Chief Differences Between Professional Tax and Income Tax

 

We often confuse with the terms Income Tax and Tax Deducted at Source (TDS) while filing our tax returns. So, before you file your returns keep a tab on certain terms to avoid any sort of confusion.

The Simple Differences between Income Tax and TDS:

1) Income tax is administered on all individuals or corporate for whatever may be the income limit above the tax limit for a particular time frame.

TDS, or rather tax deducted at source, here the tax is deducted at the source of income, just assuming that you have a taxable income.

2) You pay income tax based on your annual income, whereas TDS is deducted at source on a regular basis in the particular year.

3) A taxpayer is required to pay income tax on his total annual income, whereas TDS is can only be regarded as the partial contribution to his total annual income.

4) When it comes to the TDS, the payer deducts the tax and is paid to the Government by the payer on the payee’s behalf. It is expected of the taxpayer to pay the income tax. 

5) Suppose the taxpayer's income is much below the taxable limit and the TDS is still deducted then he can claim the TDS when he files his returns. TDS is particularly deducted from salary income, fixed deposits and so on. 

Conclusion

When the financial year draws to an end your total tax liability is calculated and the number of TDS deducted is subtracted from the total tax liability.

In some cases, the TDS is not applicable especially when the net taxable income is much lower than the taxable limit of Rs 2,50,000 for a person and Rs 3,00,000 for Senior Citizen.

When you file your returns you must ensure that you have taken into account all the TDS deducted and you can claim for the same mentioning the amount.

Suppose you have not received your tax credit statement from your employer or bank then you can file your returns by checking the form 26AS which provides you the required credit information. 

You can seek the help of a Tax consultant in Chennai, or wherever you are based for professional tax registration so that you can file your returns without any problems. Ensure you file your returns in proper time to avoid fines, same goes for professional tax too, that is why you should seek professional help if you are clueless about the proceedings. 

Goods and Service Tax- A Detailed Explanation

India has joined the bandwagon of indirect tax reforms. The Empowered Committee of the State has announced in the first discussion paper on 10.11.2009, that there will be a plan to levy a “Dual GST Scheme” in India, read both the Center and the States will have the power to levy the GST taxes.

The scheme though originally was supposed to be realized from 1st April 2016, several hurdles pushed the date further as the ruling party did not have the majority in the Rajya Sabha back then. Most of the states too expressed their grievances against the tax for one reason or the other. 

Constitutional alteration - While the Center has the power to impose the GST tax services till the production stage, the States have the onus to tax sale of goods. While each of powers cannot be swapped with one another as the States cannot levy a tax on supply of services while the Centre cannot impose a tax on the sale of goods. The Constitution does not put the power baton on any one of them (State or Center) exclusively, to levy a GST tax. Furthermore, the Constitution falls short of empowering the States to levy import taxes. Therefore, the Constitutional Amendments empower the Centre to levy taxes on the sale of goods and States and also to impose both service tax and import tax.

What is Goods and Services taxes?  Goods and Service Tax or (GST) is a comprehensive tax levied on the manufacture, sale, and the consumption of goods and services. The Center and the State governments do away with all the indirect taxes.

GST is levied on goods and services under which it is mandatory for each person to pay tax on his output and is imperative to pay the (ITC) or input tax credit on the tax paid on its inputs and outputs. 

Aims and objectives of GST: The Goods & Service Tax (GST) aims to do away with the double taxation or the cascading effect of taxes on both the production and distribution cost of goods and services. Eradicating the cascading effects of the tax on tax which burdens the final consumers will greatly improve the competitiveness of the ultimate goods and services in the market. This competitiveness has a number of positive repercussions and one of them is certainly a positive impact on the GDP growth of the country.

It goes without saying that the Introductionof a GST substituting the existing multiple tax structures of Centre and State taxes is certainly welcomed with open arms by the consumers. GST will most importantly eliminate the cascading effect on the sale of goods and services. This will impact the cost of goods. The cost of goods shall also decrease chiefly because the tax on tax effect will be done away with, forever. 

GST is transparent and embodies current technology. As most of the activities related to the GST is technology-driven. Activities such as registration, application for refund, filing returns, and response to notice are all completed on the GST Portal. This accelerates the entire process. The GST regime is likely to bring a whole new era in the country and the common people will certainly benefit from it in the long run. 

See more: http://www.vramaratnam.com/24-things-know-gst/

Full Overview of Tax Structure in India

India has a well-structured tax system catering to its large population. Taxes are a necessary evil because it is the largest source of income for the government. This money is then utilized for different purposes and projects which then can lead to the development of the nation.

Central and State Governments along with local authorities such as municipal corporations call the shots on taxes. The government is unable to levy any tax unless it is passed as a law.

Here are some of the important features of the taxation system in India:


1.The Important Role of the Central and State Government

There are specific roles for both of the central and state government. The Central Government of India imposes taxes like customs duty, service tax, income tax, and central excise duty.

