Anu Vaishale B, LLB Hons., SOEL.
This blog begins with an introduction to the meaning of taxation and the types of tax laws in India. It mainly describes the direct tax and indirect tax. Following the introduction part, to present a clear view about the direct tax and indirect tax some illustrations have been presented. The blog then moves with the Income-tax. Income tax is one of the most important forms of direct tax and it also covers various heads of Income, tax deductions, exemptions and setting up off losses. Then the blog extends to the brief about Indirect Tax. This includes a short revision about the indirect taxes that exist before the Goods and Service tax 2017 and then gives an elaborate explanation about the GST. The blog also discusses and list certain constitutional provisions and amendments related to the tax. Before the conclusion, some recent changes in the GST, GST council 2021, Income tax website reconstruction will be discussed.
KEYWORDS: Income tax, GST, ITAT, Constitution, Direct and Indirect tax
The tax is a mandatory charge levied and collected by the government from various forms of persons for the income or benefit earned by them within India or received in India. According to S.2(31) of the Income Tax Act, 1961 defines person includes an individual; HUF; a company; a firm; an association of person or body of individuals; local authorities; artificial judiciary person and an AOP or BOI formed or established intending to earn profit or gain out of business. Eg: Reliance Industry ltd(company); Madras University ( AJP); ABC LLP; A village panchayat. The taxes in India are classified mainly into two types namely Direct tax and Indirect tax. The Direct tax is the tax that is directly levied on the income, interest or wealth earned or received within India and The Indirect Tax is the tax imposed by the government for the goods and services rendered. Income Tax, Wealth tax are examples of Direct tax and GST for Indirect taxes. Some indirect taxes which are not covered under GST are custom duty, Stamp duty, Vehicle tax, excise on liquor, Tax on sale and consumption of electricity, entry and toll tax, road tax and entertainment tax levied by local bodies.
The direct tax is the taxes imposed by the government directly on the income or profit earned by the person within India or received in India. The main important type of direct tax in India is Income Tax. The Income Tax is governed by VII schedule entry 82 of the Union List of the Constitution of India and Income Tax Act 1961. The income tax department is the authority that collects and impose a tax on persons. The principal chief commissioner, chief commissioner and principal commissioner are the highest authority of the Income-tax department. The tax disputes will be either dealt with by the Income Tax Appellate Tribunal or the respective jurisdictional High Court or Supreme Court depending upon the monetary cap.
INCOME TAX APPELLATE TRIBUNAL:
The quasi-judicial authority in which the income tax appeals will be filed by the assessee against the order of income tax authorities and assessing officer is called as Income Tax Appellate Tribunal. There are various benches of ITAT at various regions consist of regional jurisdiction governed by the ministry of law and justice. The Bench deal with the appeal whose total income does not exceed Rs.50 lakhs as per assessing officer calculation. The bench comprises 2 members one is an accountant and the other is judicial. Depending upon the prima-facia of the cases the ITAT may consist of 3 members or more. The monetary limit for appeals are as follows:
|S.NO||JUDICIAL BODIES||MONETARY LIMIT|
The time limit for filing an appeal is 60 days maximum from the date of receipt of an order by the assessee from the assessing officer. The respondent to an appeal should file their memorandum of cross-objection within 30 days from receiving the notice.
INCOME TAX ACT 1961:
The Income Tax Act 1961 deals with more than 300 sections and 12 schedules. The Act will be amended every year based on the finance bill passed in the corresponding year. The year in which the tax is paid is called the assessment year and the year in which the income is earned is called the financial year. Generally, the tax will be paid in the current assessment year for the income earned in the previous financial year. The Rate of income tax slabs varies based on age limit, nature of assessee and residential status of the assessee. The Income earned is broadly classified under 5 heads of income which is taxable by various means. The heads of Income are :
Income from Salary.
Income from House property
Income from Business or profession
Income from Capital gains
Income From other resources
The Income-tax also deals with deductions, exempted incomes, Set-off of previous year losses, surcharge and cess. There are certain common rules for the taxpayer depending upon the residential taxes, income earned and income received they are as follows:
The income earned by resident taxpayer worldwide is taxable.
