drf 27 corporate taxn

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DRF: 27. CORPORATE TAXATON

1)Explain the provisions of Central Sales Tax.CENTRAL SALES TAX (REGISTRATION

& TURNOVER) RULES, 1957

1 These Rules may be called the Central Sales Tax (Registration andTurnover) Rules, 1957.2 In these rules unless the context otherwise requires(a) Act means the Central Sales Tax Act, 1956;(aa) authorised officer means an officer authorised by the Central Governmentunder clause (b) of sub-section (4) of section 8;

(aaa) company means a company as defined in section 3 of the Companies Act,1956 (1 of 1956), and includes a foreign company within the meaning of section 591of that Act ;(b) form means a form appended to these rules;(c) notified authority means the authority specified under sub-section (1) ofsection 7 ;(cc) prescribed authority means the authority empowered by the CentralGovernment under sub-section (2) of section 9, or the authority prescribed by a StateGovernment under clause (e) of sub-section (4) of section 13, as the case may be;(d) section means a section of the Act ;(dd) [Omitted];(e) warehouse means any enclosure, building, or vessel in which a dealer

keeps a stock of goods for sale.Certificate of registration3 (1) An application for registration under section 7 shall be made by a dealer to

the notified authority in Form A and shall be (a) signed by the proprietor of the business, or, in the case of a firm, by one ofits partners, or, in the case of a Hindu undivided family, by the karta or manager of

the family, or, in the case of a company [***] by a director, managing agent orprincipal officer thereof, or, in the case of a Government by an officer duly

authorised by that Government, or, in the case of any other association of individualsby the principal officer managing the business ; and(b) verified in the manner provided in the said Form A.(2) Where a dealer has more than one place of business within a State, he shallmake a single application in respect of all such places, name in such application one

of such places as the principal place of business for the purposes of these rules andsubmit such application to the notified authority specified in respect of the principal

place of business so named:1PROVIDED that any place so named shall not in any case be different fromthe place, if any, declared by him to be the principal place of business, by whatevername called, under the general sales tax law of the State.4 (1) An application for registration under sub-section (1) of section 7 shall bemade not later than thirty days from the date on which the dealer becomes liable topay tax under the Act.(2) An application for registration under sub-section (2) of section 7 may be

made at any time after the commencement of the Act.(3) A fee of rupees twenty five shall be payable in respect of every application


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for registration under sub-rule (1) or sub-rule (2), and such fee may be paid in theform of court-fee stamps affixed to such application.5 (1) When the notified authority is satisfied, after making such enquiry as itthinks necessary, that the particulars contained in the application are correct andcomplete, and the fee referred to in sub-rule (3) of rule 4 has been paid, it shallregister the dealer and grant him a certificate of registration in Form B and also acopy of such certificate for every place of business within the State other than theprincipal place of business mentioned therein.(2) When the said authority is not satisfied that the particulars contained in theapplication are correct and complete, or where the fee referred to in sub-rule (3) of rule4 has not been paid, he shall reject the application for reasons to be recorded in writing:PROVIDED that before the application is rejected, the applicant shall begiven an opportunity of being heard in the matter and, as the case may be, ofcorrecting and completing the said particulars or complying with the requirements ofsub-rule (3) of rule (4)6 The certificate of registration granted under sub-rule (1) of rule 5 shall be kept atthe principal place of business mentioned in such certificate and copy of such certificate

granted under the said sub-rule shall be kept at every place of business within the Stateother than the principal place of business, mentioned in such certificate.

7 (1) Where a dealer desires the certificate of registration granted to him underthese rules to be amended, he shall submit an application for this purpose to thenotified authority setting out the specific matters in respect of which he desires suchamendment and the reasons therefor, together with the certificate of registration andthe copies thereof, if any, granted to him; and such authority may, if satisfied with

the reasons given, make such amendments, as it thinks necessary, in the certificate ofregistration and the copies thereof, if any, granted to him.(2) The provisions of rule 6 shall apply in relation to such amended certificateand copies thereof, as they apply in relation to the original certificate and copiesthereof.

