Professional Documents
Culture Documents
Taxation Report
Taxation Report
Dissertation submitted
In Partial fulfillment for the
Post Graduate Diploma in Business Management
By
Mr. P.K.Jain
DGM-Finance
HEG Ltd.
CERTIFICATE
This is to certify that the summer project report title A
study on Taxation in HEG. is a bonafide work done by
Mr. Atul Kumar Rai, Roll No.: (GJUJUL08AC050) of
Batch 2008 2010, Submitted to NSB School of
Business,
New
Delhi
in
partial
fulfillment
of
the
44
Prof.
Alok Satsangi
Corporate Relations
Cell
ACKNOWLEDGEMENT
I wish to express my sincere gratitude to my institute to provide this
opportunity to learn the element of TAXATION.
One person is seclusion is hardly ever able to complete any project or
training. There is always discussion with professionals about conceptual
matters, which enhance the idea and the knowledge of trainee.
Thereby, I would like to acknowledge the contribution and support that
each persons at HEG Ltd. extended to me during my training period.
I would also like to express my special thanks to my guide Mr. P.K. Jain
(DGM-Finance), Mr.Ved B. Gupta (Dy. Manager-Finance), Sanjeev Asati,
Anubhav Chowdhary who provide me valuable insight about aspect of
taxation with respect of the company and the external environment
with which it associated.
44
DECLARATION
44
DATE-
PLACE-
44
CONTENTS.NO.
TOPIC
PAGE
NUMBER
9-20
HEG Ltd.
21-27
28-38
ANALYSIS
5
TAXATION
39
INCOME TAX
39-64
SALE TAX
65-73
VAT
74-89
PAN
90-91
10
EXCISE DUTY
92-96
11
CUSTOM DUTY
97-102
13
FINANCE OF HEG
103-105
12
CONCLUSION
106-113
13
BIBILIOGRAPHY
114
44
VISION
HEG LTD. -GRAPHITE DIVISION
44
MISION
HEG LTD. -GRAPHITE DIVISION
To become
leading
international
player
in
Graphite
44
44
Group Profile
The 500 million dollar LNJ Bhilwara Group is a diversified group with
interests in Graphite Electrodes, Textiles,
In its over four-decade long existence, the LNJ Bhilwara Group has
come to be identified with quality and technology. Six
of the Group companies have been awarded ISO 9001:2000
certification for their exemplary quality standards. The fact
44
underlines
its
high
quality
standards.
Awarded
Industry
The
marriage
of
traditional
values
and
foresight
has
into
manufacturing
fabric,
technical
textiles,
44
ISO
2.
Graphite electrode
HEG Limited
Textile
RSWM Ltd.
Maral overseas ltd.
BSL Ltd.
44
3.
4.
Bhilwara Spinners
POWER
Bhilwara energy ltd.
Malana Power company ltd.
AD Hydro power ltd.
Infotech
Textile
Bhilwara Spinners Limited, is an integral part of the LNJ Bhilwara
Group. The Group is a multi-product conglomerate with a global
presence and business interests spanning diverse indstries like
Textiles, Power Generation, Graphite Electrodes and IT enabled
services.
Bhilwara Spinners, based at Bhilwara (Rajasthan), manufacturer of
cotton, synthetic blended yarns of various counts and blends. The
present capacity of the unit is 18,496 spindles.
Based
on
the
requirement
of
the
market,
Bhilwara
Spinners
44
Products
44
Mayur Suitings,
Mayur Suitings the innovative and value for money brand, is a part of
RSWM Limited, the flagship company of Rs 2859 crore LNJ Bhilwara
Group.
For almost 30 years, Mayur has been constantly delivering high quality
44
all
expectations.
All this fabric is manufactured at the state of the art manufacturing unit
at LNJ Nagar, Mordi, District Banswara in Rajasthan. Innovation and
consistent quality are the two pillars that the company has always
believed in. And it is on these two pillars that the company has built its
hugely popular status in the world.
The comprehensive product-mix includes fabric ranges for classic formal
wear as well as semi formal wear. This includes unique blends of
Polyester Viscose. All this is available in different yarn counts and
shades. What's more, exciting innovations are accentuated by an array
of blends in new finishes, including poly / viscose / silk, poly / wool /
silk feather-touch, Poly / wool / Lycra, poly / viscose / linen and poly /
viscose cationic dyed soya protein / bamboo and functional fabric.
