RESEARCH ANALYSIS OF DIRECT AND INDIRECT TAXES

AT ANYA POLYTECH AND FERTILIZERS PVT. LTD.

BHARATI VIDYAPEETH UNIVERSITY

SCHOOL OF DISTANCE EDUCATION
Academic study center: BVIMR, New Delhi

BY
HARIOM ROHILLA

UNDER THE SUPERVISION OF:

MR. ADITYA VIJ
 Student Undertaking

I Hariom Rohilla of BBA sixth semester would like to declare that the project report entitled
“RESEARCH ANALYSIS OF DIRECT AND INDIRECT TAXES AT ANYA
POLYTECH AND FERTILIZERS PVT. LTD.” Submitted to Bharati Vidyapeeth
University Pune, School of Distance Education Pune, Academic Study Centre BVIMR New
Delhi in partial fulfilment of the requirement for the award of the degree.

It is an original work carried out by me under the guidance of Aditya Vij .

All respected guides, faculty member and other sources have been properly acknowledged
and the report contains no plagiarism.

To the best of my knowledge and belief the matter embodied in this project is a genuine work
done by me and it has been neither submitted for assessment to the University nor to any
other University for the fulfilment of the requirement of the course of study.

Hariom Rohilla
 ACKNOWLEDGEMENT

I also record my thanks to all the employees of ANYA POLYTECH AND FERTILIZERS
PVT. LTD. some of whom were frank and forthright and a few who were slightly
apprehensive but nevertheless gave me their full co-operation. To all those I owe a debt of
gratitude.

I am fortunate in having sought and secured valuable guidance, continuous encouragement

and strong support at every stage of my guide and supervisor Mr. Aditya Vij and am deeply
grateful to him.

I want to acknowledge the help provided by guide and friends. The precious inputs provided
by them have helped in compiling this report. As well as I want to thank my friends and
colleagues who helped me in this working.

I express my deep-hearted thanks and gratitude to all of those who helped me in this Project.

Hariom Rohilla
 CHAPTER-1

INTRODUCTION
Taxation

Taxation refers to compulsory or coercive money collection by a levying authority, usually a

government. The term "taxation" applies to all types of involuntary levies, from income to
capital gains to estate taxes. Though taxation can be a noun or verb, it is usually referred to
as an act; the resulting revenue is usually called "taxes."

BREAKING DOWN 'Taxation'

Taxation is differentiated from other forms of payment, such as market exchanges, in that taxation
does not require consent and is not directly tied to any services rendered. The government compels
taxation through an implicit or explicit threat of force. Taxation is legally different than extortion or a
protection racket because the imposing institution is a government, not private actors.

Tax systems have varied considerably across jurisdictions and time. In most modern systems,
taxation occurs on both physical assets, such as property, and specific events, such as a sales
transaction. The formulation of tax policies is one of the most critical and contentious issues in
modern politics.

Purposes and Justifications for Taxation

The most basic function of taxation is to fund government expenditures. Varying
justifications and explanations for taxes have been offered throughout history. Early taxes
were used to support ruling classes, raise armies and build defenses. Often, the authority to
tax stemmed from divine or supranational right.

Later justifications have been offered across utilitarian, economic or moral considerations.
Proponents of progressive levels of taxation on high income earners argue that taxes
encourage a more equitable society. Higher taxes on specific products and services, such as
tobacco or gasoline, have been justified as a deterrent on consumption.

Advocates of public goods theory argue taxes may be necessary in instances in which the
private provision of public goods is considered sub optimal, such as with lighthouses or
national defense.
Objectives of Tax

The concept of tax was initiated with a view to generate government revenue in its very
beginning stage. In course of time it has been utilized for various purposes.

To raise government revenue for development and welfare programmes in the country.

To maintain economic equalities by imposing tax to the income earners and improving the
economic condition of the general people.

To encourage the production and distribution of the products of basic needs and discourage
the production and harmful ones.

To discourage import trade and protect the national industries.

Importance of Tax

Tax is a major source of government revenue and its contributes for the overall development
and prosperity of a country.

Raising government revenue in terms of income tax, custom duty, excise duty, entertainment
tax, VAT, land revenue tax etc. from various sectors in order to initiate development and
welfare programmes.

Maintaining economic stability by reducing economic inequalities by means of equitable

distribution of wealth by way of imposing tax to the income earners and improving the
economic condition of the general people.

Regulating the economic sectors into right direction by encouraging the production and
distribution of useful goods and discouraging the harmful products by imposing high tax rate
on them.
Building and strengthening the national economy by encouraging and protecting national
industries and promoting export trade.

Reducing regional economic disparity by encouraging the entrepreneurs to establish

industries in remote and backward regions by giving tax exemptions, rebates and concessions
etc.

Types of Taxes

There are two major types of taxes.