8 (1) Where the certificate of registration granted to a dealer is lost, destroyed,defaced or mutilated, he may on application made in this behalf to the notified

authority and on payment of a fee of rupees five obtain a duplicate copy of suchcertificate.(2) The fee payable under sub-rule (1) shall be paid in the form of court-fee stamps.2Amendment or cancellation of Certificate of registration9 (1) A notified authority shall, before amending or canceling, as the case may be,

the certificate of registration of a dealer under sub-section (4) of section 7, give himan opportunity of being heard in the matter.(2) If the certificate of registration is proposed to be amended, the dealer shallforthwith produce to the notified authority the certificate of registration and thecopies thereof, if any, granted to him, for having them amended.

(3) If the certificate of registration is cancelled, the dealer shall forthwithsurrender to the notified authority the certificate of registration and the copies

thereof, if any, granted to him.10 If any dealer desires to apply under sub-section (5) of section 7 for thecancellation of his registration, he shall submit within the time specified in that subsection to thenotified authority an application in that behalf together with thecertificate of registration and copies thereof, if any, granted to him; and suchapplication shall be dealt with in accordance with the provisions of that sub-section.Determination of Turnover11 (1) The period of turnover in relation to any dealer liable to pay tax under thisAct shall be the same as the period in respect of which he is liable to submit returnsunder the general sales tax law of the appropriate State:PROVIDED that in relation to a dealer who is not liable to submit returnsunder the general sales tax law of the appropriate State, the period of turnover shall


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be a quarter ending on the 30th June, 30th September, 31st December and 31stMarch as the case may be, in a financial year.(2) [Omitted]12 (1) The declaration and the certificate referred to in sub-section (4) of section 8shall be in Forms C and D respectively:PROVIDED that Form C in force before the commencement of the CentralSales Tax (Registration and Turnover) (Amendment) Rules, 1974 or before thecommencement of the Central Sales Tax (Registration and Turnover) (Amendment)Rules, 1976, may also be used upto the 31st December, 1980, with suitablemodifications:[Omitted]3PROVIDED FURTHER that a single declaration may cover all transactionsof sale, which take place in a quarter of a financial year between the same twodealers.PROVIDED ALSO that where, in the case of any transaction of sale, thedelivery of goods is spread over to different quarters in a financial year or ofdifferent financial years, it shall be necessary to furnish a separate declaration or

certificate in respect of goods delivered in each quarter of a financial year.(2) Where a blank or duly completed form of declaration is lost, whether such

loss occurs while it is in the custody of the purchasing dealer or in transit to theselling dealer, the purchasing dealer shall furnish in respect of every such form solost, an indemnity bond in Form G to the notified authority from whom the said formwas obtained, for such sum as the said authority may, having regard to thecircumstances of the case, fix. Such indemnity bond shall be furnished by the selling

dealer to the notified authority of his State if a duly completed form of declarationreceived by him is lost, whether such loss occurs while it is in his custody or while itis in transit to the notified authority of his State:PROVIDED that where more than one form of declaration is lost, thepurchasing dealer or the selling dealer, as the case may be, may furnish one such

indemnity bond to cover all the forms of declarations so lost.(3) Where a declaration form furnished by the dealer purchasing the goods or

the certificate furnished by the Government has been lost, the dealer selling thegoods may demand from the dealer who purchased the goods or, as the case may be,from the Government which purchased the goods, a duplicate of such form orcertificate, and the same shall be furnished with the following declaration recorded inred ink and signed by the dealer or authorised officer of the Government, as the case

may be, on all the three portions of such form or certificate,I hereby declare that this is the duplicate of the declaration form/ certificateNo. ............ signed on ........ and issued to ............... who is a registereddealer of .......... (State) and whose registration certificatenumber is ................

(4) The certificate referred to in sub-section (2) of section 6 shall be in Form E-Ior Form E-II as the case may be.