Performance fabric like high wicking, cool comfort, anti-bacterial, antistatic, odor preventive, biodegradable and energy fabric, etc.
44
to
achieve
the
customers
expectation.
Continuous
44
and
unrelenting
trust
towards
continuous
quality
44
44
Bhilwara Infotech
"We, at BIL, strive to ensure Customer Satisfaction by providing
quality software and services, on time, every time. We are
committed to comply with the requirements of our Quality
Management System and to continually improve its effectiveness
through Management Reviews of the Quality Objectives."
HEG Limited
than
Electrodes.
countries
44
of
the
world.
to
win
and
excel
in
all
situations.
focus.
world.
44
we
have
now
expanded
our
manufacturing
capacity.
Graphite
Electrodes
and
Power.
From
modest
Bureau Veritas.
44
consecutive years.
National
Top
Export
Award
from
the
QualityPolicy
We, in HEG, are committed to being a customer-oriented
organisation where Quality is the inspiration and innovation is the
way
of
life.
being.
44
SafetyPolicy
We in heg, are committed to being a safe and eco - friendly
organization. we believe that protection of our personnel and the
environment
is
one
of
our
prime
responsibilities.
by
developing
effective
controls
of
our
causes
and
operation.
Investigate
the
accidents
to
identify
root
44
interested parties,
44
44
44
44
44
44
44
44
44
44
44
44
Taxation
44
Indirect Tax.
Direct Taxes that comprising of income tax, wealth tax, etc. are
The indirect taxes are levied on goods and services and its
INCOME TAX
Income Tax is all income other than agricultural income levied and
collected by the central government and shared with the states.
year
in
the
relevant
44
assessment
year.
1860
1877
1886
1918
for
the
determination
of
the
rate,
44
1961
1997
2003
44
Country
Australia
0% - 48.5%
Canada
16% - 29%
Estonia
24% - 24%
Denmark
44% - 63%
Hong Kong
0% - 33%
India
0% - 33%
Israel
10% - 49%
Malaysia
0% - 29%
Mexico
3% - 32%
Russia
13% - 13%
Singapore
0% - 22%
UK
0% - 40%
44
US
10% -35%
44
Rate
Taxable income slab (Rs.)
(%)
Up
Up
to
to
1,90,000
1,60,000
(for
women)
NIL
10
3,00,001 5,00,000
20
5,00,001 upwards
30*
total
income
exceeds
Rs
1,000,000.
Note :
44
ResidenceRules
to
India
remains
44
not
ordinarily
resident.
resident.
Non-Residents
and
Non-Resident
Indians
in
or
profession
set
up
in
India.
in
certain
cases.
income
are
deducted
at
source.
laid
down
by
44
the
Income
Tax
act.
Status
Resident
and
Indian
Foreign
Income
Income
Taxable
Taxable
Taxable
Not Taxable
Taxable
Not Taxable
ordinarily
resident
Non-Resident
Remuneration includes:
44
Others:
Tax equalisation
Tax
on
upon
the
Income
following
from
44
income:
house
property
head
"Income
from
House
Property".
For charging the income under the head "Profits and Gains of
business," the following conditions should be satisfied:
assessee.
assessee
at
any
time
during
44
the
previous
year.
Tax
upon
Income
from
capital
gains:-
Tax
upon
Income
from
or profession.
other
sources:-
salary
capital gains can be taxed under the head "income from other
sources".
However such income should also not fall under income not forming
part
Tax
of
total
upon
income
under
Clubbing
44
the
of
IT
Act.
Income:-
a.
any other person for the benefit of the spouse unless the transfer is
for adequate consideration or in consideration of an agreement to live
apart.
b.
to her or to any other person for her benefit unless the transfer is for
adequate consideration.
c.
income of his minor child - other than the minor child suffering
44
Tax Rates
In India, Individual income tax is a progressive tax with three slabs.
From April 1, 2008 new tax slabs apply, which are as follows:
44
SURCHARGE
A 10% surcharge (tax on tax) is applicable if the taxable income (taking
into consideration all the deductions) is above Rs. 10 lakh (Rs. 1
million). The limit of 10 lacs was increased to Rs. 1 crore (Rs. 10
million) with effect from 1 June 2007 for corporate assesses.
