...ABB v Comptroller of Income Tax [(2010) MSTC 70-000] The appellant is the widow of an employee taxpayer and brought the appeal in her capacity as the executrix of his estate. Prior to his death, the taxpayer was granted share options in several companies in a group of related companies. The various share option schemes were administered by Executive Committees which had the discretion to allow a participant to retain share options which would otherwise have lapsed, vary the number of shares comprised in the share option and the period during which they have to be exercised. After the death of the taxpayer in 2005, the Committees exercised their discretion to allow the estate to retain and exercise the share options that had been granted to the taxpayer prior to his death, which would prima facie have lapsed due to the death of the taxpayer. In addition, the exercise periods for certain of the share options which were not exercisable yet were brought forward such that those share options could be exercised immediately by the estate. Effectively the Committees’ decision only restored the share options, which would have lapsed, but did not confer any new share options on the estate. The share options were subsequently exercised by the estate in 2006, and the gains derived from the exercise which amounted to over $8m for the year of assessment 2007, were taxed by the respondent. Tax from the gains amounted to $1.7m. On appeal to the Income Tax Board of Review, the...
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...system in India India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Central Government levies taxes on income (except tax on agricultural income, which the State Governments can levy), customs duties, central excise and service tax. Value Added Tax (VAT), (Sales tax in States where VAT is not yet in force), stamp duty, State Excise, land revenue and tax on professions are levied by the State Governments. Local bodies are empowered to levy tax on properties, octroi and for utilities like water supply, drainage etc. In last 10-15 years, Indian taxation system has undergone tremendous reforms. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax payment and better enforcement. The process of rationalization of tax administration is ongoing in India. Since April 01, 2005, most of the State Governments in India have replaced sales tax with VAT. 1.Direct Taxes a. Taxes on Corporate Income Companies residents in India are taxed on their worldwide income arising from all sources in accordance with the provisions of the Income Tax Act. Non-resident corporations are essentially taxed on the income earned from a business connection in India or from other Indian sources. A corporation is deemed to be resident in India if it is incorporated in India or if it’s control and management is situated entirely in India. Domestic...
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...basis on which relief is to be granted. India has entered into agreement for relief against or avoidance of double taxation with 77 countries up to May,2010. Bilateral relief may be granted in either one of the following methods: (a) Exemption method, by which a particular income is taxed in only one of the two countries; and (b) Tax relief methods under which, an income is taxable in both countries in accordance with the respective tax laws read with the Double Taxation Avoidance Agreements. However, the country of residence of the taxpayer allows him credit for the tax charged thereon in the country of source. In India, double taxation relief is provided by a combination of the two methods. (ii) Unilateral relief : This method provides for relief of some kind by the home country where no mutual agreement has been entered into between the countries. 4.2. Double Taxation Relief Provisions under the Act: Section 90 and 91 of the Income Tax Act, 1961 provides for double taxation relief in India. 4.2.1.Agreement with foreign countries or specified territories –Bilateral Relief [Section 90]: (i) Section 90(1) provides that the Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India- (a) for granting of relief in respect of – (i) income on which income tax has been paid both in India and in that country or specified territory; or (ii) income tax chargeable under this Act and under the corresponding...
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...Essay Topic: Briefly compare the political regime type in China and India. Which of the two would you prefer to do business in and why? (You may specify the type of business.) The Politic regime of a country is imposed to safeguard the interests of that country. However it can have the effect of limiting a country’s growth and development and can cause complications when attempting to do business within a country. China and India are two fast growing and very large countries with clear distinction in social and economic models as well as two very different politic regimes with their own unique characteristics. This essay will include a contrast look into the different political regimes in both China and India and the opportunities and threats of conducting business within these countries. The essay will focus on the different government regulations and control within the two nations as well as tax policy’s, intellectual property rights, and land and labour cost, concluding with which businesses would prefer potential foreign investment in each of these two nations. Political regimes as defined by (Kitschelt, 1992) are “the rules and basic political resource allocations according to which actors exercise authority by imposing and enforcing collective decisions on a bounded constituency”. The People’s Republic of China (PRC) formally a communist regime with Marxist ideologies until the economic reform in 1978 which lead them to a more modern socialism regime. The PRC operates...
