Income Tax Grp10 SecA

8/3/2019 Income Tax Grp10 SecA

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Group 10:Ankit Batra- 11PGDM010Arpit Agarwal 11PGDM017Ganesh Dutt Anand 11PGDM028Parul Rajgariah 11PGDM040Sushree Upasana 11PGDM055


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Chargeability of Income Tax:

Introduction

The government of India imposes an IncomeTax on taxable income of persons. Levy of tax isseparate on each of the persons. The levy isgoverned by the Indian Income Tax Act, 1961.The Indian Income Tax Department is governedby the Central Board for Direct Taxes (CBDT)and is part of the Department of Revenue underthe Ministry of Finance, Govt. of India.


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Introduction

Income tax is payable at the rate enacted by theUnion Budget (Finance Act) for everyAssessment Year, on the Total Incomeearned in the Previous Year by everyPerson.


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Concepts

Assessment yearAssessment year means the period of twelve monthscommencing on 1st April every year and ending on 31stMarch of the next year. Income of previous year of anassessee is taxed during the following assessment year at

the rates prescribed by the relevant Finance Act.


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Concepts

Income

profits and gains dividends

voluntary contributions received by a trustcreated wholly or partly for charitable orreligious purposes

value of any perquisite or profit in lieu of salary

any other special allowance or benefit, otherthan those included above, any allowancegranted to the assessee


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Concepts

Non Resident Indian (NRI)NRI means an individual being a citizen of India or aperson of Indian origin who is not a resident. A personshall be deemed to be of Indian origin if he or either of

his parents or any of his grand parents was born inundivided India.


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ConceptPerson

an individual a Hindu undivided family (HUF) a company a firm i.e a partnership firm an association of persons or a body of individuals

whether incorporated or not a local authority (municipal committee, district board,

body of port commissioners, or other authority legallyentitled to or entrusted by the government with the

control and management of a municipal or local fund) every artificial, juridical person, not falling within any of

the above categories


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Slabs (Assessment Year 2012-13)

Taxable Income (Individuals) Tax RateUp to Rs. 180000 (Men) NILUp to Rs. 190000 (Women) NILUp to Rs. 250000 (Sr. Citizen age - 65 yrs.)

NIL

From Rs. 180000 to 500000 (Men) 10%From Rs. 190000 to 500000 (Women) 10%From Rs. 250000 to 500000 (Sr. Citizen (65 yrs.)) 10%From Rs. 500000 to 800000 20%Above Rs. 800000 30%

Education cess is applicable @ 3 per cent on income tax, surcharge = NA


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Corporate Tax(AY 2012-13)

1. Indian Companies

Rate = 30%Surcharge =7.5% (If total income is in excess of INR 10,000,000)Education cess = 3%If company having taxable income above 1,00,00,000, rate is 33.2175% or else,it is 30.9%.

2. Foreign companys branch office or foreign companys projectoffice (only for income generated through Indian operations)Rate = 40 percentSurcharge =2.5% (If total income is in excess of INR 10,000,000)Education cess = 3%If having taxable income above 1,00,00,000 , rate is 42.23% or else, it is 40%.


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Heads of IncomeIncome from Salary

All income received as salary under Employer-Employeerelationship is taxed under this head. Employers mustwithhold tax compulsorily, if income exceeds minimumexemption limit, as Tax Deducted at Source (TDS), andprovide their employees with a Form 16 which shows the taxdeductions and net paid income. In addition, the Form 16 will

contain any other deductions provided from salary such as: Medical reimbursement: Up to Rs. 15,000 per year is tax

free if supported by bills. Conveyance allowance: Up to Rs. 800 per month (Rs.

9,600 per year) is tax free if provided as conveyanceallowance. No bills are required for this amount.

Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed amount based ongross income. Such taxes paid are deductible fromincome tax.

House rent allowance
http://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Sourcehttp://en.wikipedia.org/wiki/Tax_Deducted_at_Source


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Income from House property

Income from House property is computed by taking into account what iscalled Annual Value of the property.

Income from Business or ProfessionIncome (including Deemed Incomes) xxxLess: Expenses deductible xxx

Profits and Gains of Business or Profession xxx

Income from Capital GainsTransfer of capital assets results in capital gains. A Capital asset is propertyof any kind held by an assessee such as real estate, equity shares, bonds,jewellery, paintings, art etc.

Income from Other SourcesThis is a residual head, also including some specific incomes

Income by way of DividendsIncome from horse racesIncome from winning bull racesAny amount received from key man insurance policy as donation.

