Taxation Concepts

Overview of Tax Regime in India

DIRECT TAXES Individual Income Tax & Corporate Tax

The provisions relating to income tax are contained in the Income Tax Act 1961 and the Income Tax Rules 1962. The Income Tax Department is governed by the Central Board for Direct Taxes (CBDT) which is part of the Department of Revenue under the Ministry of Finance. In terms of the Income Tax Act, 1961, a tax on income is levied on individuals, corporations and body of persons. Tax rates are prescribed by the government in the Finance Act, popularly known as Budget, every year.

The Government of India has recently taken initiatives to reform and simplify the language and structure of the direct tax laws into a single legislation – the Direct Taxes Code (DTC).… Read the rest

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Goods and Services Tax (GST) in India

Goods and Services Tax (GST) is part of the proposed tax reforms that centre round evolving an efficient consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the central and state levels.

In the Union Budget for the year 2006-2007, Finance Minister proposed that India should move towards national level Goods and Services Tax that should be shared between the Centre and the States. He proposed to set April 1, 2010 as the date for introducing the goods and service tax (GST).

Goods and Services Tax is proposed to be an indirect tax levied on manufacture, sale and consumption of goods and services at a national level concurrently by Central and State Governments.… Read the rest

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International Taxation

For the worldwide/global operation of firms, taxation plays a vital role. International taxation has become the core of various financing decisions which includes international investment decisions, international working capital decisions, fund raising decisions and the decisions related to dividend and other payments. The tax decision is also relevant in domestic firms also.

The managing of taxation is an extremely difficult issue for the international corporations. The various reasons are given as follows:

  • The firms are supposed to work in several tax jurisdiction or authorities where the tax rates are diverse and also the administration of the tax system is not uniform.
… Read the rest
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Primary Purpose of Taxation

Taxation is a means by which governments finance their expenditure by imposing charges on citizens and corporate entities. The main purpose of taxation is to accumulate funds for the functioning of the government machineries. All governments in the world cannot run its administrative office without funds and it has no such system incorporated in itself to generate profit from its functioning.  In other words, a government can run its administrative set up only through public funding which is collected in the form of tax. Therefore, it can be well understood that the purpose of taxation is very simple and obvious for proper functioning of a state.… Read the rest

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Income from Other Sources

Income from other source is a residuary head of income. Any item of income which does not fall under any other four specific heads of income is to be charged under this head.

According to sec 56(2) following incomes are chargeable under this head.

  • Dividend declared by a foreign company
  • Family pension
  • Winnings from lottery, crossword puzzles, horse race etc
  • Income from plant, machinery or furniture let out on hire where it is not the actual business of the assessee.
  • Interest from securities, bank deposits
  • Income from sub letting
  • Any other receipts which doesn’t fall under any other heads of income.
… Read the rest
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Introduction to Income Tax

The word tax was derived from the Latin word ‘taxore’ meaning to estimate, appreciate or value. Tax is a price which each citizen pays to the state to cover his share of the cost of the general public services which he will consume. It indirectly provides employment opportunities. Taxes are compulsory contributions imposed by the government on its citizens to meet its general expenses incurred for the common good, without any corresponding benefit to the tax payer.

In 1860, the British government firstly introduced tax in India. The present law of income tax is contained in the income tax Act,1961 as amended up to date; the income tax rules 1962 as amended up to date and finance Act passed by the parliament every year.… Read the rest

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