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...has not offered a monetary settlement to the government in their tax dispute, sources told NDTV Profit today. While the telecom company has said it will prefer an amicable solution to the matter, it has never expressed willingness to settle the dispute at Rs. 8,000 crore or any other amount. The two parties have been embroiled in a tax dispute since 2012, after the Income Tax Department on October 22, 2010, passed an order determining a tax liability (including interest) of Rs. 11,218 crore on Vodafone on its acquisition of Hutchinson's stake in Hutch-Essar through a deal in Cayman Islands in 2007. The Supreme Court, however, quashed the order in January this year. After the apex court's ruling, the Income Tax Act was amended with retrospective effect to bring into tax net such deals. Section 119 of the Finance Act, 2012, seeks to validate the October 2010 order of the Income Tax Department,w which also passed an order imposing a penalty of Rs. 7,900 crore on Vodafone in April, 2011. Finance Minister P Chidambaram recently said the Income Tax Department will take a decision on the Vodafone taxation issue after the Parthasarathi Shome Committee has given its report on General Anti-Avoidance Rules (GAAR). Talking to reporters, he said the decision whether to send another notice to the British telecom major will be taken by the concerned assessing officer in the backdrop of amendment to the Income Tax Act, Supreme Court judgment in the Vodafone case, and the opinion...
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...structuring from a tax perspective is one of the critical factors for any business restructuring proposition, such that the transaction is tax neutral or results in minimizing the tax implications. Such acquisitions may be routed through direct investments or through an International Holding Company (IHC). An IHC would be advantageous in case the promoter/company wishes to keep the cash flows generated from overseas operations outside India for future growth needs. In case of direct investments, the entire surplus amount would have to be repatriated to India and the same would be subject to tax in India, thereby reducing the disposable income in the hands of the promoter/company. Income generated overseas could be repatriated to the Indian Company in the form of interest, royalties, service or management fees, dividends, capital gains. Such income when repatriated to the Indian Company by the IHC or to the IHC by the target company would attract double taxation. Double taxation is a situation in which two or more taxes are paid for the same income/transaction which arises because of the overlap between different countries tax laws and jurisdictions. The liability is then mitigated or off settled by tax treaties between the two countries. An ideal location for an IHC would be one with low/nil withholding tax on receipts, on income streams and on subsequent re-distribution as passive income. Some of the jurisdictions preferred for repatriating back to India include Mauritius...
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...Compliance in INDIA Kaiser Ahmed, Marlies Herzog OVERVIEW • • • • • • • • • Ahmed, Herzog General country data Corporate governance in India Corruption Jurisdiction & regulation Profit & investment repatriation Stock exchanges Setting up a business Employee compliance Points worth noting 06.11.2012 General Country Data • http://www.youtube.com/watch?v=oSGcTDCK Jx8 (Fresh up!) • 5.8% growth rate per year • World‟s 10th highest Nominal GDP • World‟s 3rd largest economy in terms of PPP Problems: Poverty, illiteracy, corruption, malnutrition, inadequate health support Ahmed, Herzog 06.11.2012 Cont‘d • 1991 „Liberalization of Economy’ • WTO member since 1995 • 10th largest importer & 9th largest exporter • 2nd largest workforce: 487.6 mio • Hourly wage rate has doubled since 1999 DOTCOM era • By 2030 middle class will reach 580 mio Ahmed, Herzog 06.11.2012 Critical success factors • Global Competiveness Index: 51st • 39th best innovation nation • 7 out of the top 15 IT companies are represented • 2.8 million of IT professionals which contributes US$100 billion to India‟s GDP (7,5 %) Contradiction Ahmed, Herzog 06.11.2012 Points worth noting • High % of young population (< 35 yrs) • Rapidly growing working age population • Rising level of general education & literacy • Infrastructure & transport investments • Removal of labor regulations Ahmed, Herzog 06.11.2012 Corporate governance in India • Clause 49, Birla Committee: board...
