Taxation

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e.g. tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity.

Taxes consist of direct tax or indirect tax, and may be paid in money or as corvée labor. In modern, capitalist taxation systems, taxes are levied in money, but in-kind and corvée taxation are characteristic of traditional or pre-capitalist states and their functional equivalents.

Assessee

Income Tax Act 1961 (Act no. 43) defines 'assessee' as a person by whom any tax or any other sum of money is payable under this Act, and includes -

Every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or the amount of refund due to him or to such other person;

Every person who is deemed to be an assessee under any provision of this Act;

Every person who is deemed to be an assessee in default under any provision of this Act;

Assessment year

Assessment year means the period of twelve months commencing on 1st April every year and ending on 31st March of the next year. Income of previous year of an assessee is taxed during the following assessment year at the rates prescribed by the relevant Finance Act.

Types Of Tax

Income Tax

Income Tax is all income other than agricultural income levied and collected by the central government and shared with the states.

According to Income Tax Act 1961, every person, who is an assessee and whose total income exceeds the maximum exemption limit, shall be chargeable to the income tax at the rate or rates prescribed in the finance act. Such income tax shall be paid on the total income of the previous year in the relevant assessment year.

The total income of an individual is determined on the basis of his residential status in India.

Corporate Tax

Corporate tax refers to a direct tax levied by various jurisdictions on the profits made by companies or associations. As a general principle, this varies substantially between jurisdictions. In particular allowances for capital expenditure and the amount of interest payments that can be deducted from gross profits when working out the tax liability vary substantially. Also, tax rates may vary depending on whether profits have been distributed to shareholders or not. Profits which have been reinvested may not be taxed.

• Most of the form numbers listed below are links to traditional forms that you must first print and then write or type the required information.
• You will also notice in the list that some forms include web fill-in versions, personalized forms, and the capability to file and pay online.
• You complete the web fill-in forms by using your computer to enter the required information and print the completed form. When looking at the form, you will see “web fill” noted in the upper left corner.
• You complete personalized forms by entering the required information on to a web entry screen which creates a printable form with a scan line that allows the Department to efficiently process your form.
• Filing and paying online allows you to use your computer to electronically file the form and pay the tax using Mastercard or Visa credit or debit cards and bank draft.

Sales Taxes

A sales tax is a state or locality imposed percentage tax on the selling or renting of certain property or services. The fraction of the total taxes collected as sales taxes typically varies from about 25% to 50% of government revenue. Nearly all sales taxes have a large lists of goods and services, varying from state to state, that the tax is not collected on. Because the tax is collected from the customer, it is a consumption tax.

Ideally, a sales tax (under whatever name it's called) is fair, has a high compliance rate, is difficult to avoid, is charged exactly once on any one item, is simple to calculate and simple to collect. A conventional or retail sales tax attempts to achieve this by charging the tax only on the final retail transactions, not on intermediate businesses buying raw materials for production or finished goods for resale. This prevents so-called tax "cascading" or "pyramiding," in which an item is taxed more than once as it makes its way from production to final retail sale. Sales tax collection is well established in nearly all retail establishments and typically has a high tax compliance record in the United States. Many consider the sales tax as being nearly ideal since it taxes consumption but allows savings to grow untaxed.

Sales taxes are considered by some as regressive, that is, low income people tend to pay a greater percentage of their income in sales tax than higher income people, because they tend to spend a higher percentage of their income on taxed items. Others consider them one of the best taxes since they only tax consumption. In many locations items such as food, or prescription drugs are exempt from sales taxes to alleviate the burden on the poor. The loss of income is made up in other tax sources.

VAT

VAT is a multi-stage tax levied at each stage of the value addition chain, with a provision to allow input tax credit (ITC) of tax paid at an earlier stage, which can be appropriated against the VAT liability on subsequent sale. VAT is intended to tax every stage of sale where some value is added to raw materials and goods, but taxpayers will receive credit for tax already paid on procurement stages. In other words the general principles, which guide the value added tax, are as follows:

General Tax: It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services.

Consumption Tax: It is consumption tax because it is borne ultimately by the final consumer. It is not a charge on companies. Charged As A Percentage Of Price: It is charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain.

Collected Fractionally: It is collected fractionally, via a system of deductions whereby taxable persons can deduct from their VAT liability the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved Now while considering the taxation under vat it often comes to our mind

VAT is calculated by following method -:
A= Charge on certain Value at a certain rate
B= Ascertained input credit available
VAT Payable = A-B

Capital Gains Tax

A capital gain is income derived from the sale of an investment. A capital investment can be a home, a farm, a ranch, a family business, or a work of art, for instance. In most years slightly less than half of taxable capital gains are realized on the sale of corporate stock. The capital gain is the difference between the money received from selling the asset and the price paid for it.

"Capital gains" tax is really a misnomer. It would be more appropriate to call it the "capital formation" tax. It is a tax penalty imposed on productivity, investment, and capital accumulation.

The capital gains tax is different from almost all other forms of taxation in that it is a voluntary tax. Since the tax is paid only when an asset is sold, taxpayers can legally avoid payment by holding on to their assets--a phenomenon known as the "lock-in effect."

Excise Duty

Excise taxes can be imposed at the point of production or importation, or at the point of sale. They are usually waived or refunded on goods being exported, so as to encourage exports, though they are often re-imposed by the importing country. Smugglers will seek to obtain items at a point at which they are not taxed and then sell them at price between the pre-tax and post-tax price. They also look to find loopholes, which may exist through importing to different countries, before then exporting to the destination country.