legal issues – taxation
TRANSCRIPT
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LEGAL ISSUES TAXATION
By
Ashish Thakre
Vaibhav Zille
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TAXATION
Tax is defined as a fees paid by an individual to
the government.
It is not a donation or a voluntary payment but an
enforced contribution to the government.
Taxation has always been a part of human
civilization.
The Funds for expenditure must come from the
populace that is in need of protection and
welfare.
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Types of Taxes
Direct Tax :- These are the taxes paid on the
income earned by an individual, corporatebusiness & institutions.
Ex. Income Tax, Wealth Tax & Professional
Tax
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Contd
Indirect Tax :- These are the taxes which does
not incurred from the income earned by anindividual, corporate business & institutions.
Individuals would pay these taxes indirectly
rather than individually & directly.
Ex. Service Tax, Sales Tax & Custom Duties
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Service Tax
Service Tax is a form of indirect tax applied on
certain categories of persons, firms or agencies.
Person who provides service is supposed to paythe service tax.
Ex. 1) A person who owns a movie theater
pays service tax to the government, as he
provides theater service to the public
2) A film actor pays service tax, as he
provides entertainment service to everyone
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Contd
Service tax was introduced in India in 1994 by
Chapter V of Finance Act, 1994.
The rate of service tax is 12% of the totalincome of the service provider.
Service tax can be paid on a quarterly basis.
The tax should be paid by 25
th
of the monthfollowing the quarter.
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Contd
In case of service providers such as companiesthe service tax should be paid on monthlybasis, it should be paid before 25th of every
month. Service tax can be paid in specified branches
of designated banks and third party agents orelse we can pay the taxes online also.
The online payment of taxes is named asElectronic Federal Tax Payment.
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Contd
It was imposed on an initial set of 3 services in
1994.
Scope of service tax has since been expandedcontinuously Finance acts.
The Central Board of Excise & Customs(CBEC)
under Dept of Revenue in the Ministry of
Finance deals with task of formulation of policy
concerning levy & collection of service tax.
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Contd
There are six commissionarates located at
metropolitan cities of Delhi, Mumbai, Kolkata,
Chennai, Ahmedabad & Banglore which deal
exclusively with work related to service tax.
Directorate of service tax at Mumbai over sees
the activities at the field level for technical &
policy level coordination.
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REASONS FOR IMPOSITION OF
SERVICE TAX
The loss of revenue
Distortion in resource allocation
Desire to achieve parity between goods &services taxation
Value Added Services
Widening of tax base
Reduction in commodities taxes
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GROWTH OF SCOPE OF SERVICE TAX
Year No. of Taxed services Tax Revenue (Rs. Crore)
1994-95 3 407
1995-96 3 862
1996-97 6 1,059
1997-98 18 1,586
1998-99 30 1,957
1999-00 25 2,072
2000-01 26 2,612
2001-02 41 3,6002002-03 51 6,026
2003-04 58 8,000
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SERVICES UNDER TAX NET
Services were brought under tax net in 1994-95
1. Telephone
2. Stock Broker3. General Insurance
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Contd
The Finance act (2) brought in addition the
following services
1. Advertising Agencies2. Courier Agencies
3. Radio Pager Services
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Contd
Services were brought under tax net in 1997-98
1. Consulting Engineers
2. Custom House Agents
3. Steamer Agents4. Clearing & Forwarding Agents
5. Air Travel Agents
6. Tour Operators
7. Rent-a-Cab Operators
8. Manpower Recruitment Agency
9. Mandap Keepers
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Contd
Services were brought under tax net in 1998-991. Architects
2. Interior Decorators
3. Management Consultants
4. Chartered Accountants
5. Company Secretaries
6. Cost Accountants
7. Real Estate agents8. Credit Rating Agencies
9. Private Security Agencies
10.Market Research Agencies
11.Under Writer Agencies
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Contd
Services were brought under tax net in 2002-03
1. Auxiliary Services to Life Insurance
2. Cargo Handling
3. Storage & Warehousing Services4. Event Management
5. Cable Operators
6. Beauty Parlors
7. Health & Fitness Centers
8. Fashion Designers
9. Rail Travel Agents
10.Dry Cleaning Services
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Contd
Services were brought under tax net in 2005-06
1. Intellectual Property Services
2. Opinion Poll Services
3. TV / Radio Program Services
4. Survey & Exploration of Mineral Services
5. Travel Agent Services
6. Forward Contract Services7. Transport of Goods through Pipe Line
8. Site Preparation & Clearance Services
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Contd
9. Survey & Map Making Services
10.Cleaning Services
11.Membership ofClubs12.Packaging Services
13.Mailing Services
14.Construction Services
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Services Exempted from Service Tax
Goods transport operator services
Outdoor caterer services
Mechanized Slaughter houses
Mandap keepers services provided by hotels
Export of services
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Penalties Levied under Service Tax Act
Offence Penalty Provision
Delay in payment of service tax Simple interest @ 15% for delayed period
Failure to obtain registration Non discriminatory fixed sum of Rs. 500
Failure to pay service tax S.I. @ 15% for delayed period + Rs. 100 to200 / day during the failure
Failure to furnish prescribed returns Penalty extending to an amount not
exceeding Rs. 1,000 for each failure
Suppressing value of taxable services 25% of the tax determined, if it is paid
within 30 days of the order otherwiseservice tax, interest & penalty upto
amount of tax payable
Failure to comply with the notice 10 to 50% of the amount of service tax
that would have been avoided
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THANK
YOU