(5) The declaration referred to in sub-section (1) of section 6-A shall be in FormF:PROVIDED that a single declaration may cover transfer of goods, by adealer, to any other place of his business or to his agent or principal, as the case maybe, effected during a period of one calendar month:PROVIDED FURTHER that if the space provided in Form F is notsufficient for making the entries, the particulars specified in Form F may be givenin separate annexure attached to that form so long as it is indicated in the form thatthe annexures form part thereof and every such annexure is also signed by the person4signing the declaration in Form F:PROVIDED FURTHER that Form F in force before the commencement ofthe Central Sales Tax (Registration and Turnover) (Second Amendment) Rules,


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1973, may continue to be used up to 31st day of December, 1980 with suitablemodifications.(6) Form C referred to in sub-rule (1), or as the case may be, Form F referredto in sub-rule (5), shall be the one obtained by the purchasing dealer or, as the casemay be, the transferee in the State in which the goods covered by such form aredelivered.Explanation.Where, by reason of the purchasing dealer not beingregistered under section 7 in the State in which the goods covered by Form Creferred to in sub-rule (1) are delivered, he is not able to obtain the said form in thatState, Form C may be the one obtained by him in the State in which he is registeredunder the said section.(7) The declaration in Form C or Form F or the certificate in Form E-I or FormE-II shall be furnished to the prescribed authority within three months after the endof the period to which the declaration or the certificate relates:PROVIDED that if the prescribed authority is satisfied that the personconcerned was prevented by sufficient cause from furnishing such declaration orcertificate within the aforesaid time, the authority may allow such declaration or

certificate to be furnished within such further time as that authority may permit.(8) (a) The person referred to in clause (a) of sub-rule (1) of rule 3 shall alone be

competent to sign the declaration in Form C or Form F or the certificate in FormE-I


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2) Elaborate Direct and Indirect Taxes.1. IntroductionThe tax system affects the standard of living in different ways for different groups of thepopulation.

This is why the effects of direct and indirect taxes on the standard of living is an importantsubject inpublic economics, see for instance Myles (1995). In Norway, a lot of attention has been paid

to thedistributional effects of direct taxes, like for instance taxation of income and wealth, whilelittleattention has been paid to the distributional effects of indirect taxes, like value added tax(VAT) and

commodity taxes. This is in spite of the fact that indirect taxes are the source ofapproximately onethird of the public tax revenue,1

and thereby have considerable effects on the standard of living.Consumption also shows less volatility than income, and may therefore be a better indicatorfor the

standard of living than income. Consumption taxes may thus be relevant tools for thedistributionalpolicy. In this paper, we compare the effects of twelve direct and indirect taxes on thestandard ofliving of the Norwegian population.

Our starting point is a hypothetical situation where the government wants to lead an expansiveeconomic policy, either through a reduction in direct or indirect taxes, or by increasing

transfers orsubsidies. We assume that the government wants a specific level on the expansivity of theeconomicpolicy, here measured by the increase in total consumption of all households.2We calculate thedistribution of the standard of living3over all persons in the Norwegian population, and how thisdistribution responds to changes in the tax system. Furthermore, this approach allows us todeterminethe effects on various characteristics of the distribution of the standard of living. We focus onthree

aggregated measures of welfare: (a) Average standard of living, measured by the arithmeticmean; (b)the equality of the standard of living, measured by 1 minus the Gini-index; and (c) Sen-welfare,defined as the product of the average standard of living and equality.

We find that all the twelve tax reforms lead to an increase both in the average standard ofliving and inSen-welfare. Reduced surtax, income tax, wealth tax and petrol tax lead to reduced equality,while theother tax changes lead to a more equal distribution of the standard of living. In general, an

increase insubsidies or tax-deductions directed towards families with children leads to the largest

increase in both


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the mean and the equality of the standard of living, and thereby the largest increase in Sen-welfare.Then follows reduced VAT on food, and the rest of the indirect taxes. The least efficient taxchangesin this analysis are reduced taxation on income and wealth.

1About 36 per cent of the publics' total tax revenue came from indirect taxes in 1999 (Olsen2000, appendix, p. 69*).2We define total consumption of a household as total consumption expenditure divided by ahousehold specific price index.Total consumption of all households is defined as the sum of total consumption over allhouseholds in Norway. Totalconsumption per person and per consumption unit are also calculated to get comparablefigures. 5

A reduction in taxes or an increase in transfers leads to a partial increase in the standard ofliving of

the households because it allows for increased private consumption. Such tax changes mayalso lead toreduced public economic activity however, for instance reduced public support tokindergartens. Thiswill also affect the standard of living, but is not discussed here.

