Principles of Taxation Law

Unit-I: General Concept of Tax

1) Discuss in detail the constitutional provisions relating
to tax.
Synopsis:-
1) Introduction
2) Significance of constitution relating to taxing matters
3) Scope of Taxing powers of Parliament, State
legislature and local bodies
4) Constitutional provisions relating to tax
5) Conclusion
 2) Discuss the History, nature, scope, principles relating to tax
in India.
Synopsis:-
1) Introduction
2) Concept of Tax
3) Historical background
4) Nature
5) Scope/ Structure of Tax- Direct Tax and Indirect Tax
6) Sources of Tax
7) Principles relating to tax
8) Conclusion
 Unit-II: The Income Tax Act- Concepts
1) Explain any 15/ 20 income which are not forming part of
Total Income./ What is meant by “ Exempted Income?”
Discuss any 15 income mentioned under Income Tax Act,
1961.
Synopsis:-
1) Introduction
2) Meaning of Exempted Income
3) Income which do not form part of total income i.e Section
10
4) Conclusion
 2) What is meant by “ Residential Status of a Person?” Explain in
detail the conditions of residential status of each person.
Synopsis:-
1) Introduction
2) Concept of Residential Status, Importance
3) Conditions of Residential Status
Individual
HUF
Partnership Firm
Company
AOP and BOI
Every artificial juridical person
4) Conclusion
 Unit-III: The Income Tax Act- Computation of Total Income
Under Various Heads
1) Explain the provisions relating to Income from salary
mentioned under Income Tax Act, 1961.
Synopsis:-
1) Introduction
2) Concept of Salary
3) Provisions of salary u/s 15, 16 and 17
Basis of charge- Sec. 15
Definition of Salary- Sec. 17
Deductions- Sec. 16
4) Conclusion
 2) What is meant by Income from House property and
how it is different from Income from Profit or gains
from Business or profession?
Synopsis:-
1) Introduction
2) Provisions relating to Income from House Property-
Sec. 22, 23 and 24
3) Provisions relating to PGBP- Sec. 28 and 30, 31, 32,
35, 37 ( deductions)
4) Conclusion
 Unit-IV: Income Tax Act- Deductions/Exemptions
1) Explain the permissible deductions/ exemptions
from gross total income.
Synopsis:-
1) Introduction
2) Meaning of Deductions
3) Deductions from Gross Total Income- Sec. 80C to
80U
4) Conclusion
 Unit-V: Assessment
1) Explain the provisions relating to Assessment of
Individual, firm, HUF, Company, Charitable Trust in
detail.
Synopsis:-
1) Introduction
2) Concept of Assessment
3) Assessment of various person
4) Conclusion
 Unit-VI: Income Tax-Authorities and Procedure for
Assessment
1) Discuss the various Income Tax authorities appointed
under Income Tax Act, 1961. Explain their powers and
functions.
Synopsis:-
1) Introduction
2) Classes of IT authorities
3) Powers and functions
4) Conclusion
 Unit – VII: Introduction to GST
1) Discuss the nature, history, scope, importance, rates, advantages and disadvantages of GST
Act, 2017.
Answer:-
 Nature of the GST Act, 2017

 The Goods and Services Tax (GST) Act, 2017, is a comprehensive, multi-stage, destination-
based tax that is levied on every value addition. It has replaced many indirect taxes that
previously existed in India, such as excise duty, VAT, and service tax, with a single unified tax
regime.
 History of the GST Act, 2017

 Early Proposals: The concept of GST was first proposed in the year 2000 during the Vajpayee
government.
 Constitutional Amendment: The 122nd Constitutional Amendment Bill was introduced in the
Parliament in December 2014 and passed in May 2015, allowing the introduction of GST.
 GST Council: The GST Council was formed in September 2016 to oversee the implementation
of GST.
 Enactment: The GST Bill was passed in the Parliament on March 29, 2017, and came into
effect on July 1, 2017.
 Scope of the GST Act, 2017
 The GST Act, 2017, applies to the supply of goods and services in India. It
encompasses various forms of transactions, including sales, transfers,
purchases, barter, leases, and import of goods and services.
