Income Tax
Wealth Tax
Gift Tax
Service Tax
Sales Tax
Securities Transaction Tax
Customs Duty
Excise Duty
Municipal/Local Taxes
Other State Taxes
a. Stamp duty on the transfer of assets
b. Property/building tax that is levied by local
bodies
c. Agriculture income tax levied by the State
Governments on the income from plantations
d. Luxury tax that is levied by certain State
Government on specified goods
I.
Income Tax
Person Liable for Payment of Income Tax
1. Individuals (including Non Residents), Hindu Undivided Families,
Association of Persons, Body of Individuals (where the share of
members are known or specified) and artificial juridical persons (such
as deities of temples) having taxable income exceeding Rs.200000/-, in case of resident
senior citizens Rs. 2,50,000/-.
2. Societies and Charitable/Religious trusts having taxable income
exceeding Rs. 2,00,000/-
3. All
Partnership firms irrespective of their income
4. Co-operative Societies irrespective of Income
5. Companies irrespective of Income
6. Local authorities irrespective of Income
7. Association of Persons/ Body of Individuals where shares of the
members are indeterminate or unknown irrespective of income.
Heads of Income
1. Income from Salary including allowances, value of perquisites,
profits in lieu of salary and pension
2. Income from House Property - Whether residential or Commercial, Let
out or self occupied
3. Profits and gains of Business or Profession
4. Capital Gains
5. Income from Other Sources including bank interest, interest on
securities, lotteries, crossword puzzles, races, games, gifts from
unrelated persons exceeding the specified limit.
Gross Total Income
The aggregate income computed under various heads of income
calculated after set-off of unabsorbed depreciation/loss carried forward
from earlier years.
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II.
Wealth Tax
Persons Chargeable to Wealth Tax
(i) Individuals and
HUFs having net wealth exceeding Rs. 30 lacs on the Valuation date
(ii) All Companies having net wealth exceeding Rs. 30 Lacs
Wealth Tax Liability - 1% of Net Wealth Less Rs. 30 lacs
Assets included in Taxable Wealth
(i) A Guest House
(ii) a Residential or Commercial House with land appurtenant thereto
(iii) a farm house situated within 25 KMs from the local municipal
limits
(iv) motor cars
(v) Jewellery, bullion and furniture, utensils or any other article made
wholly or partly of gold, silver, platinum, or any other precious metal
or any alloy containing one or more of such precious metals
(vi) Yachts, boats and aircrafts
(Vii) urban land situate within the municipal limits of municipality or
cantonment board having a population of not less than 10000 or within 8
KMs of such limits
(viii) cash in hand, in excess of Rs. 50,000 in case of individuals and
HUFs, and any unrecorded amount in any other case.
Assets not included in taxable wealth
(i) a house meant exclusively for
residential purposes and allotted to a whole time employee, officer or
director of a company, whose gross annual salary is less than Rs. 5
lakhs.
(ii) a residential or commercial house, jewellery,
bullion and other precious articles, used as stock-in-trade.
(iii) any house occupied by the assessee for the purposes of his
business or professio
(iv) any residential property let out for at least 300 days in previous
year
(v) any property in the nature of commercial establishments or complexes
whether vacant or let out
(vi)motor cars used in the business of running them on hire or as
stock-in-trade
(vii) Yachts, boats and aircrafts used for commercial purposes
(viii) urban land on which construction is not permissible under any law
(ix) urban land occupied by any building which has been constructed with
the approval of the appropriate authority
(x) any unused land for industrial purposes for a period of two years
from the date of its acquisition and
(x) urban land held by the assessee as stock-in-trade for a period of
ten years from the date of its acquisition by him
Assets Exempt from Wealth Tax
1. Property held under a trust
2. Coparcenaries interest in a Hindu Undivided Family
3. Residential building of a ruler
4. Heir loom jewellery of ex-ruler
5. Assets acquired out of money brought in by NRI/Person of Indian
original permanently returned to reside in India is exempt for
successive 7 years.
