ajit kumar satapathy

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CORPORATE TAXATION

inINDIA.

Ajit Kumar SatapathyRai Business School.

3rdSemesterM.B.A + P.G.P.M.RBS / PGPM / SPR 09 / 002 .


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WHYTAX ?

EVALUATION OF INCOME TAX.

TYPES OF TAX.

SCHEME OF TAXATION.

RESIDENTIAL STATUS .

CONCLUSION.

CONTENTS.

CONTENTS.


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India is an independent country governed by the Govt. of

India. For the day - to-day activities of country like decency,

medical, health, welfare, education, etc Govt. requires fund.

Taxation has been consider as the best and major source

of income of the govt. Here the govt. collects its revenue by wayof imposing and collecting tax.

Taxation source of revenue collection is an old concept

which was introduced in India by the Britisher in the year 1860 for

the first time.

Tax implies a compulsory contribution made by the peopleto the ruling authority i.e. Govt. Presently the taxation structure of

the govt provides for the types of taxes such as direct tax and

indirect tax.

WHYTAX COLLECTED ?

WHYTAX COLLECTED ?


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DIRECT TAXES

Incidence of which falls onpersons who pay them to

the government.Ex. Income Tax. (1961)

Wealth Tax. (1957)

Gift Tax. (1958)

INDIRECT TAXES

Initially paid by one personand the burden is passed

over to some other personEx. Sales Tax.

Custom Tax. (1962)


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HISTORYOF INCOME TAX

HISTORYOF INCOME TAX

The any amount of money which ispaid by the assessee on his totalincome is called Income Tax.It was first introduced by the

Britishers in the year 1886.Again one set of law was introduced

in the year 1922 till 1947 and by theIndian govt till 1961.In the year 1961 India framed a new

set of law.


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Scheme of Taxation .

Scheme of Taxation .1)Person.2)Assessee.3)PreviousYear.

4)Assessment Year.5)Rate of Tax.6)Finance Act.

7)Charge of Tax.8)Maximum amount not chargeable to Tax.9)Total Income.10)Residential Status.


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1. Individual.2. AHindu Undivided Family.3. A Firm.4. AOP or BOI.5. Local Authority.6. Artificial Juridical Person.

7. A Company. any Indian company any body corporate incorporated by under the laws of a country

outside India any institution, association or body whether Indian or non Indian,

which is declared by general or special order of the board to be acompany any institution, association or body which is or was assessable or

was assessed as a company for any assessment year under theIndian Income tax Act, 1922 or which is or was assessable or wasassesses under this act as a company for any assessment year

commencing on or before the 1st day of April. 1970

PERSON. [SEC 2(31)]PERSON. [SEC 2(31)]


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CLASSIFICATION OFCOMPANIES

CLASSIFICATION OFCOMPANIES

For the purpose of taxation, companies are broadly classifiedas:-

Domestic company [Section 2(22A)]:- means an Indiancompany (i.e. a company formed and registered under theCompanies Act,1956) or any other company which, in respect ofits income liable to tax, under the Income Tax Act, has made theprescribed arrangement for declaration and payments within India,of the dividends payable out of such income. A domestic companymay be a public company or a private company.

Foreign company [Section 2(23A)] :- means a company whosecontrol and management are situated wholly outside India, andwhich has not made the prescribed arrangements for declarationand payment of dividends within India.


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It means a person by whom any tax or any other sum is payableunder this Act and includes :a) Ordinary Assessee: Any person who is entitled to refund of

tax under this Act.

b) Deemed Assessee: Giving tax on the income of other.c) Assessee-In-Default: A person is deemed to be an assessee

in default if he fails to fulfill his statutory obligations. In caseof an employer paying salary or a person who is payinginterest it is their duty to deduct tax at source & deposit theamount of tax so collected in Govt. treasury. If he fails todeduct tax from tax or not deposit he is known as Assesseein default.

ASSESSEE. [SEC 2(7)]ASSESSEE. [SEC 2(7)]


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Assessment year means the period of twelve

months commencing on 1st April every year andending on 31st March of the next year. Income ofprevious year of an assessee is taxed during thefollowing assessment year at the rates prescribed

by the relevant Finance Act.

ASSESSMENT YEAR. [SEC 2(9)]ASSESSMENT YEAR. [SEC 2(9)]


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The Financial Year in which the income isearned is known as the previous year. Any financial year begins from 1st of April and ends onsubsequent 31st March. The financial year

beginning on 1st of April 2009 and ending on 31stMarch 2010 is the previous year for theassessment year 2010-2011.N.B :- A) Continuing Business.

B) Newly setup business or profession.C) In case of a newly created source of

income.