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...“DIRECT TAX” ] [Amendments vide Finance Act,2010 are applicable for June 2011 and December 2011 terms of Examination] AMENDMENTS vide FINANCE ACT, 2010 on “DIRECT TAX” Tax Rates Rates of Income - Tax for Assessment Year 2011-12 1.1 (A) For woman, resident in India and below the age of 65 years at any time during the previous. Upto Rs. 1,90,000 Rs. 1,90,001 to Rs. 5,00,000 Rs. 5,00,001 to Rs. 8,00,000 Above Rs. 8,00,000 Nil 10% 20% 30% 1.1 (B) For an individual (man or woman), resident in India who is of the age of 65 years or more at any time during the previous year. Upto Rs. 2,40,000 Rs. 2,40,001 to Rs. 5,00,000 Rs. 5,00,001 to Rs. 8,00,000 Above Rs. 8,00,000 Upto Rs. 1,60,000 Rs. 1,60,001 to Rs. 5,00,000 Rs. 5,00,001 to Rs. 8,00,000 Above Rs. 8,00,000 Surcharge: NIL Education Cess (EC): Education Cess at the rate of 2% on income-tax shall be levied. Secondary and Higher Education Cess (SHEC): “Secondary and Higher Cess (SHEC) on income-tax: at the rate of 1% of income-tax in all cases shall be levied. Nil 10% 20% 30% Nil 10% 20% 30% 1.1 (C) Individuals, [other than those mentioned in para 1.1(A) and (B) above] HUF, AOP/BOI (other than co-operative societies, whether incorporated or not) Directorate of Studies, The Institute of Cost & Works Accountants of India Page 2 AMENDMENTS vide FINANCE ACT, 2010 on “DIRECT TAX” 2. Other Assessees: Assessee Rate of Tax 30% Education SHEC Surcharge Cess 2% on income 1% on income 7.5% of income tax, if Net tax tax Income...
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...Services Tax (GST) in India: prospect for states by Mohd. Azam Khan1 and Nagma Shadab2 Department of Economics, Aligarh Muslim University, India Abstract: Goods and services tax (GST) is a broad based and a single comprehensive tax levied at every stage of the production and distribution chain with applicable set-off in respect of the tax remitted at previous stages. It is basically a tax on final consumption integrates the union excise duties, custom duties, services tax and state VAT. Presently around 140 countries have adopted the GST pattern, including India. The GST would be beneficial for the consumers as it reduces the final burden of taxation. For Government it leads the reduction of tax compliance efforts and administrative costs and for business units it leads transparency, complete set-off and removal of cascading effect of taxation. It is in this background that the present paper tries to explain the significance of GST in India and its prospects for states to generate revenue and ensure transparency in tax structure. This paper is organized into seven sections. Section two presents justification for dual structure of GST in India. The third part presents the rate structure under GST work in India. The fourth segment is concerned with the working of GST in India. The fifth part shows the international experiences of GST at state level in India. The seventh and final part is related to conclusion and policy recommendations. Keywords: Goods and service tax, budgetary...
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...An Evaluation of the Tax System in Bangladesh Ahsan H. Mansur, PRI Mohammad Yunus, BIDS Presentation Outline Salient Features of Bangladesh’s Current Tax System, Trends in Growth and Revenue Structure VAT System of Bangladesh: Performance, Recent/Past Reforms, Revenue Potential, structural and administrative deficiencies, and alleviating measures Discussions on personal and corporate income tax systems have been covered in this study, but not discussed in detail in in this presentation due to time constraint. Finally the presentation assess the scope for further reforms that the authorities may consider in order to gain more buoyancy in revenue generation POLICY RESEARCH INSTITUTE OF BANGLADESH 01 Introduction: Salient Features of Bangladesh’s Current Tax System Notwithstanding the various fiscal reforms of the recent past, Bangladesh Tax system continues to suffer from a number of major weaknesses: • • • • • • • • Low Level of Revenue Mobilisation Regressive Nature of Taxation (especially VAT) High Tax Incidence Low Tax Base High Degree of Tax Evasion Limited Administrative Capacity Resource Constraints (Human and Logistics) Cumbersome Legal Procedures 02 POLICY RESEARCH INSTITUTE OF BANGLADESH Growth Trends and Revenue Structure of Bangladesh Over the past years total revenue and tax receipts as % of GDP have increased – from 6.5% and 5.5% respectively in FY1982 to 10.9% and 9.0% respectively in FY2010. Tax receipts roughly generate...
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...Economy Profile: India © 2012 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org All rights reserved. 1 2 3 4 08 07 06 05 A copublication of The World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400; fax 978-750-4470; Internet www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax 202-522-2422; e-mail pubrights@worldbank.org. Copies of Doing Business 2012:...