Income from shares (dividend other than Indian company)

Heads of Income


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Minimum Alternate Tax (MAT)

MAT is levied @ 18.5 percent of the adjusted bookprofits in the case of those companies whereincome-tax payable on the taxable income accordingto the normal provisions (i.e. 30% or 40%) is lessthan 18.5 % of the adjusted book profits. It happens

in companies which enjoy special exemption like inExport zones etc. But every company has to becareful of this and has to calculate this 18.5% MATand make comparison before filing its tax return.Concluding, tax rate of atleast 18.5% of book

profits (18% + surcharge + Education Cess) ispayable by companies, if tax liability @ 30% or@ 40% is less than this 18.5% of book profits.

Why was MAT introduced? Take a guess


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Direct Tax Code

The New Direct Tax Code (DTC) is said to replacethe existing Income Tax Act of 1961 in India.DTC bill was tabled in parliament on 3othAugust, 2010. There are big changes since and

now it will be applicable from 1st April, 2012.


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Tax slabs

The income tax rates and slabs have beenmodified. The proposed rates and slabs are asfollows:

Annual Income Tax Slab

Up-to INR 200,000 (forsenior citizens 250,000)

Nil

Between INR 200,000 to500,000

10%

Between INR 500,000 to1,000,000

20%

Above INR 1,000,000 30%


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Removal of most of the tax saving

schemes

DTC removes most of the categories of exemptedincome. Unit Linked Insurance Plans (ULIPs),Equity Mutual Funds (ELSS), Term deposits, NSC

(National Savings certificates), Long terminfrastructures bonds, house loan principalrepayment, stamp duty and registration fees onpurchase of house property will loose tax benefits.
http://www.pankajbatra.com/india/news/sebi-bans-ulip-insurance-plans/http://www.pankajbatra.com/india/finance/best-tax-saving-mutual-funds/http://www.pankajbatra.com/india/finance/best-tax-saving-mutual-funds/http://www.pankajbatra.com/india/news/sebi-bans-ulip-insurance-plans/


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New tax saving schemes

Tax saving based investment limit remains100,000 but another 50,000 has been added justfor pure life insurance (Sum insured is atleast 20times the premium paid) , health insurance,

mediclaims policies and tuition fees of children.But the one lakh investment can now only be donein provident fund, superannuation fund, gratuityfund and new pension scheme (NPS).


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Home loan interest: Exemption will remain same as 1.5 lakhsper year for interest on housing loan for self-occupied property.

Short term gains: Only half of Short-term capital gains will betaxed. e.g. if you gains 50,000, add 25,000 to your taxable income.

Long term capital gains (From equities and equity mutual funds,on which STT has been paid) are still exempted from income tax.

Education Cess: Surcharge and education cess are abolished.

Income arising from House Property: Deductions for Rent

and Maintenance would be reduced from 30% to 20% of the GrossRent. Also all interest paid on house loan for a rented house isdeductible from rent. Before DTC, if you own more than oneproperty, there was provision for taxing notional rent even if thesecond house was not put to rent. But, under the Direct Tax Code,such a concept has been abolished.


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LTA (Leave travel allowance): Tax exemption on LTA isabolished.

Education loan: Tax exemption on Education loan to continue.

Corporate tax: Corporate tax reduced from 34% to 30% including

education cess and surcharge. This 30% applies flat to bothdomestic and foreign companies.

Medical reimbursement : Max limit for medicalreimbursements has been increased to 50,000 per year fromcurrent 15,000 limit.

Tax on dividends: Equity mutual fund will attract 5% dividenddistribution tax (DDT). DDT has been removed from debt and non-equity based mutual funds but now dividends on non-equity fundswill be taxable in investors hand as per his slab rates. There willalso be a TDS 0f 10% (20% in case of NRI and companies) ifdividend is more than 10,000 Rs. for non-equity funds.


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News for NRIs

As per the current laws, a NRI is liable to paytax on global income if he is in India for a periodmore than 182 days in a financial year. But innew bill, this duration has been changed to just

60 days.


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Tax Saving

Tax Saving schemes are the legal measures bywhich individuals can save taxes

Every year the Government opens up new

options for tax savings to encourage the taxpayers utilize their money better


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Tax Saving Schemes

Deduction of 1 lakh under 80C: Options available under

this are PPF, Insurance plan, Pension plan, ULIP with alock in of 5 years, bank fixed deposits with a lock in of 5years etc.

Interest and Principal on Home loan: The principal

portion of the home loan is deductible under 80C subjectto 1 lakh limit. The interest can be deducted up to 1.5lakhs.