6. One house or part of house or plot of land belonging to an individual
or a Hindu undivided family provided the plot of land comprises of an
area upto 500 sqm.
7. In case of an individual who is not a citizen of India, or of an
individual or HUF not resident in India, or resident but not ordinary
resident in India during the year ending the valuation date.
(i) the value of assets and debts located outside India; and
(ii) the value of any assets in India, the income from which is exempt u/s
10 of Income Tax Act.
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III. Gift Tax
I. Income tax is chargeable on the gifts received
in cheque/cash by an individual, HUF without any consideration,
exceeding Rs. 50000/- in a financial year (Section 56(2)(vi).
Transactions on or after 1.10.2009 without consideration or inadequate
consideration are also will be taxed. Thus, immovable/movable property
received without consideration will be included in the income of the
recipient as under:
Incase of Immovable Property
1. Property is transferred without consideration and if stamp duty
value exceeds Rs. 50,000
Tax Treatment in the hands of recipient
Whole value of stamp duty calculated will be taxable
In case of Movable Property
2. Property is transferred without consideration and if stamp duty
value exceeds Rs. 50,000
Tax Treatment in the hands of recipient
Market value shall be base of taxation
3. For inadequate consideration and difference in fair market value and consideration exceeds Rs. 50,000.
Tax Treatment in
the hands of recipient
Difference in fair market value and declared value taxable
Movable property to include shares and securities; jewellery;
archaeological collections; drawings; paintings; sculptures; or any work
of art.
From 1st June 2010, following amendments have taken effect:
1. Bullion is now added to the list of specified non monetary movable
assets.
2. Presently, provision of transfer of shares without consideration or
for inadequate consideration is applicable only to individual and HUF.
However a new clause (viia) is inserted to provide that a firm or
closely held company, would be liable to tax, if shares of a closely
held company are received by such a firm or a closely held company
without consideration or for inadequate consideration.
II. No income tax is chargeable on the following gifts, exceeding in
aggregate value of Rupees 50000 in a financial year. Section 56 (vii)
(a) Received from the relatives (Section 56(2)(vii)
(b) Received on the occasion of marriage from any by wife and husband
(both)/separately. Section 56(2)(vii)
(c) Received by way of will/ inheritance. Section 56(2) (vii).
(d) Received from local authority. Section 56(2)(vii)
(e) Received from any fund/foundation/university/other educational
institution/hospital/other medical institution/ trust/ institution.
Section 56(2) (vii)
(g) Received from any trust/institution, registered under section 12AA.
Section 56(2) (vii).
III. Other relevant
clarifications are:
(a) Deduction under Section 80-C is allowable, against the gifts treated
as income.
(b) Gifts from employer are taxable under the head income from salary.
(c) Gifts received by minor, are to be clubbed in the hands of
father/mother as case may be. Section 64 (1A)
(d) Exemption upto Rs. 1500 (One Thousand five hundred) is available to
the father/mother as the case may be. Section 10(32).
(e) No exemption on the gifts received from the relatives of an HUF.
Henceforth this exemption is restricted to the individuals.
(f) Gifts exceeding Rs. 50000 are chargeable to tax under the head
'Income from other Sources'.
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IV.
Service Tax
Payment of Service Tax
Every person, who is the provider of taxable service, is liable to pay
service tax. Incase of any person who is use service of non-resident
service provider then the user of service is liable to pay service tax
instead of service provider.
Any payments received in advance also liable to pay service tax. The
service tax should be deposited in the specified bank through challan
Form GAR-7.
Due date for payment of Service Tax to the A/c of Government can be
summarized as under :-
For Company :- Monthly liability. Deposit tax so collected by 5th of
next month.
For month of march deposit by 31st March.
For other than Company :- Quarterly liability. Deposit by 5th of month
next to the end of quarter. For month of quarter ended 31st March
deposit by 31st March.
