TAXES LEVIED BY CENTRE CONTENTS Types Of Taxes

TAXES LEVIED BY CENTRE

CONTENTS • • • Types Of Taxes History Of Taxation In India Tax Structure In India Taxes Levied By Centre Impact of GST

TYPES OF TAXES IN INDIA v. TAXES Direct Taxes Indirect Taxes • Income Tax • Corporate tax • Custom Duty • Central Excise duty v. TAXES LEVIED BY THE CENTRE AND STATES • Taxes levied collected and retained by the centre • Taxes levied by the centre but collected and appropriated by the states • Taxes levied and collected by the centre but assigned to the states • Levied by the centre and compulsorily distributed between centre and states • Levied by centre and may be distributed • Levied, collected and retained by the states

HISTORY OF TAXATION IN INDIA • Tax was introduced for the first time in India in 1860 by Sir James Wilson - to meet losses sustained by the Government on account of military Mutiny of 1857 • In 1918, a new income tax was passed, and it was replaced by another act which was passed in 1922. • This remained in force up to the assessment year 1961 -62 with numerous assessments. • Income tax Act was passed in 1961. It was brought into force on 1 st April, 1962 and applies to whole of India.

TAXES LEVIED BY CENTRE TAXES LEVIED, COLLECTED AND RETAINED BY THE CENTRE Ø INCOME TAX • The constitution of India, Schedule VII, Union List, Entry 82 have given the power to the Central government to levy a tax on any income other than agricultural income, which is defined in Section 10(1) of the Income Tax Act. • Income Tax is the annual charge levied on the Income, such as, Salary, wage, commission, dividend, bonus etc. of an individual, company or a firm. • It is the main source of income for the government. • Income tax is subject to common deductions like PPF, Life Insurance Premium, Health Insurance premium, Home loan payment etc.

INCOME TAX SLAB RATE 2018 -19

TAXES LEVIED BY CENTRE TAXES LEVIED, COLLECTED AND RETAINED BY THE CENTRE Ø CORPORATE TAX • The corporation tax is a tax imposed on the net income of a company. • Corporate tax is levied under Income tax Act, 1961. • Companies, both private and public which are registered in India under the companies Act 1956, are liable to pay corporate tax. • Both Domestic as well as Foreign companies are liable to pay corporate tax under Income tax Act. • The income of a company here means: • Profits earned from the business • Capital gains • Income from renting property • Income from other sources like dividend, interest etc.

CORPORATE TAX SLAB RATE 2018 -19

TAXES LEVIED BY CENTRE TAXES LEVIED, COLLECTED AND RETAINED BY THE CENTRE Ø WEALTH TAX • The wealth tax is imposed on the value of the property that a person possesses, according to the Wealth tax Act, 1957. • Wealth tax is calculated at the rate of 0. 25 percent (1. 0 percent w. e. f April 2010) of the amount of net wealth exceeds Rs. 50 lakhs (Rs. 30 lakh w. e. f 2010) on the valuation date. • Wealth tax is abolished in the Union Budget 2016 -17 presented by Union Finance Minister Arun Jaitley on 28 Feb 2015. It is replaced with an additional surcharge of 2 percent on the super rich with a taxable income of over 1 crore annually. Ø CUSTOMS DUTY • Indirect tax imposed in imports and exports of goods. • Falls under the Customs Act, 1962. • Can be specific or ad velorem (0%-150%; avg 11. 90)

TAXES LEVIED BY CENTRE TAXES LEVIED, COLLECTED AND RETAINED BY THE CENTRE Ø FEES ON MATTERS OF THE UNION LIST • List of 99 items- 7 th schedule of the constitution of India- Parliament has exclusive power to legislate. • Defence, military, Foreign affairs, Atomic energy, etc. TAXES LEVIED BY THE CENTRE APPROPRIATED BY THE STATES BUT COLLECTED AND Ø STAMP DUTIES ON BILLS OF EXCHANGE CHEQUES, PROMISSORY NOTES AND OTHERS Ø EXCISE DUTIES ON MEDICINAL AND TOILET PREPERATION CONTAINING ALCOHOL

TAXES LEVIED BY CENTRE TAXES LEVIED AND COLLECTED BY THE CENTRE BUT ASSIGNED TO THE STATE Ø ESTATE TAX (on property other than agricultural land) • Also known as inheritance tax, raised on an estate or total value of money and property that an individual has left behind after their death. • Estate tax was also abolished in India in 1985. Ø DUTIES ON SUCCESSION TO PROPERTY (other than agri. land) Ø TERMINAL TAXES ON GOODS AND PASSENGERS CARRIED BY RAILWAYS AIR OR SEA. Ø TAXES ON TRANSACTIONS IN STOCK EXCHANGE AND FUTURES MARKET (OTHER THAN STAMP DUTIES Ø TAXES ON THE SALE AND PURCHASE OF GOODS IN CORSE OF INTERSTATE COMMERCE (except newspapers)

TAXES LEVIED BY CENTRE TAXES LEVIED AND COLLECTED BY THE CENTRE AND COMPULSORILY DISTRIBUTED BETWEEN THE CENTRE AND THE STATES • Taxes on income (other than agricultural income and corporation tax) shall be levied and collected by the centre but compulsorily distributed between the centre and the states in such manner as prescribed by the president on the recommendations of the Finance Commission. The obligatory sharing of income tax is provided by Article 270 of the Constitution. TAXES LEVIED AND COLLECTED BY THE CENTRE AND MAY BE DISTRIBUTED BY THE CENTRE AND STATE • Under this category falls the excise duties included in the Union list except those on medicinal and toilet preparations. These are levied and collected by the centre. The net proceeds of such duties can be paid to states out of the consolidated Fund of India only if the parliament so provides. • Further, the principles of distribution shall also be laid down by the parliament. It is to be noted that sharing of the proceeds, of income tax is obligatory, while that of excise duties is permissible.

IMPACT OF GST Ø POSITIVES • Inflation rate didn’t rise • Single National Market • One Tax Nationally • Widened Tax Base Ø DRAWBACKS • Compliance Issues • Cumbersome registration system • New Cesses crop up • Refunds problem for exports

IMPACT OF GST