Education loan can be used for tax saving purpose as theinterest on the education loan is deductible under theclause 80E


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Health Insurance: You can claim up to 15000 underhealth insurance mediclaim clause 80D.

Infrastructure Bonds: Under the income tax clause80CCF, up to 20000 can be invested in

infrastructure bond and claim for deduction

Under clause 80DD, if you have dependents who aredisabled, you can further get a deduction from

50,000 to 1 lakh depending upon the severity of thecase.

Tax Saving Schemes


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Tax Evasion

Tax evasion is the general term for efforts by individuals,firms, trusts and other entities to evade taxes by illegalmeans. Tax evasion usually entails taxpayers deliberatelymisrepresenting or concealing the true state of theiraffairs to the tax authorities to reduce their tax liability,and includes, in particular, dishonest tax reporting

Declaring less income, profits or gains than actuallyearned

Overstating deductions or expenses


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Black Money

Black money refers to funds earned on the blackmarket, on which income and other taxes hasnot been paid.

The total amount of black money deposited in

foreign banks by Indians is unknown, but it isestimated to be at over 7,280,000 Crores(US$1.4 trillion).


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Multilevel marketing SchemeA recent trend is to use international debit or credit cards issued by

offshore banks. This enables easy usage.

STEP 1: A group of individuals float a multi-level marketing scheme orinvestment scheme promising extraordinary returns to investors.

STEP 2: Investors deposit cash or cheques in bank accounts floated by

the firm. The firm, in turn, issues them post-dated cheques.

STEP 3: The firm transfers the money to personal bank accounts of thepromoters.

STEP 4: The promoters wire transfer the money to an offshore bank

account in a tax haven. They wire transfer it again to anotheroffshore bank account, in another tax haven, to widen the trail.

STEP 5: The offshore bank issues a credit or debit card valid anywherein the world, which a promoter can use for transactions.


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Bangladesh Tax Rates

First BDT 1,65,000 Nil Next BDT 2,75,000 10%

Next BDT 3,25,000 15%

Next BDT 3,75,000 20%

Rest Amount 25%


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Bangladesh Corporate Tax

Publicly Traded Company27.5% Non-publicly Traded Company

37.5%

Bank, Insurance & Financial Company42.5% Mobile Phone Operator Company

45%

Publicly Traded Mobile Operator Company35%


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Pakistan Income Tax Slab No. Taxable income Tax Rate 1. Where taxable income is below Rs. 200,000 0%

2. Where the taxable income is between Rs. 200,000 - Rs. 250,000 0.50% 3. Where the taxable income is between Rs. 250,000 - Rs. 350,000 0.75% 4. Where the taxable income is between Rs. 350,000 - Rs. 400,000 1.50% 5. Where the taxable income is between Rs. 400,000 - Rs. 450,000 2.50% 6. Where the taxable income is between Rs. 450,000 - Rs. 550,000 3.50% 7. Where the taxable income is between Rs. 550,000 - Rs. 650,000 4.50% 8. Where the taxable income is between Rs. 650,000 - Rs. 750,000 6.00%

9. Where the taxable income is between Rs. 750,000 - Rs. 900,000 7.50% 10. Where the taxable income is between Rs. 900,000 - Rs. 1,050,000 9.00% 11. Where the taxable income is between Rs. 1,050,000 - Rs. 1,200,000 10.00% 12. Where the taxable income is between Rs. 1,200,000 - Rs. 1,450,000 11.00% 13. Where the taxable income is between Rs. 1,450,000 - Rs. 1,700,000 12.50% 14. Where the taxable income is between Rs. 1,700,000 - Rs. 1,950,000 14.00% 15. Where the taxable income is between Rs. 1,950,000 - Rs. 2,250,000 15.00% 16. Where the taxable income is between Rs. 2,250,000 - Rs. 2,850,000 16.00% 17. Where the taxable income is between Rs. 2,850,000 - Rs. 3,550,000 17.50% 18. Where the taxable income is between Rs. 3,550,000 - Rs. 4,550,000 18.50% 19. Where the taxable income is between Rs. 4,550,000 - Rs. 8,650,000 19.00% 20. Where the taxable income is more than Rs. 8,650,000 20.00%


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Pakistan Corporate Tax Rates

Pakistan corporate tax rate is 35% of net taxableincome of a company.

For nonresidents, a 15% rate is levied on the gross

amount of royalties or technical service fees, and30% for other payments under the presumptive taxregime.


