Income tax & GST
“Taxes are the due we pay for the privileges of membership in an organized Society.”
Direct Taxes Indirect Taxes
The Tax we pay as an Income Tax is a Direct Tax, in which we are paying the tax and we are the sufferer of Tax. Income Tax is a certain percentage of our Income that we have to pay regularly to the Government. The Income Tax is Govern by THE INCOME TAX ACT, 1961. The Central Board of Direct Taxes (CBDT) is an important part of the Department of revenue. In Income tax, Income of Previous Year is assessed or taxed in succeeding year i.e., The Income of the Year 2016-17 is taxed or assessed in the Year 2017-18.
A person by whom any tax or any other sum of money is payable under the Income Tax Act is the Assesses. So, now the question is what is the definition of Person in the ACT?
Which is very simple the following seven types of units of assessment
- An Individual
- A Hindu Undivided Family (HUF)
- A Company
- A firm
- An association of person or body of Individuals or not.
- A local authority
- Every artificial juridical person, not falling within any of the above categories.
Now the question is “What is the meaning of Income?”
According to the definition given u/s 2(24), Income includes:-
- Profit and gain of business or profession.
- Voluntary contributions received by a Charitable Trust/Religious Trust/University/Educational Institution/Hospitals.
- The value of any perquisite of profit in lieu of Salary taxable u/s 17 & any special allowance or benefit specifically granted either to meet personal expenses or for a performance of duties of an office or employment of profit.
- The value of any benefit or perquisite, whether convertible into money or not, received by a director or any of his relatives including the sum paid by the company which otherwise would have been payable by those people.
- The value of any benefit or perquisite, whether convertible into money or not, obtained by a representative assesses or by any person on whose behalf or for whose benefit any income is received by the representative assesses including any sum paid by the representative assesses, which would otherwise have been payable by the beneficiary.
- Any sum is chargeable to Income Tax under sub-clause of section 28, Section 41 or Section 5a
- Any capital gain chargeable under section 45.
- The profit and gain of business of insurance carried on by a mutual insurance company or by a Co-Operative Society computed in accordance with Section 44. Etc.
Now, the question arises at what rate? or how the Tax is calculated?
The current Slab rates are as follows for financial year 2017-18,
|Income Slab||Tax Rate|
|Income up to Rs. 2,50,000*||No Tax|
|Income from Rs. 2,50,000 – Rs. 5,00,000||5%|
|Income from Rs. 5,00,000 – 10,00,000||20%|
|Income more than Rs. 10,00,000||30%|
Income Tax Return Filing
There are seven types of Income Tax returns
- ITR-1, This Return Form is to be used by an individual whose total income for the assessment year 2018-19 includes:-
- Income from Salary/Pension: or
- Income from One House Property (excluding cases where the loss is brought forward from previous years); or
- Income from Other Sources (Excluding Winning from Lottery and Income from Race Horses)
- ITR 2, this is to be used by an individual or a Hindu Undivided Family whose total income for the AY 2018-19 includes:-
- Income from Salary/Pension; or
- Income from House Property; or
- Income from Other Sources (including Winnings from Lottery and Income from Race Horses).
(Total income from the above should be more than Rs 50 Lakhs)
- Income from Capital Gains; or
- Income of a person as a Partner in the Firm
- Foreign Assets/Foreign income
- Agricultural income more than Rs 5,000
Further, in a case where the income of another person like one’s spouse, child, etc. is to be clubbed with the income of the assesses, this Return Form can be used where such income falls in any of the above categories.
