INCOME TAX-FOR UPSC

Hello friends welcome to Sonu live ,in this article I’m going to tell you about INCOME TAX-FOR UPSC, Certainly, here are key concepts and terms associated with Goods and Services Tax (GST) in India

INCOME TAX

It is a direct tax on individuals HUFs (Hindu Undivided Families) partnerships and companies in respect of following incomes:

1. Salary
2. Rents
3. Business Profits
4. Capital Gains
5. Other Capital Source (INTEREST, DIVIDEND,ROYALTY,GIFT etc)

Every person (natural or artificial) has to summit details of income of the previous year if taxable during the assessment year. Taxes are collected during the previous year as advance tax, tax deduction, at source(TDS), Tax Collection at source(TCS), Self Assessment Tax, Dividend Distribution Tax etc. And such taxes are considered to determine the amount of tax liability or refund.

Certainly, here are key concepts and terms associated with Goods and Services Tax (GST) in India:

Breaking Down Key Tax Concepts:

Presumptive Tax:

• Definition: Simplified taxation method where tax liability is calculated based on a predetermined estimate of income instead of reported actual income.
• Common Use: Applied to small businesses or sectors facing challenges in maintaining precise records.
• Estimation Basis: Income estimate derived from factors like turnover, rent paid, or parameters set by tax authorities.
• Example: Utilized in India for the presumptive tax scheme for small shopkeepers.

Securities Transaction Tax (STT):

1. Definition: Tax imposed on the buying and selling of specific securities, including equity shares, options, and futures contracts.
2. Purpose: Intended to discourage speculative trading and generate government revenue.
3. Rate Variability: Tax rate varies based on the type of security and transaction.
4. Example: Applicable in India with a 0.1% levy on the purchase of equity shares.

Tobin Tax (Financial Transactions Tax):

1. Definition: Proposed tax on financial transactions, particularly foreign exchange trades, aiming to deter speculation and increase revenue.
2. Origin: Named after economist James Tobin, who introduced the concept in the 1970s.
3. Implementation Challenges: Not widely adopted due to concerns about market distortion and the need for international cooperation.

Angel Tax:

1. Definition: Indian tax provision scrutinizing startups that receive investments exceeding fair market value for income tax purposes.
2. Controversy: Faced criticism for impeding startup growth and was abolished in 2019.

GAFA Tax (Digital Services Tax):

1. Definition: Tax levied on the revenue of major digital companies, often targeting tech giants like Google, Apple, Facebook, and Amazon (GAFA).
2. Purpose: Aims to address concerns about these companies not contributing their fair share of taxes in the countries where they operate.
3. Implementation: Adopted in various forms by multiple countries, including India and France.

Angel Tax:

1. Ad Valorem Tax: Calculated as a percentage of the value of goods or services (e.g., VAT, sales tax).
2. Specific Tax: Imposed as a fixed amount per unit of goods or services (e.g., excise duty on cigarettes).

Retrospective Tax:

1. Definition: Tax law applied retroactively, allowing taxation on past transactions even if the law wasn’t in place at the time.
2. Considerations: Deemed unfair and unpredictable for businesses, potentially damaging investor confidence.
3. Example: Retrospective amendment in India concerning capital gains tax on indirect transfers.

Windfall Tax:

1. Definition: One-time tax imposed on unexpected profits resulting from exceptional circumstances, such as a sudden surge in commodity prices.
2. Purpose: Aims to capture a portion of windfall gains for government revenue.
3. Example: Implementation in India in 2022 with a windfall tax on oil and gas companies.

Basic Concepts:

1. GST (Goods and Services Tax):
   • Definition: Indirect tax applied to the supply of goods and services, replacing multiple previous taxes like excise duty, VAT, and service tax.
   • Significance: A unified tax system administered by both the central and state governments.
2. Dual GST System:
   • Components:
     • Central Goods and Services Tax (CGST): Imposed by the central government.
     • State Goods and Services Tax (SGST): Imposed by the state government.
     • Integrated Goods and Services Tax (IGST): Applied to inter-state supply of goods and services.

Important Terms:

1. GSTIN (Goods and Services Tax Identification Number):
   • Definition: Unique 15-digit identifier assigned to each GST-registered taxpayer.
   • Purpose: Used for identification and tracking in the GST system.
2. Input Tax Credit (ITC):
   • Definition: Tax paid on purchases that can be offset against the tax payable on sales.
3. HSN Code (Harmonized System Nomenclature):
   • Definition: International coding system classifying goods for customs and tax purposes.
4. E-way Bill:
   • Definition: Electronic document required for transporting goods exceeding a certain value within or between states.
5. GSTR (GST Return):
   • Definition: Monthly or quarterly returns filed by taxpayers with GST authorities.
6. GST Compliance Rating:
   • Definition: Rating assigned to taxpayers based on adherence to GST rules.

Other Important Concepts:

1. Exempted Goods and Services:
   • Definition: Certain goods and services not subject to GST.
2. Zero-rated Goods and Services:
   • Definition: Goods and services taxable at a 0% GST rate.
3. Composition Scheme:
   • Definition: Simplified scheme for small businesses with a turnover up to ₹1.5 crore.
4. Reverse Charge Mechanism:
   • Definition: Instances where the recipient, not the supplier, is liable to pay GST.

These concepts provide a foundational understanding of GST. For more comprehensive information, refer to the official GST website of the Government of India: https://www.gst.gov.in/

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