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Sri Lanka Personal Income Tax

Yearly remuneration Tax 0 - Rs. 400,000 5%

Rs. 400,000 - Rs. 800,000 10%

Rs. 800,000 - Rs. 1,200,000 15% Rs. 1,200,000 - Rs. 1,700,000 20%

Rs. 1,700,000 - Rs. 2,200,000 25%

Rs. 2,200,000 - Rs. 2,700,000 30%

Over Rs. 2,700,000 35%


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Sri Lanka Corporate Tax

Sri Lanka corporate tax rates are up to 35%.

Companies with taxable income less than SLR 5million: 15%

Venture capital companies: 20% Quoted companies listed less than 5 years: 33

1/3% Companies listed more than 5 years: 35% Any unit trust or mutual fund: 10-20%


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China Income Tax

China income tax rates are progressively between 5% - 45%,shared out on 9 brackets:

Taxable Income / Tax Rate %

CNY 0-500 5% CNY 501-2,000 10% CNY 2,001-5,000 15% CNY 5,001-20,000 20% CNY 20,001-40,000 25%

CNY 40,001-60,000 30% CNY 60,001-80,000 35% CNY 80,001-100,000 40% Above CNY 100,000 45%


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China Corporate Tax

The standard corporate income tax rate in Chinais 25%. A special tax rate of20% applies tosmall-scale enterprises, also a special 15% tax

rate applies to state-encouraged new high-technology enterprises.


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Brazil Income Tax Rates

Brazil personal income tax rates are progressive, upto 27.5%.

Taxable Income (BRL) / Tax Rate % Up to BRL 17,208 Exempt BRL 17,208 - 25,800 7.5% BRL 25,800 - 34,392 15.0% BRL 34,392 - 42,984 22.5%

Over BRL 42,984 27.5%


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Brazil Corporate Tax Rates

Brazil corporate income tax is 15% plus a 10%surtax on taxable income exceeding BRL240,000; making the final corporate income taxrate 25%.


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Russia personal Income Tax

Russian personal income tax rate for residents is13%.

A special 35% tax rate is applied to some kindsof income, e.g. the cost of any prizes and wins,voluntary insurance proceeds, interest on certainbank deposits and deposits on foreign currency.

A 9% rate is applied to income in the form ofdividends received from shareholdings.

All personal income of non-residents, includingdividends, is taxed at the rate of 30%.


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Russia Corporate Tax

The standard rate of company tax in Russia iscurrently20% of which 2% is normally paid to thefederal government and 18% to republicanauthorities.

The tax rate for the share transferred to regionalauthorities may be as low as 13.5%.

Foreign enterprises deriving income which is notconnected with carrying out their business activities

through a permanent establishment pay profit tax atthe rate of 20% and 15% on dividends.


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Spain personal Income Tax (IRPF)

Personal income tax rates in Spain areprogressive to 43%.

Income Band (EUR) Tax Rate

0 - 17,707 24%

17,707 - 33,007 28%

33,007 - 53,407 37%

53,407 + 43%


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Spain Corporate Tax (Impuesto de

Sociedades)

Standard rate of corporation tax in Spain is 30%.

From 1 January 2010, there is a special reducedtax rate (20% on the first EUR 120,202.41 oftaxable income) for small companies with fewerthan 25 employees and revenue below EUR 5

million which maintain or create jobs.


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Italy personal Income Tax

Taxable Income (EUR) Tax Rate

Up to 15,000 23%

15,001 28,000 27%

28,001 55,000 38% 55,001 75,000 41%

Over 75,000 43%


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UK personal Tax Rates

The marginal tax rate for individuals in the U.K. is 50%.

Employment, trading and investment income (otherthan dividends) are normally taxable at marginal rates ofup to 40%. From 2010/11, there is an additional higher

rate of 50% for taxable income above GBP 150,000which makes the top marginal tax rate 50% in UK.

Annual Salary Tax Rate

0 37,400 20% 37,400 150,000 40% Excess 50%


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UK Company Tax rates

The main rate of corporation tax in UK is 28%(except for ring fence profits from oil rights andextraction). A reduced rate of 21% applies tosmall companies (i.e. companies with taxableprofits of less than GBP 300,000).


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Qatar Personal Income Tax

Individuals are not taxed in the United ArabEmirates.

There are no personal taxes, social insurance or

other statutory deductions from salaries andwages paid in Qatar

UAE Personal Income Tax


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Kuwait personal Income Tax

There is no personal income tax (employmenttax), wealth tax in Kuwait.Social securitycontributions Kuwaiti employees mustcontribute 7% of salary to the Public Institutionfor Social Securities; the employer alsocontributes 11%.


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Thank you

Documents

Income Tax Grp10 SecA