In the case of a non-resident taxpayer the income arised or received in India only taxable in India.
The income from the company is taxable in the hands of the company as well as taxable in the hands of shareholders on the receipt of the dividend.
The period from April 1 of the previous year till march 31st of the current year considered as one accounting year.
The residents can avail themselves of tax benefits and double taxation relief under IT treaties.
The taxes which are levied and collected by the government for the goods and services rendered is called indirect taxes. Before GST there are various types of Indirect taxes namely Central excise duty, Customs duty, Sales tax, Services Tax, central sales tax etc., After the 2017 amendment the indirect taxes were grouped under a single roof namely GST.
GST ACT 2017:
The 101st amendment is made under the Indian Constitution for the implementation of GST. It delineates the power to levy, apportionment of revenue, applicability, scope, power and duties of GST council. Art 246A, 269A, 279A, 286, 366 etc.,
RECENT AMENDMENTS IN INCOME TAX:
No further relaxation in TDS and TCS return filing for the FY 2019-2020.
The imposition of penalty in increased for the non-filer of TDS or TCS return
If cash transactions are not exceeded 5% of total receipts and total payments, then the tax audit is not mandatory for the person.
If employees provident fund or employees state insurance is not contributed within the due date then the same will be disallowed from claiming deductions.
Interest income from provident fund amounts from Rs.2.5 lakhs to 5 lakhs is chargeable to tax in a year in which it is earned.
For the primary sale of residential units, the safe harbour limit had been enhanced.
Under S.54 GB exemption for capital gain, the time limit for the transfer of residential property had been increased.
The assets or stock income received on the retirement of the partner or dissolution of the firm is taxable as business income in the year in which the amount of the asset or stock is received by the partner.
The penalty for late filing of return is Rs.5000 and in case of income not exceeding Rs. 5 lakhs the penalty shall be charged a maximum of Rs.1000.
The time limit for completion of the assessment proceeding had been reduced from 6 months to 3 months.
The time limit for the reopening of the Income-tax proceeding had been reduced from 6 years to 3 years.
The provisional attachments of an asset should be made in case of a fake invoice transaction for more than 2 crores.
The electronic mode of hearing had been introduced for ITAT.
The linking of aadhaar with the Income-tax e-filing portal had been mandated later and a penalty had been levied for the non-compliance of the said provision amounts to Rs. 1000 and for giving inappropriate PAN, then the penalty is Rs. 10000.
According to S.2(22)(e) include advance tax liability on dividend only after receipt of the same.
The dispute resolution committee will be set up for small taxpayers.
The depreciation will not be calculated on goodwill.
GST 2021 AMENDMENTS:
The 43rd GST council formed under the governance of finance minister Nirmala Sitaram on 28th may 2021 had brought few important changes in GST and the same is applicable from April 2021. They are:
The late fee was rationalized to all taxpayers up to 31st August 2021.
S.16 amended to allow taxpayers claim on ITC based on GSTR 2A and 2B.
Section 50 of CGST has been amended.
S.35 and S.44 had been amended
A new clause under the definition of supply had been introduced.
A separate proceeding had been made for the recovery of taxes.
Under S.75 of the CGST, the self-assessed tax will also be covered by outward supplies or sales.
Sec 16 of the IGST Act has been amended.
The blog thus had produced an outline of the major tax law that are prevailing in India. The tax is one of the main sources of income for the government. Though certain areas of double-taxation exist the tax provided and curtailed the misuse of tax benefits along with limitation to non-disclosures of income. Every year the tax act will be amended based on the finance bill passed by the parliament. The necessary changes also are brought in the Indian constitution from time to time for the implication of taxes in the required manner.
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- (https://www.mondaq.com/india/corporate-tax/23453/taxation-laws-of-india–an-overview) last accessed 05 June 2021.
- (https://cleartax.in/s/income-tax-appellate-tribunal) last accessed 05 June 2021.