Tata steel
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Introduction
The taxation system in India has prevailed for centuries. The government uses the revenue
collected through taxes in the development of the nation. Earlier, traders and farmers used to
pay taxes in the form of gold, silver and agricultural produce. At the time of independence,
the government formalized the taxation system. They presented a well-structured taxation
system was presented to Indian citizens, to push economic reform and remove wealth
disparity.
Over the years, the government has reformed many policies to simplify and automate the
taxation process. Read ahead to understand the tax structure and tax system in India.
Indirect taxes
The taxes imposed on products or services, when they are bought or sold, are called indirect
taxes. The government collects the taxes from the seller and not from an individuals’ income.
Some examples of taxes that fall under indirect taxes are customs duty and security
transaction tax.
[Link]
history-of-taxation-in-india/
The word tax comes from taxare or taxo. which is Latin and means to determine or
identify the worth of something. Governments impose taxes to use the services
provided by it. Taxes are imposed and collected by the state. The state then uses the
money collected for various welfare schemes or services and runs the government. The
economic strength of a nation is dependent on how good the tax systems of the nation
are. Some characteristics of tax are that it is compulsory for the public good, it is paid
from one’s income and it improves the revenue of the state.
Evolution
It was in 1850 that Sir James Willson formally introduced the tax in India. He was
the finance minister of the pre -Independent India. He introduced the tax during the
first union budget session under British rule. The Indian Income Tax act of 1860 marks
the watershed moment for taxation in India. It is through this act that centrally organized
taxation began in India. The act was introduced to recover the losses the government
suffered from the 1857 military mutiny.
Under this act, the taxation was divided into four subgroups. The incomes from land,
professions or trade, securities, and salaries/pensions were taxed under this new act.
The Indian Income Tax act formed the basis of taxation laws in India. However, it was
revised and replaced over the course of decades. The law was revised in 1886 to
improvise on some categories for which tax can be levied. The new categories included
net salaries and profits from businesses.
The next revisions came in 1918 and 1922. The act of 1918 repealed the 1886 act and
formed many new important changes. The act of 1922 is extremely important since it
has since then that India started to have an operational Income Tax Department. This
act distinguished various departments of the Income-tax authorities. Over the years the
act became more and more complicated over the years due to the amendments made
by various governments over the course of decades. The act of 1922 remained in effect
in India till 1961. The act was brought by the British and later in 1956 Government of
India referred to a law commission to make it simpler.
The Indian Income Tax act of 1961 came into effect after consultation with the Ministry
of law. It was brought into force in April 1962. All citizens of India are bound by this act.
Since 1962 many amendments have been made to the act annually by the Union
Budget. The bills become acts after it is passed by both upper and lower houses of
parliament and get presidential assent to it. Currently, five categories of income are
considered for tax. They are as follows: salary, property, capital gains, profits from
businesses and other sources of income.
The Income Tax act of 1961 is long. It has 23 chapters, 298 sections and 14 schedules
in it.
Awareness of tax & investment planning and study of tax deductions & E-filing
Introduction of Awareness of Tax
The objective of the tax system is to make funds available for development activities.
Developing countries had several challenges in collecting of tax. The government fiscal
policy plays a vital role in increasing the rate of capital formation, resource mobilization, price
stability, and reduction in economic inequities and promotes the employment opportunity. The
main objectives are to collect the revenue and other objectives to mobilize funds for economic
development, establish of welfare state, and promote the equal distribution system of income,
production and consumption, creation of favourable environment for employment, investment
and control of illegal production and consumption. These are the main determinants of economy.
Taxation is the most effective and popular tools reserved in the hand of government of a country.
The major objective of taxation is to make fund available for economic stability. It also helps to
equal distribution national income of the country. Generally tax is classified into two types on the
basis of tax payer's burden direct and indirect tax. The impact or the money burden and the
incidence are on the one and the same person direct tax like income tax, property tax, vehicle tax
etc. it play a vital role as compared to indirect tax. An indirect tax is a form of tax imposed on
one person but partially or wholly paid by another like VAT, excise duty, import Export duty
etc.