EDUCATION CESS
All taxes in India are subject to an education cess, which is 2% of the
total
tax
payable.
With
effect
from
44
assessment
year
2008-09,
[5]
44
TAX PENALTIES
"If the Assessing Officer or the Commissioner (Appeals) or the
Commissioner in the course of any proceedings under this Act, is
satisfied that any person(b) has failed to comply with a notice under sub-section (1) of section
142 or sub-section (2) of section 143 or fails to comply with a direction
issued under sub-section (2A) of section 142, or
(c) has concealed the particulars of his income or furnished inaccurate
particulars of such income,
he may direct that such person shall pay by way of penalty,-
44
(ii) in the cases referred to in clause (b), in addition to any tax payable
by him, a sum of ten thousand rupees for each such failure;
(iii) in the cases referred to in clause (c), in addition to any tax payable
by him, a sum which shall not be less than, but which shall not exceed
three times, the amount of tax sought to be evaded by reason of the
concealment of particulars of his income or the furnishing of inaccurate
particulars of such income"
Avoidation
of
double
taxation
Filing
XII.
of
Return
compulsory
44
One-by-six scheme-If a person is enjoying any of the following item, he/she has to file
his/her return.
Occupation of a House
44
25,000/-.
Penalty
Under the existing law, penalty for delay in filing of return of income
is calculated as a percentage of the shortfall of tax. Where tax has
already been deducted at source, or advance tax has been duly paid,
no penalty is leviable. It is proposed to amend the law to provide for
the penalty of Rs.1000 even in such cases. This provision is targeted
towards the salary earners who always had the impression that their
liability was over the moment the tax was deducted by the employer.
Types of Assessments
Basically assessment is an estimation for an amount assessed while
paying Income Tax. It is a compulsory contribution that is required
for the support of a government. It is generally of the following
44
types.
Self assessment
The assessee is required to make a self assessment and pay the tax
on the basis of the returns furnished. Any tax paid by the assessee
under self assessment is deemed to have been paid towards regular
assessment.
Regular assessment
On the basis of thereturn of income chargeable to tax furnished by
the assessee an intimation shall be sent to the assessee informing
him about the tax or interest payable or refundable to him.
44
Income
escaping
assessment
or
re-assessment
may
Precautionary assessment
44
be.
Section 80C
44
PPF
NSC
KVP
Life Insurance
Sale Tax
44
Interstate sale
According to S3, a sale or purchase shall be deemed to take place in
the course of interstate trade or commerce in the following cases:
one
State
to
another.
44
There can be an interstate sale even if the buyer and the seller
belong to the same state; even if the goods move from one state to
another as a result of a contract of sale; or, the goods are sold while
they
are
in
transit
by
transfer
of
documents.
Sales tax is payable to the sales tax authority in the state from which
the movement of goods commences. It is to be paid by every dealer
on the sale of any goods effected by him in the course of inter-state
trade or commerce, notwithstanding that no liability to tax on the
sale of goods arises under the tax laws of the appropriate state.
44
not.
5.
44
6.
44
of payment of the tax, payable by the company under the CST Act or,
for making any payment to secured creditors whose debts are
entitled under law to priority of payment over debts due to the
government, on the date of liquidation or, for meeting such costs and
expenses of the winding up of the company, as are in the opinion of
the appropriate authority, reasonable.
No state can levy sales tax on any sale or purchase where such
outside India.
2.
of goods
44
1.
In most of the cases related to the sales tax, the tax on the
44
6.
Not all despatches of goods from one state to another result in inter
state sales rather the movement must be on account of a covenant or
incident of the contract of sales. There are some instances wherein
the goods are moved out of the selling state and yet they are not
considered inter state sales :
Intra-state sales
44
The rule of thumb for sales tax is that most services are exempt and
most products are taxable except for food and drugs. However, states
have been gradually adding to the list of services that are taxable for
the last few years. Check with your state department of taxation to
determine if the product or service you sell is taxable in your state.
