ROLE & FUNCTIONS OF INCOME TAX DEPARTMENT

MageshManoj Kumar

ManojMeenakshi

Nabeel

Tax• Tax is to impose a financial charge or other levy

upon a taxpayer (an individual or Legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.

• Two types of tax:– Direct tax – Indirect tax

Direct tax

• Tax paid by a person on whom it is charged is a direct tax.

• Examples of direct taxes.– Income tax– wealth tax

Indirect Tax • An indirect tax is a tax collected by an

intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer).– VAT– TNGST– Local Sales Tax

OVERVIEW

1- The provisions of Indian Income-Tax are governed by Indian Income-Tax Act, 1961 which extends to the whole of India and became effective from 1st April 1962.

2- Every year a Budget is presented before the Parliament by the Finance Minister. One of the most important components of the Budget is the Finance Bill, which contains various amendments which are sought to be made in the area of Direct Taxes levied by the Central Government.

TYPES OF TAXES

They are basically of three types:

Corporate income taxPersonal income taxSales tax

1. Corporate income tax Tax intended for domestic corporation. Tax rate of 35% for Indian based corporation and 2.5% surcharge. Tax applicable for foreign corporates.

2. Personal income tax Tax collected on the basis of personal income. No tax applicable for annual income under 1 lakh 10% tax between 1 to 1.5 million. 20% tax between 1.5 to 2.5 million. 30% to 40% for amounts above.

3. Sales tax sales tax imposed on sale and purchase of

good. 1% tax on precious stones 12.5 % on uncategorized items No taxes on food items, petroleum,tobacco

Organization structure

Central board of direct taxesChairman and six membersMembers for:• Income tax• Legislation and computerisation• Revenue• Personnel and vigilance• Investigation• Audit and judicial

Corporate tax rateNature of entityNature of entity: : Tax RatesTax Rates

1- 1- Indian company whether owned by foreigners oIndian company whether owned by foreigners o:: A- If profit does not exceed 10 million Indian Rupees. 30.90%A- If profit does not exceed 10 million Indian Rupees. 30.90%B- If profit exceeds 10 million Indian Rupees. 33.22%B- If profit exceeds 10 million Indian Rupees. 33.22% 2- 2- Branch office of a foreign companyBranch office of a foreign company : : A- If profit does not exceed 10 million Indian Rupees. 41.20%A- If profit does not exceed 10 million Indian Rupees. 41.20%B- If profit exceeds 10 million Indian Rupees. 42.23%B- If profit exceeds 10 million Indian Rupees. 42.23%

3- 3- Project office of a foreign companyProject office of a foreign company : :A- If profit does not exceed 10 million Indian Rupees. A- If profit does not exceed 10 million Indian Rupees.

41.20%41.20%B- If profit exceeds 10 million Indian Rupees. 42.23%B- If profit exceeds 10 million Indian Rupees. 42.23%

Taxable Income of Men Taxable Income of WomenTaxable Income of Senior

Citizens Tax

Upto Rs.1,50,000 Upto Rs.1,80,000 Upto Rs.2,25,000 Nil

Rs.1,50,000 To Rs.3,00,000 Rs.1,80,000 To Rs.3,00,000 Rs.2,25,000 To Rs.3,00,000 10%

Rs.3,00,000 To Rs.5,00,000 Rs.3,00,000 To Rs.5,00,000 Rs.3,00,000 To Rs.5,00,000 20%

Rs.5,00,000 and Above Rs.5,00,000 and Above Rs.5,00,000 and Above 30%

TAX SLAB FOR 2010-2011

BOOKS OF ACCOUNTS1- Every Indian company including Branch office and 1- Every Indian company including Branch office and

Liaison office are required to maintain books of Liaison office are required to maintain books of accounts so as to compute profit/loss derived from accounts so as to compute profit/loss derived from operations in India. Further such books of accounts are operations in India. Further such books of accounts are also required to ascertain creditors/debtors and other also required to ascertain creditors/debtors and other business transactions effected in India.business transactions effected in India.

2- Such books of accounts have to be maintained at 2- Such books of accounts have to be maintained at principal place of business carried out by the company.principal place of business carried out by the company.

3- Such books of accounts have to be maintained for a 3- Such books of accounts have to be maintained for a period of 6 years from end of the financial year.period of 6 years from end of the financial year.

4- It is a statutory requirement to maintain above books 4- It is a statutory requirement to maintain above books as per section 44AA of Indian Income-Tax Act 1961as per section 44AA of Indian Income-Tax Act 1961

FINANCIAL YEAREvery company in India is given a choice to adopt its financial Every company in India is given a choice to adopt its financial

year. Such financial year can be more or less than 12 year. Such financial year can be more or less than 12 months, however it can not exceed a period of 18 months. months, however it can not exceed a period of 18 months. Approval from Registrar of Companies is required for Approval from Registrar of Companies is required for adopting a financial year exceeding 15 months. adopting a financial year exceeding 15 months.

2- Foreign company setting up a subsidiary has an option to 2- Foreign company setting up a subsidiary has an option to choose January-December or any other period not choose January-December or any other period not exceeding 18 months as its financial year in India so as to exceeding 18 months as its financial year in India so as to integrate its Indian accounts with parent company outside integrate its Indian accounts with parent company outside India.India.