 Importance of the GST Act, 2017
 Economic Unification: It creates a single national market by removing the
inter-state tax barriers.
 Simplification: By subsuming multiple indirect taxes, GST simplifies the tax
structure.
 Revenue Efficiency: Reduces tax evasion by bringing more transactions into
the tax net.
 Ease of Doing Business: Facilitates smoother business operations by
eliminating the need for multiple tax registrations and filings.
 Rates under the GST Act, 2017
 GST is categorized into different tax slabs: 0%, 5%, 12%, 18%, and 28%. Some
essential items are exempted from GST, while luxury and demerit goods
attract a higher tax rate.
 Advantages of the GST Act, 2017
 Reduced Cascading Effect: Eliminates the tax on tax effect,
reducing overall tax burden on goods and services.
 Increased Compliance: Unified tax system encourages
better compliance and reduces tax evasion.
 Improved Competitiveness: Lowers the overall cost of
production, making Indian goods and services more
competitive in the international market.
 Revenue Growth: Broadens the tax base and improves
revenue collection for the government.
 Transparency: Simplifies the tax structure and makes the
taxation process more transparent.
 Disadvantages of the GST Act, 2017
 Implementation Challenges: Initial teething problems and technical glitches in
GSTN (GST Network).
 Increased Compliance Costs: Businesses, especially small and medium
enterprises (SMEs), face increased compliance costs and efforts.
 Inflationary Impact: Short-term inflationary impact on goods and services due
to the transition.
 Sectoral Disparities: Certain sectors might face higher tax burdens compared
to the previous tax regime.
 Complexity for Some Sectors: The differentiation in tax rates and exemptions
can create complexities for businesses operating across multiple sectors.
 Conclusion
 The GST Act, 2017, represents a landmark reform in India's indirect tax
system. While its implementation has faced challenges, the long-term benefits
of a unified tax system are expected to outweigh the initial hurdles. The GST
aims to streamline tax administration, reduce corruption, and promote a more
transparent and efficient economy.
2) Define the concept “ Supply”. Explain the levy and collection, time of supply and types
of supply under GST.
Answer:-
 Concept of "Supply" under GST Act, 2017
 Under the GST Act, 2017, the term "supply" is comprehensively defined. It includes all
forms of supply of goods and services such as sale, transfer, barter, exchange, license,
rental, lease, or disposal made or agreed to be made for a consideration by a person in
the course or furtherance of business. The definition is broad to cover almost every
transaction involving goods and services.
 Key Elements of Supply:
 Supply of Goods or Services: The term includes all types of supply of goods and/or
services.
 Consideration: Supply must be made for a consideration except in certain specified
cases.
 Course or Furtherance of Business: The supply must be made in the course or
furtherance of business.
 Intra-State and Inter-State Supply: Includes both intra-state and inter-state
transactions.
 Levy and Collection of GST
 GST is levied on the supply of goods and services. It is a destination-based tax, meaning the tax is collected by the
state where the goods or services are consumed.
 Types of GST:
 Central GST (CGST): Levied by the Central Government on intra-state supplies.
 State GST (SGST): Levied by the State Government on intra-state supplies.
 Integrated GST (IGST): Levied by the Central Government on inter-state supplies and imports.
 Union Territory GST (UTGST): Levied in Union Territories.
 Time of Supply
 The time of supply under GST determines when the taxpayer is liable to pay GST. The time of supply varies for
goods and services.
 For Goods:
 The earlier of the following dates:
◦ Date of issue of invoice by the supplier.
◦ The last date on which the supplier is required to issue the invoice.
◦ Date of receipt of payment.
 For Services:
 The earlier of the following dates:
◦ Date of issue of invoice by the supplier (if issued within the prescribed period).
◦ Date of receipt of payment.
◦ Date of provision of services (if invoice is not issued within the prescribed period).
 Types of Supply under GST
 1. Taxable Supply:
 Supplies that are subject to GST, charged at rates specified under the GST law.
 2. Exempt Supply:
 Supplies that attract a nil rate of tax or are wholly exempt from tax under section 11 of
the CGST Act or under section 6 of the IGST Act.
 3. Zero-Rated Supply:
 Exports and supplies to Special Economic Zones (SEZs) are zero-rated, meaning the
supply attracts a 0% GST rate, but the credit of the input tax is available.