44
Form C;
Form G;
VAT
VAT is value added tax, which is charged on value addition. VAT can be
considered as a multi-point sales tax with set-off for tax paid on
purchases of inputs material and capital goods. Therefore dealers can
44
deduct the amount of tax paid on purchase from the tax collected on
sales, thereby paying just the balance amount to the government
VAT v Sale Tax
According to VAT Act:
VAT is a more transparent and accurate system of taxation. The existing
sales tax structure allows for double taxation thereby cascading the tax
burden. In VAT Act we can take credit of tax paid on input.
D
of
Rai
pur
44
Sale
Sale
B of Sale
B of
Raip
ur
@ 100/-
@ 114/-
C of
Raipu
r
@
124/-
Sale
@134/Consum
ption in
Raipur
Invoice
Price incl.
value
Tax
profit
(Incl.
Payable
(Excl Tax)
Tax)
Tax
Tax Rate
100
4% CST
104
44
4.00
4.00
114
12.5% VAT
128.25
14.25
124
12.5% VAT
139.50
15.50
134
12.5% VAT
150.75
16.75
14.25
14.25
14.25
1.25
1.25
15.50
1.25
1.25
VAT
16.75
CST
4.00
Total to Govt.
44
Sales
Selling
Seller
Buyer
Tax
Tax
Price
Total
Amount
Rate
A
(Raw
Supplier)
B (value
100
12%
by Consumer 122
12%
Material
addition
B (Mfr)
26.40
44
12.00
14.40
112.00
134.40
VAT solves the problem for both the government and the consumer.
Each dealer is allowed to deduct the tax paid on their purchases from
the tax collected on sales and to pay only the balance to the
government. This means that the purchase and sales will be correctly
recorded.
44
3. Credit will be allowed only on local purchase i.e. Credit will not
be allowed on inter state purchase or purchase under CST.
Therefore only local purchase will be considered in calculation of
VAT Credit on opening stock.
44
Net Turnover= Purchase Value- sale tax (i.e. Sale price x rate of sales
tax)
100 + rate of sales tax
6. Tax paid on capital goods which is lying in opening stock will not
be allowed as Credit.
44
7. Input Credit on following opening stock will not be allowed Receive under replacement
Receive Gift
Receive Free sample
Petrol, diesel, aviation turbine fuel, natural gas, kerosene,
liquefied petroleum gas.
Furniture and fixture including AC and refrigerator.
Material used in capital expenditure in land or civil
construction.
44
4. VAT Credit will not be allowed on following Capital Goods Capital Goods purchased from un-registered dealer.
44
CREDIT
ON
INPUT MATERIAL:
44
It is the credit for tax paid on inputs. Every dealer has to pay output tax
on the taxable sale affected by him. The basic formula of VAT is that
every dealer pays tax only on the value addition in his hands. In simple
words input tax credit is the mechanism by which the dealer is enabled
to set off against his output tax. Dealers are not eligible for input tax
credit on all inputs. There are certain restrictions and conditions on the
eligibility of input tax credit as it is stipulated in the VAT Act and Rule.
1. Credit will be allowed only on local purchase i.e. Credit will not be
allowed on inter state purchase or purchase under CST. Therefore
only local purchase will be considered in calculation of VAT Credit.
44
44
6. CST paid on inter state sale will not be allowed as VAT Credit.
AxB
44
C
Where
A = Total amount of tax paid @ 4 % on input material which is eligible
for Credit)
B = value of taxable sale including international sale and inter-state
sale but excluding sale by way of stock transfer)
C = Total sale turnover including sale by way of stock transfer.
Amount of VAT Credit on those goods on which input tax was paid
@ 12.5%
If un-adjusted Credit still remains after two year then refund can
be claim.
Payment of Tax:
44
Payment of tax for the first and second month of each quarter will be
paid before 10th day of following month and balance tax of such quarter
will be made before filing of return of such quarter.
Interest:
Registered dealer shall be liable to pay interest 1 %, if he fails to
furnish return or fail to payment of tax
P.A.N.