3- However for Income tax purposes separate financial 3- However for Income tax purposes separate financial statement for the period April-March covering 12 months statement for the period April-March covering 12 months period has to be prepared, audited and filed with the period has to be prepared, audited and filed with the authorities. authorities.

• The Indian Income Tax Act is probably the world's most frequently amended one. There are various clauses, sub-clauses that are a maze in themselves, yet draw the thin line between a "tax avoidance" and "tax evasion"

Income Tax Return• Legal obligation of every person• compulsory for every company to furnish return

of income.• an emphasis on self compliance on the partof the taxpayers.

ITR-1 SAHAJ Indian Individual Income tax Return

ITR-2 For Individuals and  HUFs not having Income from Business or Profession

ITR-3 For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship

SUGAM (ITR-4S)

Sugam - Presumptive Business Income tax Return

INCOME TAX RETURN FORMS

ITR-4 For individuals and HUFs having income from  a proprietory business or profession

ITR-5 For firms, AOPs and BOIs

ITR-6 For Companies other than companies claiming exemption under section 11

ITR-7 For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) 

INCOME TAX RETURN FORMS

Due Date for filing tax return

New rule for the accounting year 2011

Form For PAN Card

• Signature (Left Thumb Impression) - box provided - acknowledgment.• Signature should not be on photograph. • Thumb Impression should be attested by a Magistrate or a Notary Public or a

Gazetted Officer, under official seal and stamp.• If communication Address is within India a) The fee for processing PAN application is 94.00 (85.00+10.3% service tax (b) Payment can be made either by - Demand Draft - Cheque - Credit Card / Debit Card - Net Banking (c) If any of addresses i.e. office address or residential address is a foreign address, the payment can be made only by way of Demand Draft payable at

Mumbai.

Online Application for New PAN (Form 49A)

• Online PAN application - not available - Government Organisations

• An applicant - fill Form 49A online.• Any errors- rectify - re-submit .• A confirmation screen - data filled - applicant - displayed.• Applicant - either edit (or) confirm the same.• An acknowledgment - displayed. The acknowledgment -

contain – 15-digit - acknowledgment number.• Applicant - save and print- acknowledgment.• Applicants – affix - (recent) colour photograph (size 3.5 cm x

2.5 cm) – acknowledgement. (The clarity of image on PAN card will depend on the quality and clarity of photograph affixed on the acknowledgment).

• If communication Address is outside India (a). The fee for processing PAN application is 944.00[ (Application fee

85.00 + Dispatch Charges 771.00) + 10.3% service tax]. (b). Payment can be made only by way of Demand Draft payable at

Mumbai. (c). At present the facility for dispatch of PAN cards outside India is

available for a select list of countries. Applicants from other countries may contact NSDL at the contact details given in point (v) below.

• Demand draft and cheque should be drawn in favour of 'NSDL - PAN'.• Demand draft shall be payable at Mumbai and the acknowledgment

number should be mentioned on the reverse of the demand draft.• Applicants making payment by cheque shall deposit a local cheque (drawn

on any bank) with any HDFC Bank branch across the country (except Dahej). The applicant shall mention NSDLPAN on the deposit slip. List of HDFC Bank Branches.

• Credit card / Debit card / Net banking payment

Scheduleof

Constitution of India

• List-I of Seventh Schedule of Constitution of India1. Taxes on income other than agricultural income;2. Duties of customs including export duties;3. Duties of excise on tobacco and other goods manufactured or produced in

India except (i) alcoholic liquor (ii) opium, Indian hemp and other narcotic drugs and narcotics• Corporation Tax;• Taxes on capital value of assets, exclusive of agricultural land, of individuals

and companies, taxes on capital of Estate duty in respect of property other than agricultural land;

• Duties in respect of succession to property other than• Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on

railway fares and freight;• Taxes other than stamp duties on transactions in stock exchanges and futures

markets;• Taxes on the sale or purchase of newspapers and on advertisements

published therein;

10. Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce;11. Taxes on the consignment of goods in the course of inter-State trade or commerce.12. All residuary types of taxes not listed in any of the three lists of Seventh Schedule of Indian Constitution

• List-II of Seventh Schedule of the Indian Constitution1. Land revenue, including the assessment and collection of revenue,

the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues;

2.Taxes on agricultural income;3. Duties in respect of succession to agricultural income;4. Estate Duty in respect of agricultural income;5. Taxes on lands and buildings;6. Taxes on mineral rights;7. Duties of excise for following goods manufactured or produced

within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and

narcotics;8. Taxes on entry of goods into a local area for consumption, use or

sale therein;

9. Taxes on the consumption or sale of electricity;10. Taxes on the sale or purchase of goods other than newspapers;11. Taxes on advertisements other than advertisements published in

newspapers and advertisements broadcast by radio or television;12. Taxes on goods and passengers carried by roads or on inland

waterways;13. Taxes on vehicles suitable for use on roads;14. Taxes on animals and boats;15. Tolls;16. Taxes on profession, trades, callings and employments;17. Capitation taxes;18. Taxes on luxuries, including taxes on entertainments, amusements,

betting and gambling;19. Stamp duty.