Basic Concept - Taxation - Income Tax for assessment year 2017-18 (Inter Level)
DIFFERENCE BETWEEN TAX AND GIFT
| Tax | Gift |
| It is compulsory payment. | It is voluntary payment. |
| There is expectation that Govt. shall spend the money for the development of economy. | There is no expectation. |
| If tax is not paid then there is a consequences of interest, penalty and prosecution. | There is no consequences. |
TYPES OF TAXES AND DIFFERENCE BETWEEN THEM
| Direct Tax | Indirect Tax |
| Tax paid directly to the Govt. | Tax paid indirectly to the Govt. |
| Burden cannot be passed. | Burden can be passed. |
| Taxability on source / resident basis. | Taxability on consumption basis. |
| Direct tax | Indirect tax | |||||
|
| Income Tax | Wealth Tax | Customs duty | Excise duty | Service Tax | Sales tax |
| Levy (Taxable event) | Income | Wealth | Import / Export | Manufacturing | Services | Sale |
| Collection | On the happening of taxable event or on receipt of cash. Different law is enacted in different Act. | |||||
| Assessment | Assessment means computation of income / value and computation of tax / duty. Assessment is done first by assessee and then by department. | |||||
| Procedure | Registration, Payment of tax and filing of return | |||||
| Appeal | Direct tax : CIT (A) | ITAT | High Court | Supreme Court. Indirect tax : CCE(A) | CESTAT | High Court | Supreme Court. | |||||
| Types of Sales | ||
| Local Sales | Inter State Sale | International Sale |
Note 1 : All the above taxes are levied and collected by Central Govt. except law of local sales which is enacted by State Govt and collected by State Govt.
Note 2 : Taxes collected by Central Govt. are to be deposited in Consolidated Fund of India.
| Levy | Collection | Assessment |
| It is an event or situation which gives rise to tax liability. Levy is a parliamentary function which is created by enacting an Act. | Collection is possible only if there is levy. No Levy No collection. Collection can take place before, during or after levy. Collection is an administrative functions. | Assessment is computation of income / value and computation of tax / duty. Assessment is first done by assessee and then by department. |
BASIS OF TAXATION
- Source basis
- Residence basis.
Note 1 : A person resident in India shall pay tax on all income whether Indian Income or Foreign Income.
Note 2 : A person non-resident in India shall pay tax only on Indian Income and not on foreign income.
Note 3: India has entered into a agreement with different countries to avoid double taxation.
SLAB RATE : INDIVIDUAL / HUF (RESIDENT / NON RESIDENT)
| Income | Rate of Tax (Method 1) | Amount of Tax (Method 2) |
| Upto ? 2,50,000 | Nil | Nil |
| ? 2,50,001 to 5,00,000 | 10% of (Income - 2,50,000) | 10% of Income - 25,000 |
| ? 5,00,001 to 10,00,000 | 20% of (Income - 5,00,000) + 25,000 | 20% of Income - 75,000 |
| Exceeds ? 10,00,000 | 30% of (Income - 10,00,000) + 1,25,000 | 30% of Income - 1,75,000 |
Tax Concession
1. Resident senior citizen (60 years): An individual who is resident in India and who has attained the age of
60 years at any time during the relevant previous year is called senior citizen. Tax concession: No tax upto a income of ₹ 3,00,000. Tax concession ₹ 5,000.
2. Resident super senior citizen (80 years): An individual who is resident in India and who has attained the
age of 80 years at any time during the relevant previous year is called super senior citizen. Tax concession:
No tax upto a income of ₹ 5,00,000. Tax concession ₹ 25,000.
P1 : Compute tax liability on normal income if assessee is (a) Individual (b) Resident woman (c) Resident senior citizen. Normal Income : ₹ 2,70,000; ₹ 2,80,000; 3,10,000; 6,50,000; 11,00,000; 12,00,000.
Soln:
| Normal Income | Individual (R / NR) Tax | Resident Senior Citizen (Tax - ? 5,000) | Resident Super Senior Citizen (Tax - ? 25,000) |
| ? 2,70,000 | 2,000 | nil | nil |
| ? 2,80,000 | 3,000 | nil | nil |
| ? 3,10,000 | 6,000 | 1,000 | nil |
| ? 3,50,000 | 10,000 | 5,000 | nil |
| ? 6,50,000 | 55,000 | 50,000 | 30,000 |
| ? 11,00,000 | 1,55,000 | 1,50,000 | 1,30,000 |
| ? 12,00,000 | 1,85,000 | 1,80,000 | 1,60,000 |
P2 : Compute tax liability of individual from following informations
1. Compute tax liability of Mr. X resident whose total income is ₹ 12,56,900.
2. Compute tax liability of Mr. X resident aged 60 years whose total income is ₹ 9,80,000.
3. Compute tax liability of Mrs. X non resident aged 21 years whose total income is ₹ 5,90,000.
4. Compute tax liability of Mrs. X non resident aged 80 years whose total income is ₹ 5,00,000.
5. Compute tax liability of Mr. X resident aged 89 years whose total income is ₹ 17,80,000.
6. Compute tax liability of Mr. X non resident aged 79 years whose total income is ₹ 3,00,000.
Ans :
(1) 2,02,070
(2) 1,16,000
(3) 43,000
(4) 25,000
(5) 3,34,000
(6) 5,000.
FAQs on Basic Concept - Taxation | Income Tax for assessment year 2017-18 (Inter Level) PDF Download
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