Basic Concept - Taxation | Income Tax for assessment (Inter Level) PDF Download
DIFFERENCE BETWEEN TAX AND GIFT
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Tax |
Gift |
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It is compulsory payment. |
It is voluntary payment. |
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There is expectation that Govt. shall spend the money for the development of economy. |
There is no expectation. |
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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
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Direct Tax |
Indirect Tax |
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Tax paid directly to the Govt. |
Tax paid indirectly to the Govt. |
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Burden cannot be passed. |
Burden can be passed. |
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Taxability on source / resident basis. |
Taxability on consumption basis. |
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Direct tax |
Indirect tax |
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Income Tax |
Wealth Tax |
Customs duty |
Excise duty |
Service Tax |
Sales tax |
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Levy (Taxable event) |
Income |
Wealth |
Import / Export |
Manufacturing |
Services |
Sale |
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Collection |
On the happening of taxable event or on receipt of cash. Different law is enacted in different Act. |
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Assessment |
Assessment means computation of income / value and computation of tax / duty. Assessment is done first by assessee and then by department. |
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Procedure |
Registration, Payment of tax and filing of return |
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Appeal |
Direct tax : CIT (A) | ITAT | High Court | Supreme Court. Indirect tax : CCE(A) | CESTAT | High Court | Supreme Court. |
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Types of Sales |
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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.
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Levy |
Collection |
Assessment |
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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)
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Income |
Rate of Tax (Method 1) |
Amount of Tax (Method 2) |
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Upto ? 2,50,000 |
Nil |
Nil |
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? 2,50,001 to 5,00,000 |
10% of (Income - 2,50,000) |
10% of Income - 25,000 |
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? 5,00,001 to 10,00,000 |
20% of (Income - 5,00,000) + 25,000 |
20% of Income - 75,000 |
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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:
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Normal Income |
Individual (R / NR) Tax |
Resident Senior Citizen (Tax - ? 5,000) |
Resident Super Senior Citizen (Tax - ? 25,000) |
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? 2,70,000 |
2,000 |
nil |
nil |
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? 2,80,000 |
3,000 |
nil |
nil |
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? 3,10,000 |
6,000 |
1,000 |
nil |
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? 3,50,000 |
10,000 |
5,000 |
nil |
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? 6,50,000 |
55,000 |
50,000 |
30,000 |
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? 11,00,000 |
1,55,000 |
1,50,000 |
1,30,000 |
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? 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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Nov 16, 2024 Last updated |
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