 Direct Taxes
 Indirect Taxes

Direct Taxes:

These are taxes that are directly paid to the government by the taxpayer. Direct taxes are levied on
individuals and organisations directly by the government e.g. income tax, corporation tax,
wealth tax etc. The payer of this tax bears the burden directly and easily.
Types of direct taxes

I. Company tax:
This is also called corporate tax, it is the tax levied on the profits made by a company.

II. Capital tax:

This is the tax levied on property or on capital asset like cars, land, personal houses etc.
When a tax is levied on the properties of a dead person, it is called “death duty” and it is paid
by the person who inherited the properties of the deceased person.

III. Poll tax:

This type of tax is operated on a flat rate basis usually imposed on the income of some
individuals. It is a flat tax levied on every citizen of a region for the purpose of raising money
for the government.

IV. Expenditure tax:

This is the tax levied on the part of a person’s income which is actually spent.

V. Capital gain tax:

This is the tax levied on the gains or profits derived from the sale of land and other capital
asset.

VI. Personal income tax:

This is the tax levied on income of an individual usually during a period of one year. In
Nigeria, the personal income tax is based on Pay As You Earn (P.A.Y.E) i.e. people are
allowed to pay according to what they earn as income.
Advantages of direct taxes

I. they are easy to estimate and collect

II. They are not inflationary
III. It helps to reduce the inequality of income
IV. They are collected at low cost to the government
V. They are convenient to payers based on their ability to pay
VI. Certainty: In the case of a direct tax, the payers know how much is due from them and when. The
authorities also know the amount of revenue they can expect.

Disadvantages of a direct tax

I. It reduces the purchasing power of the payer

II. Easy to evade: Except through PAYE system, payers of direct tax can submit a false return of
income and thus evade the tax.
iii. Direct taxes may discourage saving and investment
iV. Direct taxes may cause social conflict
V. Direct taxes may reduce motivation level on tax payers
Indirect Tax:

These are taxes resulting from manufacturing or sale of goods and services. They are tax collected
by an intermediary (such as a retail store) from the person who bears the ultimate economic burden
of the tax(such as the consumer).

Indirect taxes are levied on goods and services, the producers or sellers bear the burden at first
before transferring to the consumers.

Types of indirect tax

a. Sales tax:
This is the type of tax levied on the sale of a certain commodities, it is collected either at the
wholesale stage or retail stage and it is passed to the consumers through increase in the prices
of goods.

b. Purchase tax:
This is the tax levied on certain consumer’s commodities such as cars, machines, television
set etc., and this tax is usually collected at the wholesale stage.

c. Value added tax (VAT):

This is the type of tax that is imposed on goods and services at each stage of production. The
final burden is usually carried by the consumers.
d. Custom duties or tariffs:
These types of taxes are grouped into two, these are: .export duties and import duties. Export
duties: These are taxes levied on the goods that are sent out (exported) to other countries; it is paid
by the exporter and the import duties which are the tax levied on goods that are brought into the
country from other countries, they are paid by the importer.

Advantages of indirect taxes

a. They help to check the importation of harmful commodities

b. They serve as a source of revenue to the government
c. They help to protect the infant industries
d. They help to correct balance of payment deficit
e. They are not easy to evade or avoided
f. Indirect taxes through custom duty and tariff, are used to protect importing countries from being
used as dumping ground for inferior goods

Disadvantages of indirect tax

a) They are inflationary in nature

b) They increase the prices of commodities
c) They are difficult to estimate
d) They could lead to industrial unrest
e) They are not economical, as they attract high cost of collection
f) They bring uncertainty in revenue generation
Why do We Have Taxes?

Taxes, which are the main source of federal, state and local government revenues, pay for buildings,
public education, highways, airplanes, rockets, road signs, and the salaries of millions of government
employees. Large amounts of tax revenues are raised from levies on personal incomes, including
investment income. The federal income tax is structured to tax different levels of income at different
rates, on a gradually increasing scale.

Taxes are an important aspect of nearly every person’s life. Your paycheck is adjusted for taxes.
Contributions to charitable organizations are no doubt influenced by the expected tax savings. Taxes
affect the cost of owning a home, and tax considerations probably also influence the votes that are
cast in local, state and national elections. Taxation of investment income is also an important
consideration when deciding upon which investments to purchase, especially if you earn a substantial
income that’s taxed at a high rate.

Only without governments would there be no taxes; therefore, without taxes there would be no
governments. Taxation is one of the several ways by which governments raise money to pay for the
goods and services that they are called on to provide. Governments lack the major sources of revenue
available to other sectors of the economy and must therefore rely on taxes to finance the majority of
their expenditures. Unlike businesses, governments generally produce very few goods and services
that can be sold, especially at a profit. In addition, governments don’t have wage and investment
income as do individuals and families. Without these sources of income, governments have little
choice but to finance their spending needs by assessing businesses as well as individuals.

