What are the Keypoints of the 2018 Budget in India?

The Finance minister has announced the budget 2018 highlights and the announced by the finance minister impacts all concerned. Here is a lowdown on the highlights.

1. The government has made some important changes in the personal income tax rates applicable to individuals in the past, more specifically in the last three years, so the finance minister has not made any changes to this. 

2. The senior citizens can smile wide as there has been an interest exemption from income on bank deposits raised to Rs 50,000.

3. Govt will slash down hardships faced in realty deals; in specific cases when circle rate does not exceed 5 pc of sale consideration. 

4. For salaried deduction, a standard deduction of Rs 40,000 will be allowed for transport and medical reimbursement for salaried taxpayers.  Also, salaried people and pensioners can claim Rs 40,000 standard IT deduction without any documents. 

5. Cash payments that go past Rs 10,000 by trusts and institutions will no longer allow as it will curb cash economy.

6. The major amendment has been introduced in the last budget wherein an investor has to pay LTCG tax @10% of the amount he earned from stock investing. 

7. Education cess has been increased from 3 pc to 4 pc and collects about Rs 11,000 Cr. 

8. Customs duty on products such as perfumes, aftershave, dental hygiene, room deodorizers, on hair doubled to 20 pc. 

9. Import duty on fruit juice has been spiked a great deal from 30 pc to 50 pc. 

10. Duties on petrol, diesel marginally revamped and the basic excise duty has been minimized by Rs 2 per liter and Rs 8 a liter road cess introduced. 

11. Import duty on televisions such as LCD/LED/OLED panels, and some parts of televisions has been raised to 15 pc; taxes such on wearable devices, smart watches, has almost doubled to 20 pc.

12. Customs duty on imitation jewelry has also increased from 15 pc to 20 pc and almost doubled on all watches to as much as 20 pc.

13. Customs duty on products such as cigarette lighter, sunglasses, bus, toys, and truck tires and some kind of furniture has also increased.

14. Import of solar tempered glass and the manufacturing of solar cells has been exempted from customs duty.

15. Customs duty on certain oils such as crude edible vegetable oils, example groundnut oil, and safflower seed oil has been increased from 12.5 pc to 30 pc; and duty has been increased on refined edible vegetable oil too from 20 pc to 35 pc.

16. A novel scheme has been introduced from electronic assessment to eliminate person-to-person contact. 

17. Customs duty on mobile phones has also been increased from 20 percent from 15 percent.

Importance of Chartered Accountant Services in India

With the rise in economic prosperity, there is a growing importance of chartered accountant services in India.  A Chartered accountant in India works on a wide number of job roles ranging from monitoring, reviewing and reporting various financial activities to providing advice on tax legislation and also business advancement advice. A certified public accountant is at the helm of operations and handles all kinds of financial affairs with alacrity. 

The Main Functions of a Comptroller

Some of the important functions of an actuary are the following:             

Prepare financial statements.

Organize financial plans.

Look after audits.

File taxes.

Bookkeeping and so on.

Keeping abreast of financial statements can help track shortages in cash flow and loss of margins. A qualified accountant can help you in this regard, and prepare all your accounts with a lot of dexterity and promptitude.

With the world economy taking giant strides towards progress, a business can only thrive with the right financial advice. However, a recorder is not there to only keep your business buoyant but also help figure out ways to increase the margin of profits and thus help your company grow.

The role of a chartered accountant in Chennai or anywhere else for that matter changes according to the changing needs of companies. While your business flourishes, the requirement of taxes and the procedures will undergo a sea change as well. In accordance with changing regulations, a registrar can come up with a tax strategy to reduce the amount of taxes needed to be paid to the government. Since tax laws are always changing, you will definitely need the services of an able CA to handle the management of accounting techniques and plan and prepare according to the State’s observation of regulations.

A qualified accountant can help you in auditing. A computer system cannot help with the auditing process in its entirety. Auditing requires a perfect blend of sagacity and a skeptical attitude. Also, the process of auditing needs rapid evolvement, and this requirement can only be fulfilled by an auditing accountant.

It is absolutely essential to keep track of how a particular business is progressing, a bookkeeper helps regulate that, and the best-chartered accountant firms in Chennai help you to track your business with aplomb.

Today, a registered accountant can not only aid a company in the financial scheme of things but also be regarded as advisors, strategists, and able administrators

VRamaratnam & Company is one of the leading Indian Chartered Accountants firm in Chennai, helmed by extremely skilled and experienced Chartered Accountants along with other professionals. Their work is backed by the experience of many years

The firm has worked hard to provide a wide range of financial and consulting services to its clients. Their services include Auditing and AssuranceServices, Direct and Indirect Taxation especially focussing on Business Entity Registration in India for Non-Resident Indians, and Start-up business valuation and accounting, Payroll outsourcing services. 

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.

Importance and differences between direct and indirect taxes?

Taxes are enforced by the governments on their citizens, it is an involuntary fee levied on corporations or individuals by a government entity, whether national, regional or local in order to back government activities with finances.

Taxes are a monetary burden laid upon individuals or property owners to lend their support to the government. The taxes are not a voluntary payment rather they are an enforced contribution towards the government.

Taxes collected are utilized by the government for various expenses such as defense, healthcare, education and different infrastructure facilities such as roads, dams, highways and so on.