The state governments, on the other hand, imposes taxes such as professional tax, income tax on agricultural income, value-added tax (VAT), land revenue, state excise duty and stamp duty. The local bodies are also allowed to collect some taxes such as property tax, octroi and some other taxes on different services such as drainage and water supply.


2.Different Types of taxes

Taxes can be categorized under two headings namely direct and indirect taxes. The difference between the two lies in their implementation. Direct taxes are paid by the assessee while indirect taxes are levied on goods and services.

 A) Direct taxes
 Direct taxes are administered to individuals and corporate entities and simply cannot be transferred to others. The plethora of taxes include income tax, gift tax, and wealth tax.

Income tax
According to the Income Tax (IT) Act, 1961 every assessee with total income more than the maximum exempt limit has to pay this tax. Both the tax structure and rates are annually prescribed by the Union Budget. This tax is imposed at the time of each assessment year, starts on 1st April and ends on 31st March.

B) Indirect taxes
Indirect taxes are, as the term denotes, not directly paid by the assessee to the government authorities. These indirect taxes are levied on goods and services and collected by those who sell goods or offer services. Here are the most common indirect taxes in India. Some of the important indirect taxes are value-added tax (VAT), customs duty, octroi, excise duty, service tax and goods and services tax.

3. Revenue Authorities

CBDT or The Central Board of Direct Taxes is an integral part of the Department of Revenue under the Ministry of Finance. This body not only provides inputs for policy but also plans direct taxes in India besides being responsible for the administration of direct tax laws via the Income Tax Department.

CBEC
The CBEC or The Central Board of Excise and Customs is like the CBDT is also an integral part of the Department of Revenue under the Ministry of Finance. It is a nodal national agency whose services include administering central excise duty, customs and service tax in India.

 CBIC
Under the GST regime, the CBIC or the Central Board of Indirect Taxes & Customs provide post-legislative approval. The CBIC would look after all the directorates, field formations and provide assistance to the government in policy making in lieu of GST, continuing with central excise duty levying customs functions.

The Indian taxation system has undergone several modifications over the years. The income tax rates have been standardized providing income tax rates with simpler governing laws helping common people understand the same.

What's the importance of GST bill in India?

GST or Goods and Services Tax (GST) is defined as the tax levied when a consumer makes a purchase. It can be defined as a comprehensive indirect tax and all-in-one tax which amalgamates the manufacture, sale, and consumption of goods taxes along with the services.

It is a simplified version of taxes as GST is set out to replace all indirect taxes which are levied on goods and services by both the Indian Central and State governments. 

This simplification of taxes puts it under a single umbrella to eliminate the impact of taxes on the production and also the distribution of prices of various goods and services. Accounting firms ina Chennai can help you unravel the nitty-gritty of the GST for of tax regulations.

Impact of Taxes

The current complex tax structure involves the taxes to be levied by the State and Union governments separately leading to the increasing and complicated tax structure. The taxes are implemented at various rates and at multiple points which bamboozle most taxpayers and that is why the help of a tax consultant in Chennai or any other place in India can make things easier for you.

As far as the Centre is concerned there are various taxes it levies on the common people like the Income tax, excise duty, service tax, central sales tax and security transaction tax. And at the state level, it includes VAT or sales tax, property tax, state excise, entry tax and agriculture tax. 

It almost acts as a double whammy as it leads to an increased tax burden on the Indian products making the prices and sales of products in the domestic, as well as international markets, shoot up.

So is GST the Savior in Disguise?

The cascading effect of multiple taxes proves to be a burden on the common man and the only solution as of now is the GST. The framework of the proposal of dual GST means that will have a federal structure. 

To explain further the GST will basically be divided into three kinds of taxes that includes Central, State and another one known as the integrated GST that helps handle inter-state transactions. Under the present GST tax reform, different kinds of services are included in sale, transfer, barter, exchange, and rental which will include a CGST and SGST.

 The Importance of GST

 The impact of indirect taxes can be explained in a number of ways, the example which can explain things well is if one person lets call him A sells goods to another person B after levying sales tax and then again when B re-sells those goods to C after levying sales tax on it.

So, when B includes the sales tax paid on the previous purchase it becomes a tax on tax. This is how GST can simplify things and makes things easier to the common consumer.

Is there any Con to the GST Tax?

In India, there are two forms of GST namely the Central GST or CGST and the state GST or SGST. The only obstacle to the implementation of GST can be the coordination amongst the different states. The Centre and States have to agree on one thing that is the uniformity of GST rates, the inter-state transaction of different goods and services, there should be a sea change in the infrastructural standpoint. The transition from the old form of taxes to the new form of taxes that is the GST pattern must be smooth without any loopholes.

The GST being a destination based tax there has to be a clarity as to where the goods are going and for that there needs to be a proper methodology that would ensure proper management in terms of services provided.

A uniformity of GST in all states at the same time and the same rates is the only way that will help improve tax governance.