Introduction To Taxation Pt 2 Flashcards
Exemption of property of the union from taxation
Article 285 and 289 of the Constitution exempts and grants intergovernmental tax immunity. The central government cannot exercise tax authority against state governments and vice versa.
Keys for distinction between tax and fees
Commissioner HRE versus LT Swamiar
Need to study Commissioner HRE versus LT Swamiya
Yes
Tax management, what is it?
Planning, organising and controlling taxpayers financial affairs to minimise the amount of tax owed and ensure compliance with applicable tax. Basically adherence to procedural aspects of tax.
Tax avoidance, what is it?
Managing economic affairs to reduce tax liability by exploiting loopholes or ambiguities. It is in accordance with the text, but against the spirit of the law, it is not illegal but viewed unfavourably by the state.
Why is it tougher to deal with tax avoidance?
Because tax avoidance in order to redress requires adaptation of the law, which can only apply prospectively and therefore not affect the assessee who has avoid tax
What are canons of taxation?
They are a set of guidelines or principles for designing, fair, efficient and effective tax system . The ensure taxes are levied in a way that does not burden taxpayers unduly. It minimise negative economic effects of taxation. They hold the same importance as DPSPs.
Canon one ability to pay
Citizens contribute to the extent of their ability to pay a progressive taxation system is necessary to achieve this. Various ways have been proposed to enforce this such as expenditure tax, wealth tax, saving tax, and income tax. Wealth tax is difficult to determine. expenditure tax disincentives private consumption and spending.
The government has abolished with tax and increased surcharge
Canon two certainty and predictability
Certain amount of tax time of payment mode of payment. Tax gym should be designed in a convenient manner for the taxpayers like online payment methods, et cetera. In India, physical run from first April to 31st March, because it is linked to the crop cycle seasons and is the most time to collect revenue from farmers.
Canon three convenience
Time in manner or judged from the assesses point of view. Tax deducted at source, the account is settled on March 31.
Canon four economy
Minimise the cost of compliance and administration to avoid diminishing the overall revenue of the state. If costs are more than the receipts, then the tax should be removed. The cost of compliance should be less because otherwise, there is a hidden tax being paid in the form of costs.
Canon five efficiency
Maximum welfare of people, minimum distortion of choices. Do not tax in such a way that welfare goods are harmed.
Neutrality canon 6
Tax loss must be impartial towards production and consumption decision-making. GST seeks established tax neutrality. Who would have said yes, no, no.
Effects of black money
Reduced government revenue,
Distorted economic growth,
Burden on honest taxpayers
Increased inflation due to sudden influx of uncounted cash in the market, leading to increased demand for goods and services.
Financing, illegal activities,
Political corruption,
Under estimation of GDP
Modes of black money
Illicit trade
Under reporting of income and transactions.
Manipulation of trade mechanisms such as shall entities.
Treat based money laundering,
Use of tax, Hinson offshore financial Centre,
Investment list activities and financial market manipulation
Need to do RK Garg
Solutions for black money
Demonetisation, effective and short-term, but limitations in addressing root cause.
Voluntary disclosure scheme, encourages people to declare unreported income by offering immunity from prosecution and lower penalties. Doesn’t work because you will be under government scanner for the rest of your life. Your life.
Simplification and rationalisation
Cracking down on tax havens
Company law monitoring of company records
Prevention of illicit transactions
Structural changes in laws
Review of regulatory laws
Administrative reforms
Incentivise, honest taxpayers
Aggressive awareness campaign