PREVIOUS YEAR. [SEC 3]PREVIOUS YEAR. [SEC 3]


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Exceptional Cases for Previous

Year.

Exceptional Cases for Previous

Year.1) Shipping Business Income of non-resident

ship-owners. (sec 172) .

2)In case of Persons leaving India. (sec 174).3)Assessment of any AOP, BOI, or ArtificialJudicial person formed or established only fora limited period. (sec - 174A).

4)In case of persons who are likely to transfertheir assets to avoid tax. (SEC -175).5)In case of discontinued Business (SEC 176).


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RATE OF TAX FOR INDIVIDUALS & MEN.RATE OF TAX FOR INDIVIDUALS & MEN.

INCOME LEVEL. R ATE OFTAX.

Where the total incomedoe snot exceeds1,60,000

Nil.

Where the total incomeexceeds Rs 160000/- butdoes not exceed Rs300000/-

10% of amount by whichthe total income exceedsRs 1,60,000/-

Where the total incomeexceeds Rs 3,00,000/-but does not exceed Rs5,00,000/-

20% of amount by which

the total income exceedsRs 3,00,000/-

Where the total incomeexceeds Rs 5,00,000/-



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RATE OF TAX FORWOMEN.RATE OF TAX FORWOMEN.



Nil.

Where the total incomeexceeds Rs 190000/- butdoes not exceed Rs300000/-








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RATE OF TAX FOR SENIORCITIZENS.

RATE OF TAX FOR SENIORCITIZENS.



Nil.









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RATE OF TAX FORHUF/ AOP/ BOI/ ArtificialJudicial Person.

RATE OF TAX FORHUF/ AOP/ BOI/ ArtificialJudicial Person.



Nil.









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SURCHARGE AND CESSSURCHARGE AND CESS

Further, the amount of income tax as computed inaccordance with above rates, and after beingreduced by the amount of tax rebate shall beincreased by a surcharge at the rate of 10% of suchincome tax, provided that the total income exceedsRs. 10 lacs. Thus, in case of individuals/HUFs nosurcharge shall be payable if the total income is

below Rs.10 lacs.

The tax and surcharge, if any, are to befurther enhanced by education cess levied@ 3% from A. Y. 2008-09 onwards.


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FIRMFIRMi. Income-tax: 30% of total income.

ii. Surcharge: The amount of income taxas computed in accordance with above

rates, and after being reduced by theamount of tax rebate shall be increasedby a surcharge at the rate of 10% of suchincome tax, provided that the totalincome exceeds Rs. 1 crore.

iii.Education Cess: 3% of the total of Income-tax and Surcharge.


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LOCAL AUTHORITYLOCAL AUTHORITY

i. Income-tax: 30% of total income.

ii. Surcharge: Niliii.Education Cess: 3% of Income-tax.


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DOMESTIC COMPANYDOMESTIC COMPANY

i. Income-tax: 30% of total income.

ii. Surcharge: The amount of income taxas computed in accordance with aboverates, and after being reduced by theamount of tax rebate shall be increasedby a surcharge at the rate of 10% of such

income tax, provided that the totalincome exceeds Rs. 1 crore.

iii.Education Cess: 3% of the total of

Income-tax and Surcharge.


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FOREIGN COMPANYFOREIGN COMPANY

i. Income-tax:@ 50% of on so much of the total income as consist of (a) royalties

received from Government or an Indian concern in pursuance of anagreement made by it with the Government or the Indian concernafter the 31st day of March, 1961 but before the 1st day of April,1976; or (b) fees for rendering technical services received fromGovernment or an Indian concern in pursuance of an agreementmade by it with the Government or the Indian concern after the29th day of February, 1964 but before the 1st day of April, 1976, andwhere such agreement has, in either case, been approved by theCentral Government;@ 40% of the balance

ii.

Surcharge: The amount of income tax as computed in accordancewith above rates, and after being reduced by the amount of taxrebate shall be increased by a surcharge at the rate of 2.5% of suchincome tax, provided that the total income exceeds Rs. 1 crore.

iii. Education Cess: 3% of the total of Income-tax and Surcharge.


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FINANCE ACT: A budget is prepared and presented by financeminister. It is a financial bill which declares the financial proposal of the

govt. for upcoming year.Charge of Tax. Sec 4 of gives an authority to the central govt. forcharging of income tax. It states where any central act enacts that incometax shall be charged for any assessment year at any rate or rates then at thatrate or rates income tax shall be charges for that year in accordance with the

provision of the act.Total Income :- Includes the following

1. Concept of Income.2. Definition Income.3. Gross Total Income.

4. Total Income.

Maximum amount not chargeable to tax:In case of certain assess there is no tax on incomes up to a certain limit sucha limit is called as basic exception limit or maximum amount not chargeableto tax.