Governments are continually searching for additional funds to pay for the needs of their citizens,
businesses, and bureaucrats. At the local level, taxes support spending for schools roads, libraries,
athletic facilities, fire and police services, and the salaries of county and municipal employees. States
collect taxes for highway construction and upkeep, public colleges, buildings, and law enforcement.
The federal government levies taxes in order to provide its citizens with an interstate highway system,
a capable military force, health services, an Internal Revenue Service, thousands of parks and
monuments, and scores of other things.
Taxation, however, is not the only means by which governments finance their spending.They also
levy a variety of user and service fees to pay for parks, bridges, transit systems, parking complexes
and sports stadiums, where the users rather than taxpayers are expected to bear the operating costs of
the facilities. These fees, however, are frequently supplemented by special taxes. In addition,
governments at all levels regularly borrow funds to augment their tax revenues. In the 1980s and
1990s, the federal government borrowed billions and billions of dollars annually to pay for
expenditures that exceeded the billions and billions of dollars that it took in from tax revenues.

In summation, although unpopular (and many may argue, unfair), taxes are a necessity. The standard
of living of a modern society demands it; governments must collect the revenues in order to provide
the goods and services that their citizens need, want and demand.
 CHAPTER-2

REVIEW OF LITERATURE
The purpose of this chapter is to present a review of literature relating to the
taxation. The following are the reports of the various committees appointed by
the Government of India from time to time, Doctoral works undertaken in the
field of taxation and contribution of tax experts by way of books and research
articles.

 COMMITTEE REPORTS

John Mathai Committee (1953)6:

The Taxation Inquiry Commission was appointed by the Government of India on April 1, 1953 under
the chairmanship of John Mathai. The terms of reference of the commission were to examine the
incidence and suitability of Central, State and Local taxation on various classes of people and in
particular with regard to (a) modifications required in the present system of taxation and fresh
avenues of taxation. The committee made several recommendations to the Government.

Nicholas Kaldor Committee (1956)7:

British economist Nicholas Kaldor carried out, on the request of the Government of India from
January to March 1956, a review of the Indian tax system particularly with reference to personal and
business taxation. The committee made the first systematic estimates of income tax evasion in India
and recommended in favour of wealth tax, capital gains tax, gift tax and a personal expenditure tax.
6 C.S.Prasad, Vibha Mathur, Anup Chaterjee (2007), “Sixty Years of Indian Economy 1947 to 2007”,
New Delhi, New Century Publications, pp.1046.

7 C.S.Prasad, Vibha Mathur, Anup Chaterjee (2007), “Sixty Years of Indian Economy 1947 to 2007”,
New Delhi, New Century Publications, p. 1010.

F.C. Badhwar Committee (1957)8:

The Customs Re-Organization Committee was appointed by the Government of India on January 23,
1957 under the chairmanship of Sri. F.C. Badhwar to conduct a comprehensive inquiry in to customs
procedures and organization and to make recommendations for their improvement. The committee
recommended a thorough revision of the Customs Tariff by aligning it closely with the import trade
control licensing schedule and the removal of anomalies in rates of duty for similar categories of
goods.

Justice K.N. Wanchoo Committee (1970)9:

On March 2, 1970 the Government of India constituted the Direct Taxes Inquiry Committee with
Justice K.N. Wanchoo as chairman. The committee was asked to recommend concrete and effective
measures to unearth black money and prevent its proliferation through further evasion to check tax
avoidance through various legal devices, including the formation of trusts and to reduce the tax
arrears. The committee suggested various measures against tax evasion and some of the measures
were; reduction in tax rates, minimization of controls and licenses, regulation of donations to
political parties, creation of confidence among small tax payers, substitution of sales tax by excise
duty, vigorous prosecution policy and compulsory maintenance of accounts.

8 C.S.Prasad, Vibha Mathur, Anup Chaterjee (2007), “Sixty Years of Indian Economy 1947 to 2007”,
New Delhi, New Century Publications, p. 1011.

9 Ibid. p. 1023.
Kelkar Committee (2002)13:
The Direct and Indirect Tax Reforms Committee was set up by the Government of India in July 2002
under the chairmanship of Dr. Vijay L. Kelkar. The major objectives of the committee were to
recommend measures for simplification and rationalization of direct and indirect taxes. Consequently
two task forces were set up. The committee suggested various measures under direct taxes like,
expansion of tax payer services both qualitatively and quantitatively. Easy access to tax payers
through internet and e-mail and extension of facilities such as Tele-filing and Tele-refunds and in case
of indirect taxes the task force recommended customs clearance to be based on trust and to be
uniformly applied to all importers and exporters, multiplicity of levies to be reduced. On service tax
the task force suggested, the implementation of service tax on comprehensive basis.

Empowered Committee on Goods and Services Tax (2007):

To achieve further significant breakthrough and the next logical step towards a comprehensive
indirect tax reform in the country, Sri P. Chidambaram, the then Union Finance Minister, announced
during Central Budget 2007-08 to the effect that GST would be introduced from April 1, 2010 and an
Empowered Committee of State Finance Ministers was constituted. The committee would work with
the Central Government to prepare a road map for introduction of GST in India. After this
announcement the Empowered Committee of State Finance Ministers decided to set up a Joint
Working Group on May 10, 2007. The Joint Working Group after intensive internal discussions as
well as interaction with experts and representatives of Chambers of Commerce and Industry
submitted its report to the Empowered Committee in November 2007. Deliberations and discussions
are going on continuously to work out a mechanism to introduce GST. Recently, in the Budget
speech, during July 2014, the Finance Minister Mr. Arun Jaitly has announced that the GST would be
roled-out by the end of the financial year 2014-15 (at Central level).