Quarter ended on Due Date for payment of Service Tax
30th June 5th July
30th September 5th October
31st December 5th January
31st March 31st March
NOTE :-Due Date of Payment is 6th of month, if the duty is deposited
electronically through internet banking.
Due date for Filing
Service Tax Return
25th April for half year ended October to March and 25th October for
half year April to September
Service Tax Compliance
Service Tax has now become one of the major sources of yielding
revenue to the exchequer. It has been extended to several items with
enhanced rates in recent budgets. It's scope is very much likely to be
widened and rates to be raised further.
The rules and regulations and various procedures laid down under service
Tax are very cumbersome, tedious and best with the problem of
interpretation , disputes and litigation all its provisions have to be
completed with very strictly. Even a minor lathes can land you in soup.
The tax has to be deposited in treasury with in the stipulated period
and various returns are to be filed on prescribed forms with in
specified dates failing which return penal action in called for.
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Sales Tax Liability
Central Sales tax is generally payable on the sale of all goods by a
dealer in the course of inter-state Trade or commerce or, outside a
State or, in the course of import into or, export from India.
Interstate Sale
A sale or purchase shall be deemed to take place in the course of
interstate trade or commerce in the following cases:
When the sale or purchase occasions the movement of goods from one State
to another;
When the sale is effected by a transfer of documents of title to the
goods during their movement from one State to another.
Where the goods are delivered to a carrier or other bailee for
transmission, the movement of the goods for the purpose of clause (b)
above, is deemed to start at the time of such delivery and terminate at
the time when delivery is taken from such carrier or bailee. Also, when
the movement of goods starts and terminates in the same State, it shall
not be deemed to be a movement of goods from one State to another.
To make a sale as one in the course of interstate trade, there must be
an obligation to transport the goods outside the state. The obligation
may be of the seller or the buyer. It may arise by reason of statute or
contract between the parties or from mutual understanding or agreement
between them or, even from the nature of the transaction, which linked
the sale to such transaction. There must be a contract between the
seller and the buyer. According to the terms of the contract, the goods
must be moved from one state to another. If there is no contract, then
there is no inter-state sale.
There can be an interstate sale even if the buyer and the seller belong
to the same state; even if the goods move from one state to another as a
result of a contract of sale; or, the goods are sold while they are in
transit by transfer of documents.
Sales Tax payable to
whom and By whom
Sales tax is payable to the sales tax authority in the state from
which the movement of goods commences. It is to be paid by every dealer
on the sale of any goods effected by him in the course of inter-state
trade or commerce, notwithstanding that no liability to tax on the sale
of goods arises under the tax laws of the appropriate state.
Possible offences, which may be
committed, that are liable to be penalized and penalties for such
offences
The offences that may be committed and, the penalties, prescribed for
can be summarized as under. Offences, under section10, are punishable
with simple imprisonment (up to 6months) with or without fine.
Giving false declaration in Form C, E-I, E-II, F or H, which he knows or
has reason to believe it to be false.
Not getting registered under the CST Act, when required to be registered
or not complying with provisions relating to security.
False representation by a registered dealer that the goods, purchased
are covered under his certificate of registration for a concessional
rate.
Falsely representing that he is a registered dealer, though he is not.
Misusing or using for different purpose, the goods, obtained under C
form at a concessional rate.
Having possession of form C, which is not obtained as per provisions of
the CST Act.
Collecting any amount, representing as sales tax, by an unregistered
dealer or by a registered dealer in contravention of the provisions of
the CST Act.
Liability of a
Company in liquidation, with respect to payment of Central Sales Tax
and the liability of the directors of a private company
If a liquidator or receiver is appointed in the case of a company, he
should inform the Sales Tax authorities within 30 days of his
appointment. The Sales Tax Authority shall intimate him the amount of
tax due from the company in liquidation within 3 months. The Sales Tax
authorities are "preferential creditors' in a case of liquidation.