The Two forms of taxes:

Basically, there are two forms of taxes namely Direct and Indirect taxes. Indirect taxes actually have the ability to shift the burden to the end taxpayer. Direct taxes, on the other hand, allow the government to collect the taxes directly from the consumers. Indirect taxes allow the government to bring in stable and assured returns via the society.

Difference between Direct Tax and Indirect Tax:

There are different implications of direct and indirect taxes on the country. However, both types of taxes are important for the government as taxes include the major part of revenue for the government.

Key differences between Direct and Indirect Tax are:

A direct tax is levied and paid by the individuals, firms, Hindu Undivided Families (HUF), companies etc. whereas the indirect tax is finally paid for by the end-consumer of goods and services.

In case of direct taxes, the burden of tax cannot be shifted while burden can be shifted as far as the indirect taxes are concerned.

• Tax evasion is possible in the collection of direct taxes while tax evasion is not possible as far as the indirect taxes are concerned as the taxes are charged on goods and services.
• A direct tax is instrumental in reducing inflation, whereas indirect tax may increase inflation
• Direct taxes have better allocative effects when compared with indirect taxes as direct taxes put much lesser burden over the collection of indirect taxes. This is where the collection is scattered across the various parties and consumers’ preferences of goods are distorted because of the price variations because of indirect taxes.
• Direct taxes helps in reducing inequalities and are far more progressive than indirect taxes which enhance inequalities and are hence considered to be regressive.
• Indirect taxes involve far lesser administrative costs owing to the stable and convenient collections, while direct taxes include a number of exemptions and also incur higher administrative costs.
• Indirect taxes are veer towards growth and progress as they discourage consumption and help increase savings. Direct taxes, on the other hand, reduce savings and also discourage investments.
• Indirect taxes have a larger coverage as different members of the society are taxed on the sale of goods and services, whereas direct taxes are collected only from specific people in respective tax brackets.
• Additional indirect taxes are levied on detrimental-to-health commodities such as cigarettes, alcohol and so on. This dissuades over-consumption and thereby helps the country in a social context.
• Both the direct and indirect taxes are important for the country as they impact the overall economy.  Direct tax includes income tax, wealth tax, corporation tax etc. Indirect taxes, on the other hand, are applied to the sale and manufacture of goods and services. Both direct taxes and indirect taxes are collected by the central and respective state governments and it depends on the kind of taxes to be levied.

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Why is GST so high in India?

The concept of GST is to simplify multiple levels of taxation. The simplest way to explain is when you go to a restaurant your Bill breakdown will read like Service tax - 6% (not with hotels though which is exempted up to 60%),  VAT - 14.5℅ levied on liquor, and 5.5% VAT will be levied on food. So for a bill of Rs.100, 60 which consists of liquor and 40 is reserved for food, you will be paying a tax of 16.9.

Here is a lowdown on the details of the bill,
Service tax should read as - 6% of 100 = Rs.6. (With exemption)

Without the exemption,  it should be 15℅ of Rs 100 = Rs. 15.

VAT (value added tax) on alcohol - 14.5℅ of 60 = 8.7

VAT levied on food - 5.5℅ of 40 = 2.2

So, the total tax should read as (with exemption) = 16.9

Total tax should read as (without exemption) = 25.9

Things have changed drastically under the GST regime and it will be taxed at a flat rate of 18-19%, that is, Rs.18/ Rs.19.

So, this example would have you thinking that you might think GST isn't making things any simpler for you but for a great number of products, the cascading taxes will be replaced with a single tax, and it will bring down the tax that you need to pay in some cases.

It is a move hailed by most economists, as the tax compliance will be relatively easier, the cascading effect of taxes will also be reduced and the tax collection and remittance will go up significantly. As a consumer, it is certainly a sign of good things to come. 

This is an assumption that Liquor will come under the purview of GST. Even otherwise, the same concept holds good for another sale of Goods and services provided.

All the political leaders have indeed regarded GST as a positive reform for the Indian economy but GST rates in India are considered to be the highest in the world among the 140 countries that have implemented the taxes so far.

As per the new tax system in India will have four tax slabs: 5%, 12%, 18% and 28% which puts India at the top, on the basis of all countries with the highest GST rate toppling Argentina on the way. European countries have one rate of GST as they don’t have to worry about a huge country like India. Also, a majority of Indian population stays in rural areas and their economic condition is not too great.

India followed in the footsteps of Canada and introduced a dual structure where both Centre and the states have the power to levy and also collect the taxes. 

The key issue why India has such high GST rates is because we tend to rely more on indirect taxes rather than direct taxes.

There are chiefly two ways in which the government can tax you:

1.       Direct Tax or tax on your income 

2.       Indirect tax or tax on your purchase

In developed economies, the tax structure is different as the majority of the tax revenues will be direct. Most pay income taxes barring a few exceptions.

In India, the majority of the tax revenues is not direct mostly it is indirect. Farmers and many others don’t pay income taxes in India and it is less than 3% who pay income tax.

So the government have to earn their revenue from taxing your purchases and that is a little difficult to cheat on. Since the government has to pay a large number of employees, provide subsidy and freebies to everyone and provide infrastructure and other things, high indirect taxes are a reality in India compared to most countries. This has always been the case and the scenario has not changed much. But things are changing and the price of most things are reducing.