GROUP MEMBER

• MOHMD SALIM 05• ANIL SHARMA 10• AJAY YADAV 12• NIKHIL BISHT 13

TAXESDIRECT AND INDIRECT TAX

TAXES  A direct tax is generally a tax paid directly to the government by the person on whom it is imposed.

For example:A taxpayer pays a direct tax to a government for different purposes, including real property tax, personal property tax, income tax or taxes on assets.

. A Indirect tax are those tax which are levied on goods and services rather than on income or profits.

For example:(such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST) is a tax collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).

WHO ALL ARE LIABLE FOR TAX?

• Individuals• Hindu undivided families• Companies• Partnership firms

IMPORTANCE OF TAX

• Economic growth• Government revenue• Private saving• Restraining consumer demand

STRUCTURE OF INDIAN TAX SYSTEMCENTRAL GOVERNMENT:

Income tax, service tax, custom duties, central excise & sales tax

STATE GOVERNMENT:

Sales tax, stamp duty, state excise, land revenue, duty on entertainment

LOCAL BODIES:

Tax on properties, octroi, users charges on utilities like water supply drainage etc

Income Tax Rate

Upto 200,000 Nil

200,000 to 500,000 10%  of  the  amount  exceeding 200,000

500,000 to 1,000,000 Rs.30,000  +  20%  of  the  amount exceeding 500,000

1,000,000 & above Rs.130,000  +  30%  of  the  amount exceeding 1,000,000

FOR INDIVIDUALS BELOW 60 YEARS AGE (INCLUDING WOMAN ):

 LATEST RATE OF INCOME TAX FOR ASSESSMENT YEAR 2014-15

FOR INDIVIDUALS AGED 80 YEARS AND ABOVE (VERY SENIOR CITIZEN):

Income Tax Rate

Upto 500,000 Nil

500,000 to 1,000,000 20% of the amount exceeding 500,000

1,000,000 & above Rs.100,000  +  30%  of  the  amount exceeding 1,000,000

Income Tax Rate

Upto 250,000 Nil

250,000 to 500,000 10% of the amount exceeding 250,000

500,000 to 1,000,000 Rs.25,000  +  20%  of  the  amount exceeding 500,000

1,000,000 & above Rs.125,000  +  30%  of  the  amount exceeding 1,000,000

FOR INDIVIDUALS AGED 60 YEARS AND ABOVE BUT BELOW 80 YEARS (SENIOR CITIZEN):

TYPES OF DIRECT TAXES

INCOME TAX - This is most important type of direct tax and almost everyone is familiar with it. TDS is its famous example and whosoever is earning above a minimum amount (tax exemption limit) has to pay income tax.

WEALTH TAX - This is in addition to the income tax and is levied if your net wealth exceeds Rs 30 Lakh at the rate of 1% on the amount exceeding Rs 30 Lakh. 

PROPERTY TAX/CAPITAL GAINS TAX - This is levied on the capital gains arrived by selling property and stocks. Tax rates are different for long term and short term capital gains.

GIFT TAX/ INHERITANCE OR ESTATE TAX - Amount exceeding Rs. 50000 received without consideration by an individual/HUF from any person is subjected to gift tax as income under "other sources". There are exemptions like money received from relatives is not taxable. Marriage gifts and money received through inheritance are also exempt from gift tax. Inheritance tax was earlier in practice but has been repealed by the government.

CORPORATE TAX - Companies operating in India are taxed as per the corporate tax rate on their income. This tax is one of the major sources of revenue for government.

STAMP DUTY:• Stamp duty is a form of tax that is levied on documents relating to

immovable property, stocks and shares. Apart from transfers of shares and securities, stamp duties are also charged on the issue of bearer instruments and certain transactions involving partnerships.

TYPES OF INDIRECT TAXESA)SERVICE TAX: Service providers in India are subject to service tax, which is charged on the

aggregate amount received by the service provider. Services like leasing, internet/voice, transport, etc are subject to service tax.

B) CUSTOM DUTY: Custom duties are indirect taxes which are levied on goods imported to/exported

from India. There are different rules for different types of goods and sectors. Government keeps on changing these rates so as to promote import/export of specific goods.

C) EXCISE DUTY: Excise duties are indirect taxes which are levied on goods manufactured in India

for domestic consumption. Like custom duty, there are a number of rules which keep on changing as per government discretion.

D) SALES TAX AND VAT: Sales tax is levied by the government on sale and purchase of products in Indian

market. As customers, whatever you buy from the market, you pay sales tax on it. Now, sales tax is supplemented with new Value Added Tax so as to make it uniform across country.

SERVICE TAX• Service tax was introduced in India for the first time in 1994.

• Service Tax is a tax imposed by Government Of India on services provided in India

WHAT IS SERVICE TAX ?

• Tax on Services.

• Not an profession

• It is an Indirect tax

• Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994. 

LIST OF SERVICES COVERED UNDER SERVICE TAX

There are some detailed list of taxable services viz. Rail Travel Agents, Tour Operator, Stock Exchange

Services, Internet Telecommunication Services, Telephone, Transportation of Air and so on.

APPLICABILITY • Section 64 (1)Applicable to the whole of India

except Jammu & Kashmir.• Thus any services provided within the territorial

limits of the state of Jammu & Kashmir are excluded from the of levy of tax i.e. it will not attract service tax.

PARTICULARBasic Salary ....Bonus ….Commission ….Allowances ….Perquisites ….

Gross Salary XXXLess:- Specific deduction ….

Taxable income from salary XXXX

Statement showing taxable income from Salary

PARTICULAR LOP DLOP SOPGross Annual Value …. …. 0Less:- Local Tax, Mu. Tax 0

Net Annual Value XXX XXX 0Less:- Specific deduction1.Std. dedu. (30% of NAV) …. …. 02. Interest on borrowed capt. …. …. ….

Taxable Income/Loss of House Property.

XXXX XXXX XXXX

Statement showing taxable income from House Property

PARTICULARNet Profit (P&L A/c) ….Less: Other Heads of Income (P&L A/c) ….Less: Other Income (Cr. P&L A/c not taxable) ….Add: Inadmissible Exp. (Dr. to P&L A/c) ….Less: Inadmissible Exp. (not claimed) ….Add: Taxable Business Income Not recorded ….

Taxable Business Income XXX

Statement showing taxable income from Business or Profession.

PARTICULARSalary Income ….

Add: House Property ….

Add: Business or Profession ....

Add: Capital Gains ….

Add: Income from other source ….Gross Total Income XX

Less: General Deduction ….Taxable Income XXX

Statement showing Taxable Income