Permanent Account Number is a number by which the Assessing
Officer can identify any person. Presently the Income Tax Department
is allotting PAN under the New Series to all assessees which consists
of ten alphanumeric character and is issued in the form of a
laminated card. The PAN is ultimately meant to supplant the General
Index Register Number which is currently in use. The General Index
Register Number is a number given an Assessing Officer to the
assessees in the General Index Register maintained by him which
also contains the designation and the particulars of the Assessing
Officer. As per section 139A of the Act obtaining PAN is a must for the
44
following
persons:-
1. Any person whose total income or the total income of any other
person in respect of which he is assessable under the Act exceeds the
maximum
amount
which
is
not
chargeable
to
tax.
any
previous
year.
below:-
department.
department.
44
44
CENTRAL EXCISE
8%. (As
per who
changes
madeoronmanufactures
Feb 24, 2009)
that every
person
produces
any 'excisable
goods',
or who stores
goods
in a warehouse,
shallduty
pay beyond
the
Extension
of thesuch
earlier
4 percent
cut in excise
duty leviable
on2009.
such goods
in changes
the manner
provided
rules
or
31 March
(As per
made
on Febin
24,
2009)
under any other law. No excisable goods, on which any duty is
1% cess for secondary and higher education introduced.
payable, shall be 'removed' without payment of duty from any
For
small they
scale are
excemption,
ceiling is or
increased
place,
where
producedtheorturnover
manufactured,
from afrom
Rs 10 million
Rs 15 million.
warehouse,
unless to
otherwise
provided. The word 'removal' cannot
be necessarily equated with sale.
The valuation rule for all the goods manufactured by job worker
has been introduced.
The effective rates on petrol and diesel is reduced from 8 per cent
to 6 per cent.
1. Sale
The e-payment has become mandatory in cases where the annual
Importance
of
Central
Excise
Duty
Central excise revenue is the biggest single source of revenue for the
Government of India. The Union Government tries to achieve different
socio-economic objectives by making suitable adjustments in the scope
and quantum of levy of Central Excise duty. The scheme of Central
Excise levy is suitably adapted and modified to serve different purposes
of price control, sufficient supply of essential commodities, industrial
growth, promotion of small scale industries and like Authority for
collecting
the
Central
Excise
duty.
Article 265 of the Constitution of India has laid down that both levy and
collection of taxes shall be under the authority of law. The excise duty is
levied in pursuance of Entry 45 of the Central List in Government of
India Act,1935 as adopted by entry 84 of List I of the seventh Schedule
of the Constitution of India. Charging section is Section 3 of the Central
Excises
Liability
and
to
Salt
pay
Central
Act,1944.
Excise
Duty
Section 3 of the Central excises and Salt Act,1944 provides that there
44
Customs Duty
Introduction
The Customs Act was formulated in 1962 to prevent illegal imports and
exports of goods. Besides, all imports are sought to be subject to a duty
with a view to affording protection to indigenous industries as well as to
keep the imports to the minimum in the interests of securing the
exchange
rate
of
Indian
44
currency.
and
the
ports
which
alone
shall
be
coastal
ports.
of
goods
is
also
possible
in
the
warehouses.
For a person who do not actually import or export goods customs has
relevance in so far as they bring any baggage from abroad.
44
Types
of
duties
Under the custom laws, the following are the various types of duties
which
are
leviable.
Basic
Duty:
This is the basic duty levied under the Customs Act. The rate varies for
different
items
Additional
Duty
from
5%
(Countervailing
to
Duty)
40%.
(CVD):
This additional duty is levied under section 3 (1) of the Custom Tariff
Act and is equal to excise duty levied on a like product manufactured or
produced in India. If a like product is not manufactured or produced in
India, the excise duty that would be leviable on that product had it
been manufactured or produced in India is the duty payable. If the
product is leviable at different rates, the highest rate among those rates
is the rate applicable. Such duty is leviable on the value of goods plus
basic custom duty payable. eg. If the customs value of goods is Rs.
5000 and rate of basic customs duty is 10% and excise duty on similar
goods
produced
in
India
is
20%,
44
CVD
will
be
Rs.1100/-.
Anti-dumping
Duty:
Sometimes, foreign sellers abroad may export into India goods at prices
below the amounts charged by them in their domestic markets in order
to capture Indian markets to the detriment of Indian industry. This is
known as dumping. In order to prevent dumping, the Central
Government may levy additional duty equal to the margin of dumping
on such articles, if the goods have been sold at less than normal value.
