Income tax & GST

By- preetish kumar purohit

23354
Preetish.23354@sscbs.du.ac.in
G1
Income tax

 Income tax is a tax levied by the government on the income earned by

individuals, businesses, and other entities within its jurisdiction

 It’s typically based on various sources of income, including wages, salaries,

interest, dividends, rental income, and capital gains

 The government uses income tax revenue to fund public services and
programs, such as education, healthcare, infrastructure, and defense

 Taxpayers are required to file income tax returns annually to report their
income and calculate their tax liability
Tax structure in India

 direct taxes

 Eg: income tax, corporate tax, wealth tax

 Indirect taxes

 Eg: custom duty, excise duty, Service tax, VAT

Method of taxation

 Progressive tax
 Increase rate of tax for increasing value or volume

 Regressive tax
 Decreasing rate of tax for increasing value Or volume

 Proportional tax
 Fixed rate of tax for every level of income or production
Short comings in current tax system

 Tax cascading ( tax on tax)

 Complexity
 Taxation on manufacturing level
 Exclusion of services
 Tax Evasion
 Corruption
GST

 Goods and service tax (GST) is a comprehensive tax levy Manufacture, sales and
consumption of goods and services at a national level

 Gst is a tax on goods and service with Value addition at each stage

 Gst will Include many state And Central level Indirect taxes

 It overcomes Drawback by present tax system

History

 Feb 2006, first proposed the concept of gst and announced the date of the
implementation in 2010

 Jan 2007, First gst study by ASSOCHAM released by Dr. Shome

 Feb 2007, F.M announced Introduction of GST from 1 april 2010 in budget

 The government came out with a First discussion paper on gst In November,
2009

 Introduced the 115 th Constitution amendment(GST) bill in the year 2011

Model of GST

 GST STRUCTURE

Centre GST
GST to be levied by the centre

State GST
GST to be levied by the state

Dual GST
GST to be levied by the state and centre concurrently
Proposed gst rate
Tax Proposed to be Subsumed in gst

CENTRAL TAXES

 Excise duty
 Additional excise duty
 Service tax
 Additional custom duty known as countervailing duty (CVD)
 Surcharge
 CENVAT
Tax proposed To be Subsumed in gst

STATE TAXES

 Value added tax ( VAT)

 Entertainment tax levied by the state
 Luxury tax
 Tax on lottery, betting, gambling
 Entry tax other than for local bodies
Products excluded from gst

 Petroleum products

 Alcohol

 Tobacco products
Advantage of gst

 Simplified Tax Structure: GST simplifies the taxation system by replacing

multiple indirect taxes with a single tax

 Elimination of Cascading Tax: GST eliminates the cascading effect of taxes,

where taxes are levied on top of taxes

 One Nation, One Tax: GST unifies India into a single market by removing
state-level barriers to trade

 Boost to GDP: It can potentially boost the GDP growth by improving tax
compliance, increasing tax revenues, and enhancing the ease of doing
business
 Input Tax Credit: Businesses can claim input tax credit, which allows them to
offset the tax they paid on inputs against their GST liability

 Transparency: GST is a transparent tax system with digital record-keeping

and online filing of returns.
Disadvantages of gst

 Complexity in Compliance: GST, while aimed at simplification, can still be

complex due to different tax rates, exemptions, and compliance
requirements

 Compliance Costs: Businesses often need to invest in new accounting and

compliance systems to meet GST requirements, which can increase their
operational costs

 Multiple Tax Slabs: The presence of multiple tax slabs can lead to confusion
and classification disputes, as well as administrative complexities in
determining the appropriate rate for various goods and services
 Initial Transition Challenges: During the initial implementation phase,
businesses may face disruptions and confusion, affecting their operations and
revenue

 Impact on Prices: Depending on the tax rates applied, GST can lead to price
fluctuations for certain goods and services, potentially impacting consumers
and businesses