND APPEAL BEFORE ITAT BEFORE HIGH COURT BEFORE SUPREME COURT OF INDIA
19 BUSINESS STRUCTURING DECISIONS vis-a-vis TAX PLANNING CHOICE OF BUSINESS :- RETAILS TRADE, MANUFACTURING, SERVICE, IMPORT, EXPORT, COMBINATION OF TWO OR MORE. CHOICE OF FORM OF ORGANISATION :- PROPRIETORSHIP UNIT, PARTNERSHIP FIRM, CORPORATE ENTITY (WHETHER PUBLIC OR PRIVATE)
20 CHOICE OF LOCATION:- FREE TRADE ZONES TAX HOLIDAY ZONES URBAN AREAS RURAL AREAS PROXIMITY TO RAW MATERAILS AVAILIBILITY OF SKILLED LABOUR PROXIMITY TO THE CUSTOMER. CHOICE OF CAPITAL/DEBT STRUCTURE:- OWN FUNDING OR BORROWED FUNDING OR PUBLIC SUBSCRIPTION OR VENTUERE CAPITAL OR COMBINATION OF TWO OR MORE.
Income Tax Rates(Individual) Upto Rs 150000- Nil 150000-300000- 10% 300000-500000- 20% Above 500000- 30% For senior citizen- Additional 30000 For Women- Additional 75000 21
Calculate income tax of a male officer having total income of Rs 545780/- 22