Direct & Indirect Tax Structure in India-final

7/31/2019 Direct & Indirect Tax Structure in India-final

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DIRECT & INDIRECT TAX STRUCTUREIN INDIA

PRESENTED BY:AMIT NAIK 11201

VISHAL DEORE 11213

NILESH HIREMATH 11218SAGAR ZAPARDE 11255


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Agenda

Introduction

Indian Taxation System

Types of Taxes

Merits and Demerits of Taxes

Information about few taxes in detail

Features of the Tax Structure in India


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Taxes

Important Source of Revenue of theGovernment.

Compulsory Contribution from a Person tothe Expenses incurred by the State in commonInterest of all without reference to Specificbenefits conferred on any Individual.


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Merits of Direct Taxes

Imposed according to the Ability of the Personto Pay. (Termed as Progressive Taxation)

Revenue is Income Elastic as ProgressiveCharacter Revenue increases faster than theincrease in Income.

Create better Civic Consciousness.

Serves the purpose of Transference of Incomefrom the Rich to the Poor.


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Demerits of Direct Taxes

The Ability to Pay is difficult to determine; only arough idea can be formed.

Because of Undeclared Sources of Income orEvasion, the actual payment may not be strictlyaccording to Pay.

Necessitate Proper Maintenance of Accountswhich some of the Tax Payers may not be able to

do. Cumbersome Assessment Procedure requiring

Expert Assistance.


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Merits of Indirect Taxes

Convenience in Assessment & relativeDifficulty in Evasion.

Inclusion of Tax in the Price. Difficult to Evade.

Taxes on drinks, narcotics, & tobacco, serve a

Social purpose by discouraging theirconsumption.


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Demerits of Indirect Taxes

Regressive Character

Do not create Social Consciousness as Payment ofTax is not felt by the Payer.

Government is not certain about the Proceeds ofthese Taxes.

Burden of Indirect Taxes can be shifted Forwardor Backward as such Consumers have to bear theultimate burden of Tax.

Can be Evaded by methods as Smuggling,Falsification of Accounts, etc.


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Personal Income Tax

Incomes from all the Sources are added.

Certain Rebates, Deductions, Expenditure

etc., on account of Life Insurance, MedicalInsurance, Savings in PPF, etc. are allowed.

Whole Income is divided into Different Slabsand Taxed on the basis of Slab into which it

Falls. Progressive Income Taxation i.e., as Income

Increases, the Rate of Tax also Increases.


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Corporate Income Tax

Rationale for the Corporation Tax is that a Joint StockCompany has a Separate Entity & thus should be Taxedseparately.

Until 1960-61, Corporations were Taxed in a Partialsense.

A Corporation was required to Pay Income Tax onbehalf of Shareholders on Dividends paid to them, &each Shareholder got a Credit to this effect.

Corporations are Taxed at a Flat Rate, but certainRebates & Exemptions are also provided. Tax Rates are different for Indian Companies &

Foreign Companies.


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Taxes on Wealth - Estate Duty

Taxes which are levied on Wealth & Capital are mainlyEstate Duty, Annual Tax on Wealth & Gift Tax.

Estate Duty is levied on the Total Property passing to theheirs on the Death of a Person.

Wealth Tax was abolished in 1993 on all assets exceptcertain specified assets such as Resident Houses, FarmHouses, Urban Land, Jewellery, Motor Car, etc.

Gift Tax was leviable on all Donations to RecognizedCharitable Institutions, Gifts to Women Dependents &Gifts to Wife.


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Custom Duties

Custom Duties are levied on Exports & Imports.

Import Duties are levied on the basis of ad

valorem. In Pre-Tax Reform Period, India had become a

country with one of the highest levels of CustomTariffs in the World.

Since 1991, the Custom Duty Structure waspruned.

Maximum Rate of Custom Duty is 10% now.


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Excise Duties

An Excise Duty is levied on Production & hasabsolutely on Connection with its Actual Sales.

These are levied by the Central Government in anumber of forms.

To remove these, Government introducedModified Value Added Tax (MODVAT) in 1986-87.

MODVAT differs from VAT.

To Overcome the Limitations of MODVAT, theBudget 2000-01 introduced the Central Value-Added Tax [CENVAT].


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Value Added Tax (VAT)

VAT is a multistage Sales Tax with credit forTaxes paid on Business purchases.

VAT is non-cascading. Tax is levied on Value Addition at each stage of

Transaction in the Production/DistributionChain.

Overall Tax Burden will be Rationalized.

Price will in general Fall.


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Service Tax

Service Tax is a form of Indirect Tax imposedon Specified Services called Taxable Services.

It was introduced in the year 1994-95. Service Tax Network has expanded to cover

many Services over the Years.


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Highlights of budget 2012-13

Gross Tax Receipts estimated at Rs 10,77,612 crore, 15.6 per centhigher than original budget estimates and 19.5 per cent over therevised estimates for 2011-12.

Net tax to the Centre in 2012-13 estimated at Rs 7,71,071 crore;Non-Tax Revenue Receipts estimated at Rs 1,64,614 crore

Direct Tax Code (DTC) Bill to be enacted at the earliest.

Income tax exemption limit raised from Rs 1,80,000 to Rs2,00,000; 10 per cent tax for 2-5 lakh income; 20 per cent for 5-10lakh and 30 per cent beyond Rs 10 lakh.

Tax free bonds of Rs 60,000 crore to be allowed for financinginfrastructure projects in 2012-13.

Import duty on equipment for iron ore mining reduced from 7.5to 2.5 percent.


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THANK YOU

Direct & Indirect Tax Structure in India-final

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