The Liquidator shall not dispose of assets of the company before setting
aside the amount of dues as intimated by sales tax department. The
liquidator may, however, part with such assets or properties in
compliance with any order of a court or for the purpose of payment of
the tax, payable by the company under the CST Act or, for making any
payment to secured creditors whose debts are entitled under law to
priority of payment over debts due to the government, on the date of
liquidation or, for meeting such costs and expenses of the winding up of
the company, as are in the opinion of the appropriate authority,
reasonable.
Liability of
the directors of a private company with respect to payment of
Central Sales Tax
If a private limited company is in liquidation and, any tax, assessed on
the company, cannot be recovered, it becomes the personal liability
of the directors, jointly and severally.
Directors can however avoid this liability; if they prove that the
non-payment of tax was not on account of neglect, misfeasance or breach
of duty on the part of the directors, in relation to affairs of the
company.
The power to levy Sales tax
1.No state can levy sales tax on any sale or purchase where such sale or
purchase takes place outside the state and in the course of import of
goods into or export of goods outside India.
2.Only the parliament can levy tax on inter-state sale or purchase of
goods
Main Principles in
State Sales Tax Laws
1.A sale or purchase of goods is said to take place when the transfer of
property in the existing goods or future goods takes place for
consideration of money.
2.The goods have been divided into different categories and different
rates of sales tax are charged for different categories of goods.
3.In most of the cases related to the sales tax, the tax on the sale or
purchase of goods is at single point.
4.Under the provisions of some state laws the assesses are divided into
several categories such as manufacturer, dealer, selling agent etc. and
such as assess is required to obtain a registration certificate to that
effect. The sales tax or the purchase tax is levied on that assessee on
the basis of his category such as dealer, manufacturer etc. on
production of certain forms or certificates (and differential rates of
sales tax are levied).
5.Generally , a quarter return of sales or purchases is insisted upon
and the assessee is required to furnish the return in the prescribed
form.
6.At the time of assessment, the assessee has to furnish all the
documentary evidence and satisfy the concerned sales tax / commercial
tax officer.
7.The sales tax laws of the states prescribe the procedure to be
followed in case an assessee prefers to make an appeal.
8.Every dealer should apply for registration and obtain a registration
certificate to that effect. The registration certificate number should
be quoted in all the bill / cash memos.
Transactions not amounting to inter-state sales
Not all dispatches of goods from one state to another result in inter
state sales rather the movement must be on account of a covenant or
incident of the contract of sales. There are some instances wherein the
goods are moved out of the selling state and yet they are not considered
inter state sales :-
Intra-state sales
Stock transfer from head office to branch & vice versa
Import and Export sales or purchases
Sale through commission agent / on account sales
Delivery of Goods for executing works contract
Sales Tax ID number
A state sales tax ID number is basically a business version of your
Social Security number under which you collect and pay tax for any
service or product you sell that qualifies for taxation in your state.
The state department of taxation provides sales tax ID numbers and it
takes about a month to get one.
The rule of thumb for sales tax is that most services are exempt and
most products are taxable except for food and drugs. However, states
have been gradually adding to the list of services that are taxable for
the last few years. Check with your state department of taxation to
determine if the product or service you sell is taxable in your state.
Exception in the sales taxes
Sales to resellers such as wholesalers and retailers that have a valid
state resale certificate.
Sales to tax-exempt institutions such as schools or charities
forms to be filled
-Form C;
-Form D;
-Form G;
-Forms E-I & E-II.
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VI. Securities Transaction Tax
VII. Customs Duty
VIII. Excise Duty
IX. Municipal/Local Taxes
XI. Other State Taxes
a. Stamp duty on the transfer of assets
b. Property/building tax that is levied by local
bodies
c. Agriculture income tax levied by the State
Governments on the income from plantations
d. Luxury tax that is levied by certain State
Government on specified goods