Legal Aspects Of Business Unit - 4 PPTs
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This document discusses various taxes including income tax, sales tax, and value added tax. It defines taxes as compulsory exactions of money by public authorities for public purposes. Sales tax is classified as an indirect tax on the sale of goods, while income tax and wealth tax are direct taxes. The Central Sales Tax Act of 1956 establishes principles for determining when inter-state sale or purchase of goods occurs. Value added tax is levied on the value added at each stage of production or distribution and aims to eliminate cascading of taxes.
Legal Aspects Of Business Unit - 4 PPTs
- 1. UNIT IV INCOME TAX AND SALES TAX ACT
- 2. TAX The term tax may be defined as compulsory exaction of money by public authorities for public enforceable by law and is not payment for services.
- 3. CLASSIFICATION OF TAXES • DIRECT TAX Income tax wealth tax • INDIRECT TAX sales tax customs duty excise duty
- 4. TAX PLANNING • Corporate tax planning has got a very wide scope. • In case of a company there is ample scope of tax planning in respect
- 5. SCOPE OR AREAS OFTAX PLANNING • Choice of form of business organizations • choice of business • Choice of area location • Choice of proper capital structure • Capital budgeting • Expansion and new business • Choice of accounting year • Depreciation and the investment allowance • Capital gains • Merger of business units
- 6. SALES TAX • Sales tax is a tax on the sale of goods. • It is an indirect tax.
- 7. CLASSIFICATION OF SALES TAX • Selective sales tax • General sales tax
- 8. CENTRAL SALES TAX ACT, 1956 • The act formulates principles for determining to when a sale or purchase of goods takes place a) in the course of inter – state trade of commerce b) outside a state c) in the course of import in to or export from India
- 9. OBJECTIVES OF CST • To formulate principles for determining to when a sale or purchase of goods takes place • To provide for the levy, collection and distribution of taxes on sale of goods • To declare certain goods to be of special importance • To specify the restrictions and conditions
- 10. SCOPE OF THE ACT • Inter state sales • Sale or purchase in the course of export and import • Liability and charge to sales tax • Registration of dealers • Determination of taxable turnover • Levy and collection of tax • Offences • Declared goods
- 11. SALE OR PURCHASE OF GOODS IN THE COURSE OF INTER-STATE TRADE • Occasions the movement of goods from one state to another state. • Is effected by a transfer of the documents of title to the goods during their movement from one state to another.
- 12. SALE OR PURCHASE OF GOODS OUTSIDE A STATE • A sale which takes place in one state is said to take place outside all other states i.e., once the place of sale fixed in a particular state, it shall be deemed to be outside all other states.
- 13. SALE/PURCHASE IN THE COURSE OF EXPORT OR IMPORT • A sale or purchase of goods shall be deemed to take place in the course of export of goods out of territory of India only if the sale or purchase is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India.
- 14. SALE FOR EXPORT AND SALE IN THE COURSE OF EXPORT - DISTINGUISHED • Where the sale is effected by the seller and he is not connected with the export of those goods which actually takes place, it is known as sale for export. • In the case of sale in the course of export, the seller would be definite that the goods sold to the buyer are mainly for export.
- 15. VALUE ADDED TAX • Value added tax is a method of taxation whereby the tax is levied on the value added at each stage of the production/ distribution chain.
- 16. OBJECTIVES OF VAT • Eliminates multiplicity of taxes. • Prevents double taxation • Eliminates inter-state tax. • Rationalizes all tax burden in the case of goods and services. • Replaces existing system of inspection by built in assessment by dealers and internal auditing. • Makes tax structure simple, efficient and transparent. • Improves tax compliance • Coordinates revenue growth with development by ad valorem rate of tax. • Development of fair and healthy competition.
- 17. ADVANTAGES OF VAT • Removes the cascading of taxes • Widening of tax base and reduction in rates of tax • Does not distort trade and production methods • Encourages better compliance • Improves economic efficiency • Improves export competitiveness • Creates an audit trial
- 18. METHODS OF VAT CALCULATION • ADDITION METHOD • SUBTRACTION METHOD • TAX CREDIT METHOD