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...Tax Deducted at Source (TDS) ABSTRACT TDS is effected at the source when income arises. This type of tax is deducted by the employer or the payer of the income, and is deposited in the Central Government. TDS is calculated under 5 provisions: 1. TDS on salary 2. TDS on Rent 3. TDS on payments to contractors 4. TDS on commission & Brokerage 5. TDS on fees for professional & technical services It also has various subsections explaining the procedure, applicability and collection of TDS. It is a very relevant tax in terms of its share in total tax revenue being collected in India. It is complicated in nature and in calculation and hence, needs to be scrutinized properly. INTRODUCTION Tax deducted at source is one of the modes of collecting Income-tax from the assessees in India. Such collection of tax is effected at the source when income arises or accrues. Hence where any specified type of income arises or accrues to any one, the Income-tax Act enjoins on the payer of such income to deduct a stipulated percentage of such income by way of Income-tax and pay only the balance amount to the recipient of such income. The tax so deducted at source by the payer, has to be deposited in the Government treasury to the credit of Central Govt. within the specified time. The tax so deducted from the income of the recipient is deemed to be payment of Income-tax by the recipient at the time of his assessment. Income from several sources is subjected to tax...
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...OVERVIEW Overview of GST GST (good and service tax), other words it also known as VAT (value added tax). It have implemented in many countries throughout the world. Currently there are 170 counties in the world that have implemented GST /VAT. NO REGION No of country 1 ASEAN 7 2 Asia 19 3 Europe 53 4 Oceania 7 5 Africa 44 6 South Africa 11 7 Caribbean, Central and North America 19 Table 1: No of countries implement GST/VAT Sources: Ministry of Finance GST is a multi-stage tax system, this is due to its nature which the tax is collected based on the supply of goods and services at each of the supply chain from the supplier to the retailer stage of the distribution. Even though GST is imposed at every stage of the supply chain, but the tax element will be not become a part of the cost of the product, because the GST paid on the business inputs is claimable as input tax. Where the business will pay the GST as output tax and claim for the input tax from the customs. In addition, it does not matter how many stages where a particular goods and services goes through the supply chain because the input tax incurred at the previous stage is always deductible by the businesses at the next in the supply chain. GST consider as a broad based consumption tax, which includes all sectors of the economy. In Malaysia the GST have been establish in a very clear manner, for example all goods and services made in Malaysia...
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...GOODS AND SERVICE TAX BILL * Same tax rates for all goods and services. * Its not based on income. GOODS AND SERVICES TAX BILL INTRODUCTION Goods and Services Tax is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. GST will replace other taxes levied by central and state government . This would be collected at each stage of purchase or sale. Tax on goods and services will be of same rate at every stage until it reaches the ultimate consumer . Problem statements * One of the major issue is that the tax rate is even for all the goods and services . This will not work for a country with asymmetric federalism . * Non inclusion of petroleum , tobacco , liquor will be a major drawback since most of the country's revenue is made from the three mentioned goods . * India does not have a stable economy as of now . Introducing GST would be a pushback rather than benefit to the country with unstable economy . * Income varies from one person to another . The country can't expect the people under poverty line to pay taxes at the same rate as others . * GST will definitely reduce the price of products but this will inturn lead to less quality goods since the main motive being money for any concern . * * * (income tax) * Liquor/tobacco/petroleum- 85% of india’s income * Not a stable economy- per-capita income is not such that people can pay the same...
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...Personal Income Tax System? Introduction Taxation, as a primary media of the implementation of fiscal policies of various national governments, generally has three primary functions, which come as follow: * Raise funds as a main source of fiscal income of national governments * Stabilize the market and macro economy against market failure * Distribute and redistribute the income among individuals to reduce social wealth inequality The priority of those functions varies from country to country and changes in different phases of social and economic development. For most developing countries, the widening gap between the rich and the poor is not only a major economic issue arousing public concern but also a major social issue. The developed west, yet is in need of effective taxation system to tackle with problems such as everlasting heavy deficit and dim market outlook. Table 1 World Gini Indexes for Major Global Economies in 1990, 2000 and 2010 Year | U.S. | Canada | U.K. | Switzerland | Germany | France | Russia | China | Brazil | India | Japan | 1990 | 42.8 | 35.2 | 36.5 | 34.1 | 34.2 | 29.2 | 25.9 | 32.7 | 60.4 | 31.2 | 26.4 | 2000 | 44.2 | 33.3 | 37.5 | 33.4 | 30.3 | 31.1 | 42 | 40.7 | 58.5 | 32 | 27.6 | 2010 | 47 | 33.6 | 35.9 | 32.4 | 30.5 | 33.2 | 35.9 | 48.1 | 49.5 | 35.6 | 32.1 | Among the taxes of all kinds, personal income tax is one of the most effective monetized tools targeting at individual residents and corresponding income source....
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