TAXATION IN INDIA

CONTENT
1.Who are reliable to pay tax?
2.Types of taxes
3.Direct taxes
Corporate tax
Income tax
Wealth tax
Fringe and Benefit tax
4.Indirect taxes
Service tax
VAT tax
Excise tax
Sale tax
5.GST ( Goods And Service Tax)
6.Vodafone Tax Case

WHO ARE LIABLE FOR

TAX?
1.
2.
3.
4.
5.
6.
7.

Individuals
Hindu Undivided families
Companies
Firms (partnerships)
Association of persons or bodies of individuals
Local authority (municipal bodies)
Artificial juridical person

According to the report released by Indian Finance

Ministry, estimated number of taxpayers for
financial year 2011-12 stands at just 3.24 Crore
people.That means, less than 3 people in 100
pay taxes
Out of these 3.25 Crore people, 89% pay taxes in
the tax slab of 0 5 Lakh rupees, while on the
other end of spectrum, only 1.3% of all tax payers
have income about 20 Lakh!

TYPES OF TAXES

DIRECT TAXES: Direct Taxes are those taxes which are demanded from the very
person who it is intended or desired should pay it.
CORPORATE TAX A resident company is taxed on its worldwide income. A
non-resident company is taxed only on income that is
received in India, or that arises, or is deemed to arise,
in India.
The corporate income tax (CIT) rate applicable to an
Indian company for the tax year 2015/16 is 30%.
Resident companies are liable to pay surcharge at 7%
on the amount of CIT if the total income exceeds 10
million Indian rupees (INR) and at 12% if income
exceeds INR 100 million.

In budget 2016 Companies with

revenue less than Rs 5 crore to be
taxed at 25% plus surcharge.

INCOME TAX:
Personal income tax, levied on income of individuals,
households ,partnership and sole-proprietorships.
Income tax is a tax payable,at the rate enacted by the
Union Budget (Finance Act) for every Assessment Year, on
the Total Income earned in the Previous Year by every
Person.

WHAT IS TAX DEDUCTED AT SOURCE ?

Heads of income
The total income of a person is segregated
into five heads:1. Income from salaries
2. Income from house property
3. Profits and gains of business or
profession
4. Capital gains and
5. Income from other sources

WEALTH TAX
Wealth Tax is a tax on the value of wealth
owned by a person, levied under the Wealth
Tax Act, 1957.
The tax is levied @ 1 per cent on the amount
of wealth as on 31st March of every year,
where such amount exceeds Rs.30,00,000.

Fringe Benefit Tax(FBT)

The fringe benefits tax (FBT) was the tax applied to
most, although not all, fringe tax in India. A new tax was
imposed on employers by India's Finance Act 2005 was
introduced for the financial year commencing April 1,
2005.
Employer's expenses on entertainment, travel, employee
welfare and accommodation.
.
Employer's provision of employee transportation to work
or a cash allowances for this purpose.

INDIRECT TAXES

xcise duty tax: This tax is levied by central government for manufacturing products.
who is liable to pay excise duty:
Those who personally manufacture the goods.
Those who get the goods manufactures by employing hired labour.
Those who get the goods manufactured by other parties.

Sales tax: It is form of tax paid to a governing body for sale of goods and services.
It is of two types:
State sales tax: This tax is levied by state government.
Central sales tax: This tax is imposed only on goods sold from one
state to another state.

VAT TAX

Value-added taxation in India was introduced as an indirect

value added tax (VAT) into the Indian taxation system from 1
April 2005.

Method of tax collection and state level tax(at present)

in india.
Collected at every stage of value addition i.e. either
production and distribution.
Multi point tax collection
No cascading effect
Does not increase inflation.

SERVICE TAX
It is a tax which is payable on services provided by
the service provider.
The tax came into effect in 1994 and was
introduced by the then Finance Minister Dr.
Manmohan Singh.
Service tax policy is not applied in jammu and
Kashmir.

Services on which tax is imposed

In relation to telecommunication service.

In relation to general insurance business.
In relation to insurance auxiliary service by an
insurance agent.
In relation to transport of goods by road in a
goods carriage, where the consignor or
consignee of goods.
In relation to Business Auxiliary Service of
distribution of mutual fund by a mutual fund
distributer or an agent.
In relation to sponsorship service provided to

ServiceTaxonFoodinRestaurant@6%from1st
June2016.
When you dine out at a restaurant, the following charges
and taxes are normally levied on your food bill:
Service charge
VAT (value added tax)
Service tax

Applicability of Service Tax on Food in

Restaurants:
WedontalwaysgoinarestaurantforbothFood+Services.Manyatimes,peoplegoina
smallnearbyrestaurantnot for the services provided but only for the food. In suchcases
service charge wont be leviable.
Govt. has announced the following conditions for the levy of ServiceTaxinaRestaurant:
TheRestaurantshouldbe air conditioned.
Restaurant should have license to serve liqour.
(n budget 2013 p. Chidambram removed 2nd condition and added new condition)
In Budget 2013, P.Chidambaram also announced that Service Tax would be
alsolevied underconstructionpropertywhereareaofthepropertyis under
2000sq.feet.

Budget 2016 UpdateCurrent

Service Tax Rate

The current service tax rate is 14%

(+) Swachh Bharat Cess = 0.5%
(+) Krishi Kalayan Cess= 0.5%
Service Tax Rate = 15%
Effective service tax rate=6%

Moreover, every Service Provider is now required to apply for Service Tax Registration if
the Value of Services provided by him during a Financial Year is more than Rs. 9 Lakhs,
but the Tax would be payable only when the Value of Services provided is more than Rs.
10 Lakhs.

Hongkong

London
Vodafone Grp plc

1B
1
$

Hutchinson
telecomm

C
Caymen island

Netherland

D
Vodafone
international holding
BV

CGP investment
holding

67%share

India
Hutchessar Ltd.

Vodafone Case 2007

Thank you