13 C.S.Prasad, Vibha Mathur, Anup Chaterjee (2007), “Sixty Years of Indian Economy 1947 to 2007”,
New Delhi, New Century Publications, p. 1049.
Standing Committee on Direct Tax Code Bill - 2010:
Income tax in India is governed by the Income Tax Act, 1961 and this Act has become very old. It has
been amended and modified many times since 1961. This has made the Act complicated and difficult
to interpret, leading to many disputes and court cases. The Government wished to have a modern
tax code in consonance with the needs of modern economy. The Direct Taxes Code (DTC) bill, when
passed will replace the existing Income Tax Act, 1961 and the Wealth Tax Act, 1957. The first draft of
the Direct Taxes Code came up for public discussion in August 2009. It proposed some significant
changes, like removal of most of the tax exemptions, putting most of retirement products like PF,
PPF and New Pension System (NPS) in Exempt-Exempt- Tax Category and a substantial widening of
the income tax slabs applicable to individuals. Based on the responses and suggestions to the first
draft of DTC the Government came with the second draft in 2010, with several modifications. The
same was reviewed by the Parliamentary Standing Committee and it is yet to be decided in the
Parliament.

 DOCTORAL THESES14

Hagaragi, S.B. (1998), had undertaken research on “Rationalisation of Personal Taxation: A

Study of Tax on Salary Income” in Gulbarga University, Gulbarga. The researcher in the study
discusses the various components of salary under the provisions of Income Tax Act. The study is
mainly primary data based and a sizeable number of respondents have been consulted by
administering questionnaire. The researcher highlights the disparities and redundancies existing in
salary taxation of the employees. The researcher makes a long list of suggestions to simplify and
rationalize the tax structure for the benefit of tax payers as well as tax collector. The limitation of the
study is it relates to one head of income and the suggestions are relate to that head only.
Ramesh Babu, R.K. (2007), had undertaken research on “Commodity Taxation in India:
Alternative Systems (An Evaluation)” in Bangalore University, Bangalore. The study compares the
old regime of sales tax and VAT in the broader sense, which includes from the process of registration
to auditing. Apart from this other aspects like returns, assessments, refunds, penalties etc. have been
brought out based on the primary data from the Bangalore city. The researcher traces the background
of sales tax and value added tax in India and examined the role of VAT in State’s fiscal position. The
study also examined the structure of VAT in the state of Karnataka, the rationale for exemptions from
VAT and inquired into the issues, implications emerging from the introduction of Value Added Tax in
Karnataka. The study suggests and argues that, the training to dealers is an investment in efficiency.
Hence, the Government need to organize workshops and seminars to educate the assessees.

14 All Doctoral theses were referred from different University Libraries, Association of Indian
Universities web, Journal “University News” and Shodhganga INFLIBNET Centre.

Patel, Nagaraj Goud (2008), had undertaken research on “Perceptions of the Service
Providers and Tax Experts about Service Tax: A Study of Bangalore City” in Gulbarga University,
Gulbarga. The study made an attempt to analyse the structure and the growth trends of service tax.
A critical examination of perception of the service providers and tax professionals of the Bangalore
city regarding common aspects pertaining to service tax, crucial aspects concerning to specific
selected services and technical/ academic aspects of service tax scheme has been carried out. The
study reveals most of the compliance issues faced by the service providers. The researcher suggests
separate administrative setup for administering service taxation, offers some measures in provisions
of service tax for issues concerning to manpower service, security agency service, insurance service,
banking service etc. The researcher also suggests developing an exclusive call center at every
commissionarate office to cater the needs of duty paying service providers along with conducting
regular seminars and workshops for clarifying confusions on new amendments like additions,
deletions, new circulars, departmental clarifications etc.
Kaddipudi, N. Mallikarjun (2009), had undertaken a study entitled “Sales Tax and Value
Added Tax – A Comparative Study” in Gulbarga University, Gulbarga. The study was carried out
immediately after introduction VAT in India during 2005. The researcher has based the study mainly
on primary data gathered from Dharwad and Belgaum revenue divisions consisting of six districts of
Karnataka. The respondent numbering 720 belonged to the category of general merchants,
pharmaceuticals, commission agents, home appliance sellers, automobiles and manufacturers. The
main purpose of the study was to compare the Sales Tax and VAT from the stand point of
structure, operations and results. The respondents’ opinion on these parameters observed and
analysed. The researcher comes to the conclusion that from different angles VAT is much superior to
the conventional Sales Tax. The researcher also made recommendations to the stakeholders to make
the VAT regime smooth, effective and payer friendly. However, the study did not compare the
revenue performance of Sales Tax and VAT.