Pending determination of margin of dumping, such duty may be
provisionally imposed. After the exact rate of dump ing duty is finally
determined, the Central government may vary the provisional rate of
dumping duty. Dumping duty can be imposed even when goods are
imported indirectly or after changing the condition of goods. There are
however certain restrictions on imposing dumping duties in case of
countries which are signatories to the GATT or on countries given "Most
Favoured Nation Status" under agreement. Dumping duty can be levied
44
to
Indian
Protective
industry.
Duty:
Duty
on
Bounty
Fed
Articles:
44
Export
Duty:
44
Overall performance:The Company during the year shows strong growth of sales graphite
electrode.
Net sales increased to rs.945.98 crore higher by closed to 16% from rs.
817.87 crore in the previous year.
The export turnover increased approximately 48% as compared to
previous year.
The net profit increased substantially to rs. 146.35 crore from 73.84
crore.
Earnings per share increase increased to rs. 35.17 crore (previous yearrs. 18.32 crore).
The company had paid an interim dividend @ rs. 7 per share on Equity
share in January, 2008.
External sales revenue of graphite is 88538.53 lac.
44
2007-2008
2006-2007
Excise Duty
33.02
49.66
106.88
10.02
Current year
67.67
12.58
Deferred
9.88
13.97
0.43
0.36
2.62
0.67
44
Following dues of income tax, sales tax, service tax, excise duty along
with the forum where the dispute is pending.
44
Conclusion
The 500 million dollar LNJ Bhilwara Group is a diversified group with
interests in Graphite Electrodes, Textiles,
Steel , Power Generation and IT Enabled Services.
The group is
Certifications.
Asia,
processing
sophisticated
UHP
(Ultra
High
Power)
Electrodes.
The company exports over 80% of its production to more than 25
countries of the world.
It is an ISO 9001 & ISO 14000 Certified Company, by M/s Bureau
Veritas.
In Graphite, HEG focus is on UHP grade electrodes, and we have
expanded our product range and established the same on some of
the toughest furnaces of our customers. Today, we have years of
experience supplying quality UHP grade electrodes all over the world.
44
(CAPEXCIL) for 17
consecutive years.
Also won the National Top Export Award from the Government of
India and the Rajiv Gandhi National Quality Commendation Award.
Taxes - Taxes in India are of two types, Direct Tax and Indirect Tax.
Direct Tax, like income tax, wealth tax, etc. are those whose burden
falls directly on the taxpayer.
The burden of indirect taxes, like service tax, VAT, etc. can be passed
on to a third party.
Income Tax
Income Tax Rates
44
tax
payable.
With
effect
from
assessment
year
2008-09,
Sale Taxes - Central Sales tax is generally payable on the sale of all
goods by a dealer in the course of inter-state Trade or commerce or,
44
outside a State or, in the course of import into or, export from India.
Interstate sale
According to S3, a sale or purchase shall be deemed to take place in
the course of interstate trade or commerce in the following cases:
Sales tax is payable to the sales tax authority in the state from which
the movement of goods commences. It is to be paid by every dealer
on the sale of any goods effected by him in the course of inter-state
trade or commerce, notwithstanding that no liability to tax on the
sale of goods arises under the tax laws of the appropriate state.
Possible
offences
and
the
penalties
for
such
offences.
44
VAT- VAT is value added tax, which is charged on value addition. VAT
can be considered as a multi-point sales tax with set-off for tax paid on
purchases of inputs material and capital goods. Therefore dealers can
deduct the amount of tax paid on purchase from the tax collected on
sales, thereby paying just the balance amount to the government.
VAT is a more transparent and accurate system of taxation. The existing
sales tax structure allows for double taxation thereby cascading the tax
burden. In VAT Act we can take credit of tax paid on input.
According to Sale Tax act:-
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Then labour charge, processing charges and his profit will be added to
make up the sales price. Thereafter he paid tax on the entire amount.
The government receives tax two times - once on the raw materials
bought by the manufacturer and again on the final product.
socio-economic
objectives
by
making
suitable
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Export
44
Duty.
BIBILIOGRAPHY:BOOKS
I.
II.
III.
JOURNALS
I.
WEBSITES
I.
II.
www.lnjbhilwara.com
www.hegltd.com
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