 4. Composite Supply:
 A supply consisting of two or more goods or services, which are naturally bundled and
supplied in conjunction with each other in the ordinary course of business, where one
of which is a principal supply.
 5. Mixed Supply:
 A supply consisting of two or more individual supplies of goods or services, or any
combination thereof, made in conjunction with each other for a single price, which do
not constitute a composite supply.
 Detailed Example of Each Type of Supply
 Taxable Supply Example:
 Sale of a television set by a retailer to a customer.
 Exempt Supply Example:
 Services by an entity registered under Section 12AA of the Income Tax Act, 1961 by way of
charitable activities.
 Zero-Rated Supply Example:
 Export of goods from India to the USA.
 Composite Supply Example:
 When a hotel provides a package that includes food and accommodation, where accommodation is
the principal supply.
 Mixed Supply Example:
 A Diwali gift hamper consisting of chocolates, dry fruits, and sweets supplied for a single price,
where each item can be supplied separately.
 Conclusion
 The GST Act, 2017, defines "supply" in a broad and inclusive manner to encompass various
transactions involving goods and services. Understanding the levy, collection, and time of supply is
crucial for compliance under GST. The different types of supply ensure that the tax is appropriately
categorized and applied, thereby providing clarity and uniformity in the taxation of goods and
services.
3) Explain in detail the provisions relating eligibility, exemption,
compulsory registration, cancellation of Registration under GST.
Answer:-
 Eligibility for Registration under GST
 Under the GST Act, any person or entity engaged in the supply
of goods or services is required to register for GST if their
aggregate turnover exceeds the prescribed threshold limit
during a financial year.
 Threshold Limits:
 For businesses involved exclusively in the supply of goods:
◦ Rs. 40 lakhs (Rs. 20 lakhs for special category states).
 For businesses involved in the supply of services:
◦ Rs. 20 lakhs (Rs. 10 lakhs for special category states).
 Exemption from Registration under GST
 Certain categories of persons are exempt from registering under GST, even if their turnover exceeds
the threshold limit. These include:
 Agriculturists, to the extent of supply of produce out of cultivation of land.
 Persons exclusively supplying goods or services not liable to tax or wholly exempt from tax.
 Specified activities that are neither treated as supply of goods nor supply of services (e.g., services
by an employee to the employer in the course of employment).
 Compulsory Registration under GST
 Certain businesses must register for GST irrespective of their turnover. These include:
 Inter-state suppliers.
 Casual taxable persons.
 Persons liable to pay tax under reverse charge.
 Non-resident taxable persons.
 Persons required to deduct tax (TDS) under GST.
 Input service distributors.
 E-commerce operators.
 Persons supplying goods or services on behalf of other taxable persons as an agent or otherwise.
 Persons supplying online information and database access or retrieval services from a place outside
India to a person in India, other than a registered taxable person.
 Step-by-Step Procedure for GST Registration
 Access the GST Portal:
◦ Visit the official GST portal: GST Portal.
 Create a Temporary Reference Number (TRN):
◦ Click on the 'Services' tab.
◦ Select 'Registration' and then 'New Registration'.
◦ Fill in the required details, including:
 Select 'Taxpayer' under 'I am a'.
 Enter the State and District.
 Enter the legal name of the business (as per PAN).
 Enter the PAN of the business.
 Provide a valid email address and mobile number.
◦ Click on 'Proceed'.
◦ You will receive an OTP on your registered email and mobile number.
◦ Enter the OTP to receive a Temporary Reference Number (TRN).
 Complete Part-B of the Registration Form:
◦ Return to the GST portal.
◦ Click on 'Services' > 'Registration' > 'New Registration'.
◦ Select 'Temporary Reference Number (TRN)'.
◦ Enter the TRN received and complete the CAPTCHA.
◦ Click on 'Proceed'.
◦ You will receive an OTP on your registered mobile and email.
◦ Enter the OTP to access the application form.
 Fill in the Registration Application:
◦ The application form is divided into several sections. Fill in the required details in each tab:
 Business Details: Legal name, trade name, constitution of the business, PAN, date of
commencement of business, and date on which liability to register arises.