 RESEARCH ARTICLES

Peter J. Lambert (1993)15 in his survey provides coverage of the inputs from the theory side
which go into the empirical analysis of impact effects of tax reforms. Inequality. Social welfare,
progressivity and horizontal inequity effects are considered. The value judgments inherent in
selecting the target group for analysis, specifying welfare through household utility, equivalizing
incomes and otherwise incorporating differences in household needs into utilitarian analysis, are all
explained.
M.N. Murty (1995)16 discusses the various types of VAT and their application in a federal
country or a country with government at many levels. In particular, this study takes up a detailed
examination of a comprehensive VAT covering the full chain of business activities from
manufacturing to retailing. The author also discusses a case for having a comprehensive VAT at
Central and State levels in India. The study finds that, such a tax system supplemented by specific
excises and subsidies to deal with the problem of equity, environment and social needs is ideal for
India.

Jason G. Cummins and et al (1995)17 suggests to improve upon existing approaches

used to estimate investment models by exploiting tax reforms as ‘natural experiments’. The
researchers find, tax policy has an economically important effect through the user cost of capital on
firms equipment investment following major tax reforms enacted in 1962, 1971, 1981 and 1986. This
effect was most pronounced for firms not in tax loss positions and , thus, more likely to face
statutory tax rates and investment incentives. The study also demonstrates that tax-induced
variation in the user cost of capital across equipment asset classes was negatively related to asset-
specific investment forecast errors following major tax reforms, suggesting that extent knowledge of
an impending tax reform can improve forecasts of investment.

15 Peter J., Lambert, (1993), “Evaluating Impact Effects of Tax Reforms”, Journal of Economic Survey,
Vol.7, No.3, pp 205-242.

16 M.N., Murty, (1995), “Value Added Tax in a Federation: Commodity Tax Reforms in India”,

Economic and Political Weekly, Vol.30, No.11, pp 579-584.

17 Jason G., Cummins and et al, (1995), “Have Tax Reforms Affected Investment?”, Tax Policy and
the Economy, Vol.9, pp 131-149.
J P Hutton and T. Kenc (1998)18 elicit the effectiveness of proposed reforms to the tax
system intended to stimulate investment depends on how capital structure affects corporate behavior.
The researchers use a dynamic general equilibrium model, calibrated for U.K, to investigate the
difference between three models of financial structure, including one of endogenous structure
motivated by agency theory. It was shown that the difference in predicted effects can be significant,
and that the impact of the reform on the marginal source of funds is crucial.

Ranjan Ray (1999)19 shows in his study that, the insensitivity of marginal commodity tax
reforms to demand specification does not extend to the non-marginal case. The size of the tax change
has a sharp impact on commodity tax reforms unlike price effects, neither household composition nor
quadratic Engel curves alters significantly the direction of tax change. The researcher also says, the
first order approximation overestimates the welfare cost of tax change, and the bias increases sharply
with the size of the change.

18 Hutton, J P and Kenc, T, (1998), “The Influence of Firms; Financial Policy on Tax Reforms,

Oxford Economic Papers, Vol.50, No.4, pp 663-684.

19 Ray, Ranjan, (1999), “Marginal and Non-Marginal Commodity Tax Reforms with Rank Two

and Rank Three Demographic Demand Systems, Oxford Economic Papers, Vol.51, No.4, pp 689- 712.
Steven M. Sheffrin (1999)20 analyzes alternative approaches to measuring the effects of
structural tax changes on government growth. It first reviews traditional time series approaches that
attempt to disentangle the causal relationships between taxes and spending. It explains why these
methods are incapable of uncovering the true causal links because of problems of observational
equivalence and why institutional data can assist in making this determination. It then presents the
methods and results from two alternative approaches and studies that analyse the effects of change
in tax structures on government growth. Both methods rely on econometric and institutional
analysis.

Jochen Michaelis and Michael Pfluger (2000)21 analyze revenue- neutral tax reforms
for a small open economy which is constrained to a balanced current account and whose producers
have market power on the world market. The researchers consider origin-based and destination
based commodity taxes as well as taxes on income, the payroll, and on an imported factor of
production. The main findings of this study were, First, the strength, and for some parameter
constellations, even the sign of the employment effect of tax reforms varies with the degree of
openness of the economy. Second, the indeterminacy of the sigh of the employment effect crucially
hinges on the presence of an internationally mobile factor. The central mechanism underlying the
results are adjustments of the real exchange rate which have repercussions on wage and price
setting and therefore on employment.

20 Sheffrin, Steven M., (1999), “Tax Reforms and the Growth of Government”, Empirical Economics,
Vol.24, No.4, pp 655-666.

21 Michaelis, Jochen and Pfluger, Michael, (2000), “The Impact of Tax Reforms on Unemployment in
a SMOPEC”, Journal of Economics, Vol.72, No.2, pp 175-201.
Vijay Jog and Jianmin Tang (2001)22 analyses the Canadian corporate income tax
revenues during the 1984-94. The study period showed a relative shifting of tax revenue shares
between Canadian and foreign corporations, and a substantial change in the debt levels of foreign-
controlled corporations, as well as Canadian-based multinationals. This study claims that these
changes may have been associated with the tax reforms undertaken by the United States and
Canada in the mid-1980s resulting in the relative change in the tax rates between the two countries.
The study also hypothesizes that if this difference persists and in Canadian- controlled corporations
continues to aggressively expand abroad, the Canadian corporate tax base could experience further
pressure.