- ITR3, The Current ITR 3 Form is to be used by an individual or a Hindu Undivided Family who have income from proprietary business or are carrying on the profession. The persons having income from the following sources are eligible to file ITR 3 :
- Carrying on a business or profession
- The return may include income from House property, Salary/Pension, and Income from other sources
- ITR 4, The current ITR4 is applicable to individuals and HUFs having income from a business or profession and who have opted for the presumptive income scheme as per section 44AD, Section 44ADA and Section 44AE of Income Tax Act. However, if the turnover of the business exceeds Rs. 2 cores, the taxpayer will have to file ITR-3
- ITR-5, ITR 5 is for firms, LLPs (Limited Liability Partnership), AOPs (Association of Persons) and BOIs (Body of Individuals)
- ITR-6, For Companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes)
This return has to be filed electronically only.
- 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).
- Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
- Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount which is not chargeable to income-tax.
- Return under section 139(4C) is required to be filed by every –
- scientific research association;
- news agency ;
- association or institution referred to in section 10(23A);
- institution referred to in section 10(23B);
- fund or institution or university or other educational institution or any hospital or other medical institution.
- Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish the return of income or loss under any other provision of this section.
GST (GOODS & Service Tax)
“GST is a cure for ills of existing Indirect Tax”
Goods and Services Tax is an indirect tax levied in India on the supply of goods and services. GST is levied at every step in the production process but is meant to be refunded to all parties in the various stages of production other than the final consumer.
Goods and Service tax means a tax on supply of goods or services, or both, except taxes on the supply of alcoholic liquor for human consumption (Article 366(12A) of Constitution of India). GST is a value-added tax levy sale or services or both. GST is a destination based consumption tax. GST offers a comprehensive and continuous chain of tax credit. GST where the burden is borne by the final consumer. GST eliminate cascading of tax. GST brings a uniform tax structure all over India.
There are some Advantages in GST:-
- One Nation One Tax.
- Removal of bundled indirect taxes such as VAT, CST, Service Tax, CAD, SAD, and Excise.
- Removal of cascading effect of taxes i.e. removes the tax on tax.
- Increased ease of doing business.
- Lower cost of production, increase in demand will lead to an increase in supply. Hence, this will ultimately lead to rising in the production of goods. Resultant boost to make in India initiative.
- It will boost export and manufacturing activity, generate more employment and thus increase GDP with gainful employment leading to substantive economic growth.
Dual GST Model
India adopted a dual GST where the tax imposed concurrently by the Central and State.
SGST CGST IGST
|Collected by the state Govt.|
|Collected by Central Govt.|
|Collected by the central Govt. or interstate supply of Goods and Services.|
As per the CGST Act subject to changes by CBIC Notifications
|Return Form||Particulars||Frequency||Due Date|
|GSTR-1||Details of outward supplies of taxable goods and/or services affected||Monthly||11th* of the next month with effect from October 2018
*Previously, the due date was 10th
|Details of inward supplies of taxable goods and/or services affected claiming the input tax credit.||Monthly||15th of the next month
|Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of tax.||Monthly||20th of the next month
|GSTR-3B||Simple Return in which summary of outward supplies along with Input Tax Credit is declared and payment of tax is affected by taxpayer||Monthly||20th of the next month|
|GSTR-4||Return for a taxpayer registered under the composition levy||Quarterly||18th of the month succeeding quarter|
|GSTR-5||Return for a Non-Resident foreign taxable person||Monthly||20th of the next month|
|GSTR-6||Return for an Input Service Distributor||Monthly||13th of the next month|
|GSTR-7||Return for authorities deducting tax at source.||Monthly||10th of the next month|
|GSTR-8||Details of supplies effected through e-commerce operator and the amount of tax collected||Monthly||10th of the next month|
|GSTR-9||Annual Return for a Normal Taxpayer||Annually||31st December of next financial year*|
|GSTR-9A||Annual Return a taxpayer registered under the composition levy anytime during the year||Annually||31st December of next financial year*|
|GSTR-10||Final Return||Once, when GST Registration is canceled or surrendered||Within three months of the date of cancellation or date of cancellation order, whichever is later.|
|GSTR-11||Details of inward supplies to be furnished by a person having UIN and claiming a refund||Monthly||28th of the month following the month for which statement is filed|