 Promoter/Partner Information: Details of up to 10 Promoters/Partners, including their
personal information, identity, and address proof.
 Authorized Signatory: Details of the person who will act as the authorized signatory.
 Principal Place of Business: Address and contact information of the principal place of
business.
 Additional Places of Business: Details of additional business locations, if any.
  Goods and Services: HSN codes for goods supplied and SAC codes for services provided.
 State-Specific Information: Professional tax employee code, state excise license number, etc.
 Aadhaar Authentication: Information on Aadhaar authentication of the authorized signatory.
 Verification: The application must be verified by the authorized signatory using a Digital Signature
Certificate (DSC), e-Sign, or Electronic Verification Code (EVC).
 Upload Documents:
◦ Based on the business type, you may need to upload the following documents:
 PAN card of the business.
 Proof of business registration or incorporation certificate.
 Identity and address proof of promoters/partners.
 Proof of principal place of business (electricity bill, rent agreement, NOC from owner).
 Bank account statement/cancelled cheque.
 Digital Signature Certificate (DSC).
 Submit the Application:
◦ After filling in all the details and uploading the required documents, submit the application using DSC
or Aadhaar-based E-Sign.
 Application Verification:
◦ The GST officer will verify the application and documents.
◦ If the officer finds the application satisfactory, the registration will be approved, and a Certificate of
Registration will be issued in Form GST REG-06.
 Receiving GSTIN:
◦ Upon approval, you will receive a unique Goods and Services Tax Identification
Number (GSTIN) and the registration certificate.
 Rejection or Additional Information:
◦ If additional information is required, or the application is found unsatisfactory,
the GST officer may issue a notice seeking additional details or clarification.
◦ You will have to respond to the notice within the specified time.
 Unit – VIII: GST- Procedure
1) What is meant by “Returns”? Explain the various returns filed under GST.
Answer:-
 Under the Goods and Services Tax (GST) regime, "returns" refer to the periodic statements filed by
registered taxpayers to report their business activities, tax liabilities, and input tax credits. Filing
GST returns is a crucial compliance requirement for businesses as it ensures the proper
documentation of all transactions and helps maintain transparency in the tax system.
 Types of GST Returns
 Various returns need to be filed under GST, each serving a specific purpose and having different
filing frequencies. Here are the main returns filed under GST:
 1. GSTR-1: Details of Outward Supplies
 Purpose: Captures details of all outward supplies (sales) made by the taxpayer.
 Frequency: Monthly for businesses with turnover above ₹1.5 crore; quarterly for businesses with
turnover up to ₹1.5 crore.
 Due Date: 11th of the following month for monthly filers; end of the month following the quarter
for quarterly filers.
 2. GSTR-2: Details of Inward Supplies
 Purpose: Captures details of all inward supplies (purchases) received by the taxpayer.
 Note: As of now, GSTR-2 is suspended, and inward supplies details are auto-populated in GSTR-2A
from suppliers’ GSTR-1.
 3. GSTR-3: Monthly Return
 Purpose: Summary of outward and inward supplies along with
the tax liability.
 Note: GSTR-3 is currently suspended and replaced by GSTR-3B.
 4. GSTR-3B: Summary Return
 Purpose: Simplified summary return for declaring summary of
inward and outward supplies, input tax credit, and tax liabilities.
 Frequency: Monthly.
 Due Date: 20th of the following month.
 5. GSTR-4: Annual Return for Composition Scheme
 Purpose: Annual return for taxpayers registered under the
Composition Scheme.
 Frequency: Annually.
 Due Date: 30th April of the following financial year.
 6. GSTR-5: Return for Non-Resident Taxable Persons
 Purpose: Details of all outward and inward supplies, tax paid, and tax
liability for non-resident taxable persons.
 Frequency: Monthly.
 Due Date: 20th of the following month or within 7 days after the last
day of the registration period, whichever is earlier.
 7. GSTR-6: Return for Input Service Distributors (ISD)
 Purpose: Captures details of input tax credit received and distributed
by an ISD.
 Frequency: Monthly.
 Due Date: 13th of the following month.
 8. GSTR-7: Return for Tax Deductors
 Purpose: Details of tax deducted at source (TDS) and TDS liability.