Michael P. Devereux and et al (2002)23 analyse the development of taxes on corporate

income in EU and G7 countries over the last two decades. The study finds, tax-cutting and base-
broadening reform have had the effect that, on average across EU and G7 countries, effective tax
rates on marginal investment have remained fairly stable, but those on more profitable investments
have fallen. The study also discusses two possible explanations of these stylized facts arising from
alternative forms of tax competition. First, governments may be responding to a fall in the cost of
income shifting, which puts downward pressure on the statutory tax rate. Second, reforms are
consistent with competition for more profitable projects, in particular those earned by multinational
firms.

22 Jog, Vijay and Tang, Jianmin, (2001), “Tax Reforms, Debt Shifting and Tax Revenues: Multinational
Corporations in Canada”, International Tax and Public Finance, Vol.8, No.1, pp 5- 25.

23 Devereux, Micheal P. and et al, (2002), “Corporate Income Tax Reforms and International Tax
Competition”, Economic Policy, Vol.17, No.35, pp 450-495.
 CHAPTER-3

Introduction to the company

  Overview

Anya Polytech Private limited (APPL) was incorporated on September 27, 2011 as a joint venture
company between Anya Agro & Fertilizers (P) Ltd & Kribhco Infrastructure limited (KRIL),registered
under Company act 1956 having its;

The Company is presently engaged in the manufacturing of HDPE Bags & have capacity to produce
350 lakh Bags per annum for packing of various fertilizers. Commercial production in APPL started on
17th January 2013.The existing capacity utilization is about 100%.The present turnover is around
Rs.32cr.The Company has provided direct employment to 200 persons (
managerial/technical/skilled/semiskilled/Unskilled) .The Company have a plan to expand its existing
capacity, in near future. The extended capacity will be utilized for the manufacturing of PP
fabric/Bags.

The Company is now starting a new business for manufacturing of Zinc sulphate, Monohydrate Plant
having capacity of 50 MTPD under the guidance of the Board of Directors.

The Management team of APPL is well versed with the industry dynamics & has envisaged a proper
business plan to strengthen the Company‘s business model. The management is certain of a 100
percent off take of the Company‘s production in the backdrop of an efficient marketing plan and
vital commercial tie ups.

We are a leading manufacturer of HDPE / High Quality bags & Fertilizers and are known for quality
product and timely service. Customer satisfaction and committed service is our main motto.
 Our focus is on quality, 'in time' delivery and client contentment and this has enabled us to carve a
significant place in the industry. We follow ethical and transparent business practices, which have
enabled us to gain trustworthy clients across the globe.

The key factors that set us apart amidst our clients are :

 Industry leading prices

 Customized products
 Durable and reliable
 Fine raw material
 Wide distribution network
 Capacious warehouse
 On time delivery
 State-of-the-art manufacturing facility
 Stringent quality control program
 quality control program

 Vision of company

Our vision is to attain & maintain leadership status in our chosen field of business through :

 Focusing all our actions towards “Total Customer Satisfaction.

 Continuously striving to innovative our processes, products & services to generate value for
money in all our efforts-both internal and external.
 Making total employee involvement, sincerity of purpose and commitment to objectives as
the foundations of this vision.
  Mission of company

"To be recognized as one of the best brands by delivering quality products at best
price"

 Organisation Structure
 Board of Director's
The Board of Directors of the Company comprises of dynamic persons with string Leadership
capabilities and business acumen and consists of Shri Yash Yadav Director of AA & FPL, Shri Virendra
Singh CEO/Director in APPL. The Board of Directors along with the strong management team
comprising of professionals from Industry, Marketing, Technocrats, Quality Experts etc will make the
company to be a profitable venture.

Our Team-Members Include

 Procurement personnel's
 Quality controllers
 Sales and marketing experts
 Skilled & unskilled workers
 Warehousing professionals

Core Values
 Our core values drive our day to day business and define who we are as a company. They
propel us forward and dictate our actions :

 The company strives to be an employer of choice, inspiring and developing the team through
training, realising that our key to success must be the success of each and every employee.
 We endeavour to be dedicated, disciplined and loyal, providing consistency, value and great
service to all our clients.
 Our team is a well disciplined, enthusiastic, fun loving group of people with great attitude,
passion and integrity.
 The business always strives to achieve the highest level of cleanliness, give direction, create
endless opportunity and generates abundance through growth.
 We treat all of our customers and manufacturers exactly as we would want to be treated, with
dignity, honesty and respect.

 Products

 HDPE/HIGH Quality Bags

We bring forth quality HDPE Bags, which are highly demanded among the clients owing to their
superior quality. These HDPE Bags are manufactured using advanced machines and from quality
HDPE material. Further, we offer HDPE Bags in varied sizes to meet the client’s requirement.

