Direct Taxes and CST

8/3/2019 Direct Taxes and CST

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DIRECT TAX &CENTRAL SALES TAX

Submitted by:TANIYA BAKSHI

MBA - Ist Sem

Submitted to:Prof. Sunil Bhardwaj

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Direct tax is the tax which is charged directly on the taxpayer. For e.g. property tax and income tax. In otherwords direct tax is that tax which is deducted fromone's salary.

Government levies on the income, property, or wealthof people or companies. A direct tax is borne entirelyby the entity that pays it, and cannot be passed on toanother entity.

Examples include corporation tax, income tax, andsocial security contributions. Unlike indirect taxes,

direct taxes are based on the ability to pay principle butthey sometimes work as a disincentive to work harderand earn more because that would mean paying moretax.

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Direct taxation in India is taken care by the CentralBoard of Direct Taxes (CBDT); it is a division ofDepartment of Revenue under the Ministry of Finance.CBDT is governed by the Revenue Act 1963. It is given

the authority to create and control direct taxes in India.The most important function of CBDT is to managedirect tax law followed by Income Tax department.

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In India the tax structure is divided amongstthe central government and state government.The central government levies taxes on income,

custom duties, central excise and service tax.While the state government levies tax like stateexcise, stamp duty, VAT (Value Added Tax),land revenue and professional tax.

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Government of India has proposed a new DirectTax code or Direct Taxes Code to replace the oldIndian Income Tax Act of 1961. This Direct Taxcode is an attempt to simplify the tax-life of an

individual. The way it works is that the income taxslabs are increased, however several deductions(e.g. deduction on housing loan) and tax-breaksare taken away. A detailed post will be written

about Direct Tax Code. Below you will find theproposed income tax slabs under the Direct Taxcode will be debated in the Parliament and ifapproved, will be implemented in 2011-2012.

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MEN WOMEN SENIOR

CITIZEN

TAX

INCOME up to 1.6 lacs up to 1.9 lacs Up to 2.4 lacs no income tax

INCOME 1.6 lacs to 10

lacs

1.9 lacs to 10

lacs

2.4 lacs to 10

lacs

10%

INCOME 10 lack to 25lacs

10 lacs to 25lacs

10 lacs to 25lacs

20%

INCOME above 25 lacs above 25 lacs above 25 lacs 30%

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According to the article 265 of the constitution of India notax of any nature can be levied or collected by thecentral or State Governments except by the authority oflaw.

The constitution of India vide entry no. 54 of the state list,gave power to the state legislature to levy sales tax onsale or purchase of goods other than newspapers,which takes place within the state. However, at that

time the parliament was not empowered to levy anytype of sales tax. Therefore, only state legislatureenacted state sales tax laws in their respective state forlevy of sales tax on sale or purchase of goods other

than newspapers. BC/JU



Although, the State Government was empoweredto levy and collect tax on sales made within itsown territory but there was no specific provisionsof levying tax on sale and purchase having

interstate composition. As a result, same goodscame to be taxed by several states on the groundthat one or more ingredient of sale was present intheir state. This led to multiple leving of tax. There-

fore central sales tax Act 1956 was enacted by theParliament and received the assent of the presidenton 21.12.1956. Imposition of tax became effectivefrom 01.07.1957.

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1.It extends to the whole of India.

2. Every dealer who makes an inter-state sale must be aregistered dealer and a certificate of registration has tobe displayed at all places of his business.

3 .There is no exemption limit of turnover for the levy ofcentral sales tax.

4. Under this act, the goods have been classified as:

•

Declared goods or goods of special importance in inter-state trade or commerce and

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• Other goods.

The rates of tax on declared goods are lower ascompared to the rate of tax on goods in thesecond category.

5 .The tax is levied under this act by the Central

Government but, it isCollected by that state government from where

the goods were sold. The tax thus collected isgiven to the same state government whichcollected the tax.

In case of Union Territories the tax collected isdeposited in the consolidated fund of India

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1. Formulate principles for determining when a sale or

purchase of goods takes place :-- in the course of interstate trade or commerce ; or- outside a State ; or- in the course of import into or export from India.

2. Provide for the :-

- levy of- collection and- distributionOf taxes on sales of goods in the course of interstatetrade or commerce.

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3. Declare certain goods to be of special importance ofinter state trade or commerce.

4. Specify the restriction and conditions to which statelaws impose taxes on the sale or purchase of such goodsof special importance shall be subject.

5. Provides for collection of tax in the event of

liquidation of a company.

6. Authority to settle disputes in course of interstatetrade or commerce

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Present CST Rate in India is – 2%

State from which movement of goods commences gets

the revenue.

Even if CST is levied by Union Government, therevenue goes to the State Government as CST Act is

administered by the State givernment

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THANKYOU……

……………………

….

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Documents

Direct Taxes and CST