 Frequency: Monthly.
 Due Date: 10th of the following month.
 9. GSTR-8: Return for E-Commerce Operators
 Purpose: Details of supplies made through e-commerce platforms and
the tax collected at source (TCS).
 Frequency: Monthly.
 Due Date: 10th of the following month.
 10. GSTR-9: Annual Return
 Purpose: Comprehensive annual return consolidating all
monthly/quarterly returns filed during the year.
 Frequency: Annually.
 Due Date: 31st December of the following financial year.
 11. GSTR-9A: Annual Return for Composition Taxpayers
 Purpose: Annual return for taxpayers registered under the
Composition Scheme.
 Note: GSTR-9A is now merged with GSTR-4, making GSTR-4 an annual
return.
 12. GSTR-9C: Reconciliation Statement
 Purpose: Reconciliation statement and certification for taxpayers with
an annual turnover exceeding ₹5 crores.
 Frequency: Annually.
 Due Date: 31st December of the following financial year.
 13. GSTR-10: Final Return
 Purpose: Filed by taxpayers whose GST registration has been canceled
or surrendered.
 Due Date: Within 3 months of the date of cancellation or order of
cancellation, whichever is later.
 14. GSTR-11: Return for Unique Identification Number (UIN) Holders
 Purpose: Details of inward supplies for UIN holders to claim a refund.
 Frequency: Monthly.
 Due Date: 28th of the following month.
 Importance of Filing GST Returns
 Compliance: Regular filing of returns ensures compliance with GST laws.
 Input Tax Credit: Helps in claiming input tax credit for the taxes paid on
purchases.
 Transparency: Maintains transparency and accountability in business
transactions.
 Legal Requirement: Non-filing or late filing can lead to penalties and legal
consequences.
 Revenue Collection: Facilitates the government in collecting revenue
efficiently.

 Conclusion
 Filing GST returns is a critical aspect of GST compliance, requiring businesses
to accurately report their transactions. Each return serves a specific purpose
and has a defined due date to ensure systematic and timely tax collection.
Understanding the various types of returns and their filing requirements is
essential for businesses to stay compliant under the GST regime.
1) Person
2) Assessment Year
3) Previous Year
4) Income
5) Assessee
6) Income Tax Tribunal
7) House Rent Allowance
8) Direct Tax and Indirect Tax
9) Tax Evasion and Tax Avoidance
10) E-filing of returns
1) Returns: GST returns are periodic statements filed by registered
taxpayers to report their business activities, tax liabilities, and input
tax credits. These include various forms like GSTR-1, GSTR-3B, and
GSTR-9.
2) Reverse Charge: Under reverse charge, the liability to pay tax shifts
from the supplier to the recipient of goods or services. This is
applicable for specified goods/services and certain situations like
purchases from unregistered dealers.
3) Refund: GST refunds can be claimed for excess taxes paid, tax on
export of goods/services, or input tax credit accumulation due to the
inverted duty structure. The process involves filing a refund application
in Form GST RFD-01.
4) Payment of Tax: GST payments are made online through the GST
portal using various methods like net banking, debit/credit cards, or
via authorized banks. Tax payments must be made monthly or
quarterly, depending on the return filing frequency.
5) Supply: Supply under GST includes all forms of supply of goods or services
such as sale, transfer, barter, exchange, license, rental, lease, or disposal made
for consideration in the course of business.
6) Self-Assessment: Self-assessment under GST allows taxpayers to assess their
tax liability, file returns, and pay taxes without requiring prior approval from
the tax authorities. It ensures timely compliance and reduces administrative
burden.
7) Audit: A GST audit involves the examination of records, returns, and other
documents maintained by a registered person to verify the correctness of
turnover declared, taxes paid, refund claimed, and input tax credit availed.
8) Input Tax Credit: Input tax credit (ITC) allows businesses to claim a credit for
the GST paid on purchases of goods or services used in the course of business.
ITC can be utilized to offset the GST liability on sales.
9) Levy and Collection: GST is levied on the supply of goods and services and
collected at each stage of the supply chain. The tax is ultimately borne by the
end consumer, with registered taxpayers collecting and remitting GST to the
government.