Widely Used In Industries Such As :

 Food
 Fertilizer
 Chemical
 Agriculture
 Pesticides
 Packaging
 Our esteemed clients can avail from us impeccable HDPE Bags at an economical price. We
manufacture these bags using high-grade basic material and latest technology at our sound
infrastructure setup. These bags can be used to store grains, cements and other items. With due
consideration, we have made these bags available in different sizes and colors to meet divergent
demands of the clients.

Features

 Long life
 Light weight
 Very affordable
 UV resistant
 Flexible and high strength
 High tearing strength
 Smooth finish
 Water proof
 Infestation resistance
 Temperature resistance
 Central sealing
 Moisture proof
 Spillage resistance
 Chemical effect resistance
 Durable
 Optimum quality
 Excellent finish
 Easy to carry
  Zinc Sulphate Heptahydrate
We are reliable manufacturers and suppliers of high grade Zinc Sulphate Heptahydrate. This Zinc
Sulphate Heptahydratet is reasonably priced, and can be obtained from us in custom requirements.

Applications

 As mordant in calico-printing
 Preserving wood and skins with hypochlorite for bleaching paper manufacture lithopone and
other zinc salts
 Clarifying glue
 Electrode position n also as reagent in analytical chemistry.

Our esteemed clients can avail from us impeccable HDPE Bags at an economical price. We
manufacture these bags using high-grade basic material and latest technology at our sound
infrastructure setup. These bags can be used to store grains, cements and other items. With due
consideration, we have made these bags available in different sizes and colors to meet divergent
demands of the clients.

 Zinc Sulphate Monohydrate

We specialize in production and Supply of exceptional quality Zinc Sulphate Monohydrate, which is
widely used in veterinary and poultry industry for making several formulations. Tested for quality,
purity and composition, the Zinc Sulphate Monohydrate supplied by us, has helped us to carve niche
in the markets across the country.

Applications

 For agriculture Products

 Animal Feed
 Feed Grade Mineral
 Micronutrient Product
  Micronutrient Fertilizers
We are one of the well known manufacturers and suppliers of Micronutrient Fertilizers. The offered
micronutrient fertilizers are mixtures of nutrients which are applied to soils and plant tissues, to
enhance the growth of plants. Our offered micronutrient fertilizers supply nitrogen in the fixed form.
The offered micronutrient fertilizers boost the energy carriers in cells and tissues of plants.

Features

 Enhance the water retention ability in cells

 Provide life supporting nutrients
 Support photosynthesis by enhancing aeration.
  Clients of company

KRIBHCO SHYAM FERTILIZERS

LIMITED
  Infrastructure

UNIT-1 (High Quality Bag Manufacturing)

The Company has set up Unit-1 for the manufacturing of high quality packaging bags made of HDPE
granules having installed capacity of 350 Lakh bags per annum for packing various Fertilizers.

UNIT-2 (Zinc Sulphate Plant)

Company now setting up a 50 MTPD Zinc Sulphate Plant at Shahjahanpur,in the same premises. The
annual capacity of the plant is 16500MT.The production is likely to start by May 2015.

Infrastructure
In order to meet the variegated requirements of the clients with ease and perfection, we have
established an ultramodern infrastructure facility. This facility is installed with all the modern
machines and equipment that enables to retain excellent production rate. To manage all our
business activities in an efficient way, we have recruited a team of diligent and sincere professionals.
These professionals strive to offer the clients products exactly as per their requirements. Our
researchers conduct various surveys in both national and international market to understand the
exact requirements of the clients and include new products accordingly in the existing product-line.
We ensure that only quality products reach the clients’ destination within the postulated time
frame. Owing to the modern facility, quality products, client-centric approach and on-time
deliveries, we have been able to muster a huge client-base for ourselves.

Under the visionary guidance our managing director, ‘Mr. xyz, we have been able to reach the
pinnacle of success. His in-depth knowledge, excellent leadership qualities, brilliant managerial skills,
constant motivation and business acumen have helped us spread our wings across the globe.
 Infrastructure of an organization speaks volume of its status and goodwill and considering this fact,
we have invested huge capital to establish a well equipped infrastructure. Our infrastructure
comprises in-house design unit, quality management system and warehousing and packaging unit
which helps in smooth functioning of the organization. Each department is headed by a professional
which efficiently manages the tasks and its team. Moreover, we keep upgrading our machines to
keep abreast with prevailing technology.

Our Infrastructure Includes :

 8 Color gravure printing machine

 Imported fully automatic bag making machine
 Extruders
 Cutting machine

We are also well backed by a team of highly dexterous and efficient workforce. The team comprises
Engineers, Quality Controllers Technocrats, and other professionals. They are highly experienced in
their respective areas and work in close coordination with each other, in order to achieve optimum
product quality.