Tax can be defined as a levy or other type of financial charge or fee imposed by state or central
government on legal entities or individuals. It is a compulsory levy from individuals ,
households and firms to central or local government. It is a kind of money of which it is the legal
duty of every citizen of the country to pay honestly. It may be levied on income, property and
even at the time of purchasing a commodity. Tax is computed and paid as prescribed in the law.
If a person defies the tax payment, he may be punished in the court of law. A taxpayer is no ten
titled to compel the government, while paying taxes, to give something to him in return of the
amount he has paid.
Introduction of Tax Planning
Tax planning helps in the reduction of tax amount and helps in utilizing the various reliefs,
deductions, exemptions and rebates as per the IT Act, 1961. Tax-saving is an important part of
financial planning. Tax planning is the process of analyzing a financial plan or a situation from a
tax perspective. With the help of tax planning, one can ensure that all elements of a financial plan
can function together with maximum tax efficiency. Tax Saving Instrument involves selection of
the right kind of instruments / schemes with an aim of maximizing returns. The decision
regarding the type of instrument depends upon the risk-taking capabilities of individuals.
Although there are various tax-saving instrument plans available in the market. People often get
confused about which plan best suits them. In order to make you choose the best instrument plan
for you depending on your risk appetite and preferences. The purpose of the study is to know the
awareness level and perception on the Tax saving instruments and to determine the tax-saving
instrument options which are preferred to save tax reason for preference of Instrument.
In tax planning, you can make contributions to retirement plans and instruments that have the
best impact on reducing your tax bill each year. Since retirement plans and instruments can have
a large effect on taxes owed, it’s important to consider these elements when you’re creating a tax
plan. There are a variety of methods by which, individuals or families falling in any tax bracket
can reduce their taxable income in the Indian tax system. These methods generally involve
instruments in certain types of tax saving instruments which allow for deductions under various
sections of the Income Tax Act, most notably Section 80C which covers a wide array of tax
deductions. This provision in the act allows for deduction on instruments of up to Rs. 1.5 lakh
annually. While picking a method that suits your needs, it is imperative to consider factors such
as risk, liquidity and potential returns as well as the tax liability on those returns. When returns
on these instruments are also taxable, they restrict your ability to generate wealth in the long
term. Every individual should know that tax planning in order to avail all the incentives provided
by the Government of India under different statures is legal.
Introduction on Tax Deduction
Tax deduction refers to claims made to reduce your taxable income, arising from various
investments and expenses incurred by a taxpayer. Thus, income tax deduction reduces your
overall tax liability. It is a kind of tax benefit which helps you save tax. However, the amount of
tax you can save depends on the type of tax benefit you claim.
Introduction of E-Filing
E-File is the term for electronic filing, sending your income tax return from tax software via the
Internet of the IRS or state tax authority. Two benefits of filing taxes electronically over mailing
in your return and that will receive a tax refund sooner and your tax data goes directly to IRS
computers with a greatly reduced chance of human keying or document scanning errors. E-filed
returns coat 20 times lesser than to process which compared to a paper return that saves tax
payers lots of money.
E-Filig is the process of filling your tax document through internet with the help of software or
by registering yourself to the income tax website. In India, E-filing of the income tax was
introduced in September, 2004, Initially on a voluntary usage basis for all categories of income
tax assesses. But from July, 2006, it was made mandatory for all corporate firms to e-file their
income tax return. Taking this process further, from assessment year 2007-2008, e-filing of
income tax return was made mandatory for all companies and from 2013 individuals having
more than INR 10 lakh income are mandate for filling income tax online.
The Central Board of Direct Taxes (CBDT) launched the new income tax e-
filing portal on 7th June 2021. The new portal ‘[Link]’ has
replaced the previous e-filing portal ‘[Link]’. The
taxpayers will now have to file their income tax returns (ITRs) and do all other
tax-related tasks through the new portal. The portal is being redesigned for
the convenience of the taxpayers which will provide the facility of income tax
return filing and other tax-related services in a modern and seamless manner.
[Link]
eFiling service is specially designed for advocates and litigants to provide convenience of working from
home, reduce delays and minimize physical presence of the parties in the court. The facility allows user
to file a case online and upload all the case documents from home. The system also features e-signing
facility and oath recording using in-system camera to ensure authentication of the document.
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