In this paper we do not focus on traditional efficiency issues in tax analysis, but instead wedefine ourmeasure of distributional efficiency separable from efficient production of consumption, bydividingthe changes in welfare by the change in total consumption. One tax reform is more

distributional2. The model framework

We have used the model LOTTE-Konsum, developed at Statistics Norway.5LOTTE-Konsum is basedon consumer theory and econometric analysis of consumer behaviour and standard of living,and

welfare theory for aggregation of standard of living over households and individuals in apopulation. Amodel for direct taxes, LOTTE, is used as a pre-model for LOTTE-Konsum to compute theeffects ofchanges in direct taxes on disposable household income, cf. Aasness et al (1995). LOTTE

uses amodel population of approximately 15 000 households with about 40 000 individuals,

weighted to berepresentative for the Norwegian population. The effects of changes in indirect taxes onconsumerprices are calculated in another pre-model.6Lotte-konsum calculates savings, total consumptionexpenditure, consumption expenditure for 24 goods, the number of consumption units andpriceindexes for each household, taking into consideration that different households have differentconsumption patterns, and the different measures of distributional effects for the modelpopulation,which represents the entire Norwegian population.


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3. Tax reformsSurtax is a progressive tax on high incomes, and is levied on personal income without anydeductions.Income tax is the common tax on income to the tax distribution fund. It has a flat tax rate, andisproportional to net income less income deductions, if applicable. Wealth tax is a progressivetax, andis levied on net wealth. We simulate a reduction of one percentage point for each of thesetaxes.15Parents' tax deduction is a deduction in the income tax for parents or others with custody ofchildrenunder the age of 19, and is calculated per child. If the recipient does not have taxable income,thecorresponding amount is given as a transfer payment. We simulate an increase of 10 per cent.Parents'income deduction is, within a specified limit, given for documented childcare expenses for

childrenunder the age of 12

16. We simulate a 10 per cent increase of the initial value. Child benefit is given toall who support children under the age of 1817and live in Norway, and can be considered as a negative

tax. Single parents have the right to child benefit for one more child than the actual number ofchildrenin the household. The child benefit is higher for child number three and above than for thetwo firstchildren. An additional benefit is given for children under the age of three. We analyse two

alternativechanges in the child benefit, a 10 per cent increase for the first child and a 10 percent increase

for thethird child and above.

Table 1: Distributional efficiency of a reduction in various taxes and an increase in childbenefit and various deductions. OECD equivalence scale (e = 0.5). Ranking number

in parentheses.Increased child benefit for 3rd child+ 2.16 (1) 1.57 (1) 5.78 (1)Increased tax deduction for parents 1.69 (2) 1.48 (2) 3.45 (2)Increased child benefit for 1st child 1.55 (3) 1.45 (4) 2.72 (3)Increased income deduction 1.23 (4) 1.47 (3) 0.76 (6)

Reduced VAT on food 1.18 (5) 1.26 (7) 1.34 (4)Reduced tax on electricity 1.11 (6) 1.23(10) 1.11 (5)

Reduced VAT on all commodities 1.00 (7) 1.26 (9) 0.31 (7)Reduced tax on tobacco & spirits 0.96 (8) 1.22(11) 0.25 (8)Reduced petrol tax 0.86 (9) 1.27 (6) -0.56a(9)Reduced income tax 0.73(10) 1.26 (8) -1.31(10)

6. ConclusionsTwelve different direct and indirect taxes in the Norwegian tax system are ranked accordingto theirdistributional efficiency. This empirical case study illustrates a new approach to the analysisof the


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distributional effects of direct and indirect taxes, which we find fruitful. The distributionalefficiencyof a tax change is measured by the change in an aggregate measure of the distribution ofstandard ofliving over all individuals in a mini population divided by the change in total consumption.We focuson three aggregate measures: average standard of living, equality and Sen-welfare. Thedistributionalefficiency varies strongly between the tax reforms, and the rankings are robust with respect toimportant model assumptions. Child benefit for families with three or more children is mostefficientin all dimensions. Other types of child benefit and tax reductions for families with childrenare alsorelatively efficient. Reduced VAT on food and reduced electricity tax increase equality andSenwelfare, but are less efficient than increased child benefit and tax reductions for familieswith children.The least distributional efficient tax reductions, with respect to equality and Sen-welfare, are

reductions in surtax, wealth tax, and income tax.

drf 27 corporate taxn

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