legal issues – taxation

8/7/2019 LEGAL ISSUES TAXATION

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LEGAL ISSUES TAXATION

By

Ashish Thakre

Vaibhav Zille


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TAXATION

Tax is defined as a fees paid by an individual to

the government.

It is not a donation or a voluntary payment but an

enforced contribution to the government.

Taxation has always been a part of human

civilization.

The Funds for expenditure must come from the

populace that is in need of protection and

welfare.


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Types of Taxes

Direct Tax :- These are the taxes paid on the

income earned by an individual, corporatebusiness & institutions.

Ex. Income Tax, Wealth Tax & Professional

Tax


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Contd

Indirect Tax :- These are the taxes which does

not incurred from the income earned by anindividual, corporate business & institutions.

Individuals would pay these taxes indirectly

rather than individually & directly.

Ex. Service Tax, Sales Tax & Custom Duties


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Service Tax

Service Tax is a form of indirect tax applied on

certain categories of persons, firms or agencies.

Person who provides service is supposed to paythe service tax.

Ex. 1) A person who owns a movie theater

pays service tax to the government, as he

provides theater service to the public

2) A film actor pays service tax, as he

provides entertainment service to everyone


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Contd

Service tax was introduced in India in 1994 by

Chapter V of Finance Act, 1994.

The rate of service tax is 12% of the totalincome of the service provider.

Service tax can be paid on a quarterly basis.

The tax should be paid by 25

th

of the monthfollowing the quarter.


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Contd

In case of service providers such as companiesthe service tax should be paid on monthlybasis, it should be paid before 25th of every

month. Service tax can be paid in specified branches

of designated banks and third party agents orelse we can pay the taxes online also.

The online payment of taxes is named asElectronic Federal Tax Payment.


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Contd

It was imposed on an initial set of 3 services in

1994.

Scope of service tax has since been expandedcontinuously Finance acts.

The Central Board of Excise & Customs(CBEC)

under Dept of Revenue in the Ministry of

Finance deals with task of formulation of policy

concerning levy & collection of service tax.


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Contd

There are six commissionarates located at

metropolitan cities of Delhi, Mumbai, Kolkata,

Chennai, Ahmedabad & Banglore which deal

exclusively with work related to service tax.

Directorate of service tax at Mumbai over sees

the activities at the field level for technical &

policy level coordination.


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REASONS FOR IMPOSITION OF

SERVICE TAX

The loss of revenue

Distortion in resource allocation

Desire to achieve parity between goods &services taxation

Value Added Services

Widening of tax base

Reduction in commodities taxes


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GROWTH OF SCOPE OF SERVICE TAX

Year No. of Taxed services Tax Revenue (Rs. Crore)

1994-95 3 407

1995-96 3 862

1996-97 6 1,059

1997-98 18 1,586

1998-99 30 1,957

1999-00 25 2,072

2000-01 26 2,612

2001-02 41 3,6002002-03 51 6,026

2003-04 58 8,000


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SERVICES UNDER TAX NET

Services were brought under tax net in 1994-95

1. Telephone

2. Stock Broker3. General Insurance


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Contd

The Finance act (2) brought in addition the

following services

1. Advertising Agencies2. Courier Agencies

3. Radio Pager Services


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Contd


1. Consulting Engineers

2. Custom House Agents

3. Steamer Agents4. Clearing & Forwarding Agents

5. Air Travel Agents

6. Tour Operators

7. Rent-a-Cab Operators

8. Manpower Recruitment Agency

9. Mandap Keepers


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Contd

Services were brought under tax net in 1998-991. Architects

2. Interior Decorators

3. Management Consultants

4. Chartered Accountants

5. Company Secretaries

6. Cost Accountants

7. Real Estate agents8. Credit Rating Agencies

9. Private Security Agencies

10.Market Research Agencies

11.Under Writer Agencies


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Contd


1. Auxiliary Services to Life Insurance

2. Cargo Handling

3. Storage & Warehousing Services4. Event Management

5. Cable Operators

6. Beauty Parlors

7. Health & Fitness Centers

8. Fashion Designers

9. Rail Travel Agents

10.Dry Cleaning Services


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Contd


1. Intellectual Property Services

2. Opinion Poll Services

3. TV / Radio Program Services

4. Survey & Exploration of Mineral Services

5. Travel Agent Services

6. Forward Contract Services7. Transport of Goods through Pipe Line

8. Site Preparation & Clearance Services


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Contd

9. Survey & Map Making Services

10.Cleaning Services

11.Membership ofClubs12.Packaging Services

13.Mailing Services

14.Construction Services


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Services Exempted from Service Tax

Goods transport operator services

Outdoor caterer services

Mechanized Slaughter houses

Mandap keepers services provided by hotels

Export of services


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Penalties Levied under Service Tax Act

Offence Penalty Provision

Delay in payment of service tax Simple interest @ 15% for delayed period

Failure to obtain registration Non discriminatory fixed sum of Rs. 500

Failure to pay service tax S.I. @ 15% for delayed period + Rs. 100 to200 / day during the failure

Failure to furnish prescribed returns Penalty extending to an amount not

exceeding Rs. 1,000 for each failure

Suppressing value of taxable services 25% of the tax determined, if it is paid

within 30 days of the order otherwiseservice tax, interest & penalty upto

amount of tax payable

Failure to comply with the notice 10 to 50% of the amount of service tax

that would have been avoided


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THANK

YOU

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