Vat

Three things are important in tax 1. Taxable item 2. Taxable event 3. Taxable entity Value Added Tax

1. Sale/purchase value value of the goods/commodities. Each state has has its own VAT act. There are schedules at the end of each act which enlist the taxable items and the slab rate for taxation. 2. The point of sale or purchase. Sale point or purchase point of the transaction. 3. Legal persons persons doing business. business. The business is of taxable item beyond beyond the threshold limit. The threshold limit depends on the nature of activity undertaken. For ex. If the seller is a trader then it is Rs. 5,00,000 but if he is a manufacturer then it is Rs. 1,00,000 and if he is an importer than Re. 1 What is VAT

1. Power to levy is with state list list –   – imposed imposed on value addition made to the commodity by the taxable entity. 2. Different from CST (Central Sales Tax)  –  where movement of goods from seller to purchaser terminates in the state itself VAT is imposed, whereas if the movement of  goods terminates in other state within India then CST is imposed. 3. There can be interstate sale in the state and the CST shall apply. 4. Under the GST regime the VAT shall be abolished. Registration Provisions

Every taxable entity dealing with the taxable item within a prescribed period of time. Liability for Non-Registration

Penalty to the tune of 200% of VAT payable.

WHAT IS SERVICE TAX.

Service tax is a tax levied on the services. Service tax is on intangible items. Works contract is one where both goods and services are consumed, rather a mixed form of  contract. They are indivisible contracts comprising of both tangible and intangible contracts. Power to levy service tax is with the Union Government under the Finance Act, 1994. Position Under GST

1. GST won’t differentiate b/w tangible and intangible. intan gible. 2. A lump-sum to be charged on the revenue. 3. Power to levy with both Central and State Government. 4. The department of service tax and VAT shall merge, leading to a simplification of process and system. 5. GST will lead to an end of Service tax. Charging Provision

Sec. 65 & 66 of the Finance Act, 1994 is the charging provision. They provide a complete list of services on which the tax is levied. Under GST also and there is a provision of an amendment to Finance Act, 1994 to do away with the inclusive list. Which will remove the bottlenecks of the classification of taxable services. Rather a blanket provision has been proposed with the provisions for certain exclusionary clauses. Taxable item Services are the taxable items for the service tax, provided pr ovided in Sec 65 & 66 of the Finance Act, 1994. Taxable event Raising of the bill or the payment whichever whichever is earlier. Taxable entity Service provider earning revenue beyond the threshold limit of Rs. 10,00,000. Registration

Sec 69 read with Rule 4. There is prescribed performa which has to be furnished to the service tax department alongwith the supporting documents and the prescribed fee.

Supporting documents

1. Id proof  2. Address proof  3. Treasury challan Penalty for Non-Registration

There is no certain provision for the penalty for the Non-Registration. Can be called dubious.

CENTRAL EXCISE ACT Taxable item Goods produced/manufactured produced/manufactured which is excisable. Taxable event Manufacturing or producing but collection is delayed till the removal of goods from the factory. The dispute is mainly because of clandestine movement movement of goods. Taxable entity The producer or the manufacturer except the in i n the SEZ. What is Central Excise

Central excise is Tax levied on the goods, which are manufactured/produced by the excisable units. Power to levy Central Excise

With the Union Government except for Alcohol Beverages which resides with the State Government. Difference B/w Central Excise, VAT & Customs Act

All these taxes are levied on goods and commodities, but there is a difference between the taxable events. In Vat it is Sale Point which is taxable, in Central excise it is the manufacturing or Production point and in the Customs Act it is the Import/export point is taxable. Position in GST

The Central Excise shall be rendered inoperative in the GST regime.

Registration

1. The registration for taxable entity is mandatory. 2. First and Second stage dealers –  dealers  – can can also get registration for the tax benefits. 3. The holders of warehouses can also get registration f or the similar reasons as above.

CUSTOMS ACT Taxable item Goods imported or exported Taxable event Import or export. Taxable entity Any person. What is Customs Act Custom duty is leviable on the goods which are imported/exported or pass through custom barriers of India at a rate prescribed by the Customs Tariff Act. Power to levy Is with the Central Govt. Position Under GST It shall not eclipse. It shall be there. Difference B/w Central Excise, VAT & Customs Act

All these taxes are levied on goods and commodities, but there is a difference between the taxable events. In Vat it is Sale Point which is taxable, in Central excise it is the manufacturing or Production point and in the Customs Act it is the Import/export point is taxable.

INCOME TAX ACT

Income define u/s 2(24), which contains an inclusive list and not an exhaustive list.  Raja Raghvender Singh v. State of Punjab 102 ITR 401  –  Sec2(24) is not only a list but covers any income or item which can be covered in income as its natural import.

Taxable item Income Illegality associated with the income is immaterial. Income may be money or money money’’s worth. Diversion of income by overriding title. Taxable event Earning/accruing of income. Collection is made through different modes. Taxable entity Assesse who can be any legal person and the scope of income is based on his residential status. Person may Individual, HUF, Company, AOP, BOI, Firm etc.

In Individual the resident status is based on state, and in case of non resident it is based on control and management. In case of a Company there is a possibility that it may be resident or may be non-resident. A Company is resident if it is an Indian Company or the substantial control and management is wholly in India. Scope Of Income

Income Received in India Income accrues or deemed to accrue in India When income accrued outside India and Received outside India

Resident

Non-Resident

Y

Y

Y

Y

Y

N