Basic Concept - Taxation Taxation Notes | EduRev

Income Tax for assessment year 2017-18 (Inter Level)

Taxation : Basic Concept - Taxation Taxation Notes | EduRev

The document Basic Concept - Taxation Taxation Notes | EduRev is a part of the Taxation Course Income Tax for assessment year 2017-18 (Inter Level).
All you need of Taxation at this link: Taxation

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

  1. Source basis
  2. 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.

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