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Particular Amount.

Salaries (sec 15-17) XXX

Income from house property (sec 22-27)XXX

Income from business or profession (sec 28 44D)XXX

Income from Capital Gain (Sec 44 55A)XXX

Income form Other Source (sec 56-59)XXX

Gross total income. XXX

(-) Deduction U/S 80C to 80U. XXXTotal Income / Tax on above. XXX

(-) Rebates (sec 88E) XXX

(+) Surcharge @10% XXX

(+) Education Cess@3% XXX

Total Tax XXX

Computation of Total Tax Liability.Computation of Total Tax Liability.


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RESIDENTIAL STATUS(SEC-6)

RESIDENT

ORIDINARYRESIDENT

NOTORIDINARYRESIDENT

NON-RESIDENT.

RESIDENTIAL STATUS (SEC 6)RESIDENTIAL STATUS (SEC 6)


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RESIDENT[SEC 6(1)]:- AnindividualshallberesidentinIndiaifhe

satisfiesatleastoneofthefollowingtwobasicconditions.i.e..

1. HeisinIndiaforatotalperiodof182daysormoreduringthe RPY.

2. HeisinIndiaforatotalperiodof60daysormoreduringthe RPYand

alsohasbeeninIndiaforatotalperiodof365daysormoreintheimmediatefourPPY.

Therearetwoexceptionstotheaboverules.Intheseexceptionalcases

thesecondbasicconditiondoesntapply.

a) AnindividualwhoisacitizenofIndia & leavesIndiaforemploymentin

abroador

as

acrew

member

of

aIndian

ship.

b) AnindividualwhoisacitizenshipofIndiaorapersonofIndianororigin

whoordinaryresidesabroadbutcomestoIndiaonavisit.

Non-Resident[SEC 2(30)]:- If anindividualfailstosatisfyatleastone

ofthebasictwocondition,thenthatindividualwilltreatedasa Non-

Resident.

RESIDENTIAL STATUS OF

INDIVIDUAL.

RESIDENTIAL STATUS OF

INDIVIDUAL.


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ORIDINARYRESIDENT [SEC 6(1)]:- An individual shall beresident and ordinary resident in India if he satisfies at leastone of the above two basic conditions and also satisfies boththe following two additional conditions. i.e. .

1. He is resident in India for two or more years in theimmediate ten (10) PPY.2. He is in India for a total period of 730 days or more in the

immediate seven (7) PPY.

Resident but not Ordinary-Resident [SEC 6(6)]:-An individualshall be resident but not ordinary resident if he satisfies atleast one of the two basic condition but fails to satisfy boththe additional conditions.

N.B 1. considered arrival and departure day.2. Indian origin if his parents were born in India.

RESIDENTIAL STATUS OFINDIVIDUAL.

RESIDENTIAL STATUS OFINDIVIDUAL.


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RESIDENTIAL STATUSOFHUF. [SEC-6(2)]

RESIDENT

ORIDINARYRESIDENT

NOT ORIDINARYRESIDENT

[SEC-6(6)(B)]

NON-RESIDENT.[SEC-2(30)]

RESIDENTIAL STATUS OFHUF.(SEC 6)RESIDENTIAL STATUS OFHUF.(SEC 6)


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RESIDENTIAL STATUSOF COMPANY. [SEC-6(3)]

RESIDENTNON-

RESIDENT.[SEC-2(30)]

RESIDENTIAL STATUS OFCOMPANY.(SEC 6)

RESIDENTIAL STATUS OFCOMPANY.(SEC 6)


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Different kindsofIncome.Different TypesofStatus.

ResidentNot-Ordinarily

Resident.Non-

Resident.

Income earned in India whether received in

India or not. Taxable Taxable. Taxable.

Income received in India whether earned inIndia or not.

Taxable Taxable. Taxable.

Incomes earned & received outside India from

a business or profession w.e. control in India.

Taxable Taxable. Not.

Incomes earned & received outside from asource other than all the above.

Taxable Not. Not.

Past untaxed income brought into Indiaduring the previous year.

Not. Not. Not.

SCOPE OF TOTAL INCOME (SEC-5).SCOPE OF TOTAL INCOME (SEC-5).


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Tax is collected by the Govt. i.e. Ruling Party.

It is the major source of Govt. for collection of Revenue.

The Rate of Tax is determined by the Govt. in each year.

The Rate of Tax is differ from person to person.

Total Tax is calculated on the basis of Toal Income and

Residential Status of a person.

There is a difference between resident and citizen from

Income Tax point of view.

CONCLUSION.CONCLUSION.


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ANYQUIRIES ?


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