Warehousing
We understand the requirement of a warehouse in an organization and hence, have created a
spacious warehouse. Our warehouse is clean and free from dust & moisture this helps us in
maintaining the safety of our bags. We make sure that our warehousing personnel keeps the
product line safe.
  Quality Assurance
To us, quality is something of high importance. Thus we engage in the utilization of high
grade raw materials and modern machines, in compliance with the set industry norms and
guidelines. This ensures the product’s strength, load bearing capacity and finishing. In
addition to this, for providing highly standardized products to our clients, we process the
products through several rounds of quality examinations, where all manufacturing defects
are examined and eliminated, with high level of precision.Quality is the foundation of our
organization and therefore, we aim at strengthening our base so that we can maintain the
reputation of this organization. For this, we have implemented a quality control
management system in our operations where in our quality auditors constantly check the
products at each level of production in order to make sure that the flawless range is
dispatched. They are also responsible for checking the products at procurement level and
verify them for the processing stage.

Some of the parameters on the basis of which the quality is tested are :
 Durability
 Tensile strength
 Color fastness

Quality Policy / Process

We boast of state-of-the-art manufacturing unit, which is facilitated with the most sophisticated
machinery and technology. With the help of these facilities, we are able to meet the bulk
requirements of our clients. Regular up-gradations are also made on these facilities to ensure the
smooth operation of the manufacturing process.

Client Satisfaction
Clients help us in building the image of an organization successfully and therefore our foremost aim
is to offer good quality Products. We make sure to deliver quality approved products to our clients
and hence have gained loyalty of our clients. Our team is capable of customizing the products as per
the needs of the clients without compromising on the quality. We aim at delivering these plastic
bags to the address specified by our customers within stipulated time frame. Owing to the reasons
stated above, we have achieved utmost client satisfaction especially in USA, UK, Germany, Cuba and
Canada.
 CHAPTER 4

RESEARCH METHODOLOGY
Research Methodology
The process used to collect information and data for the purpose of making business decisions. The
methodology may include publication research, interviews, surveys and other research techniques,
and could include both present and historical information.

The study will be conducted to achieve the aforesaid objective including both exploratory and
descriptive in nature and involve personal interviews that based on the questionnaire format. A
Research Methodology defines the purpose of the research, how it proceeds, how it measure
progress and what constitute success with respect to the objectives determine for carrying out the
research study.

Research
Research is research that is not exclusively based on a summary, review or synthesis of
earlier publications on the subject of research. This material is of a primary source character.
The purpose of the original research is to produce new knowledge, rather than to present the
existing knowledge in a new form (e.g., summarized or classified).
Original research can take a number of forms, depending on the discipline it pertains to. In
experimental work, it typically involves direct or indirect observation of the researched
subject(s), e.g., in the laboratory or in the field, documents the methodology, results, and
conclusions of an experiment or set of experiments, or offers a novel interpretation of
previous results. In analytical work, there are typically some new (for example) mathematical
results produced, or a new way of approaching an existing problem. In some subjects Which
do not typically carry out experimentation or analysis of this kind, the originality is in the
particular way existing understanding is changed or re-interpreted based on the outcome of
the work of the researcher.

Definitions:
Research is a careful, systematic and objective investigation conducted to obtain valid facts,
draw conclusion and established principles regarding an identifiable problrm in some field of
knowledge. – Clarke and Clarke
Research is a systematic and objective analysis and recording of controlled observations that may
lead to the development of the generalizations, principles , theories and concepts , resulting in
prediction for seeing and possibly ultimate control of events. – John. W. Best

Researchis carefully enquiry or examination in seeking facts or principles, a diligent investigation to

ascertain something. – Clifford Woody

It is the process of arriving at dependable solutions to the problem through planned and systematic
collections, analysis and interpretation data. – Mouley

Research is a process of steps used to collect and analyze information information to increase our
understanding of a topic or issue. It consists of three steps. Pose a question, collect data to answer
the questions and present a answer to questions. –Creswell.

Research Design
The word ‘design’ has various meanings. But, in relation to the subject concern, it is a pattern or an
outline of research project’s workings. It is the statement of essential elements of a study that
provides basic guidelines of conducting the project. It is same as the blue print of architect’s work.

The research design is similar to broad plan or model that states how the entire research project
would be conducted. It is desirable that it must be in written form and must be simple and clearly
stated. The real project is carried out as per the research design laid down in advance.

Contents of Research Design:

The most common aspects involved in research design include at least

followings:

1. Statement of research objectives, i.e., why the research project is to be conducted

2. Type of data needed

3. Definition of population and sampling procedures to be followed

4. Time, costs, and responsibility specification

5. Methods, ways, and procedures used for collection of data

6. Data analysis – tools or methods used to analyze data

7. Probable output or research outcomes and possible actions to be taken based on those
outcomes

Types of Research Designs:

The research design is a broad framework that describes how the entire research project is carried
out. Basically, there can be three types of research designs – exploratory research design, descriptive
research design, and experimental (or causal) research design. Use of particular research design
depends upon type of problem under study.

1. Exploratory Research Design:

This design is followed to discover ideas and insights to generate possible explanations. It helps in
exploring the problem or situation. It is, particularly, emphasized to break a broad vague problem
statement into smaller pieces or sub-problem statements that help forming specific hypothesis.

The hypothesis is a conjectural (imaginary, speculative, or abstract) statement about the relationship
between two or more variables.
 Naturally, in initial state of the study, we lack sufficient understanding about problem to formulate a
specific hypothesis. Similarly, we have several competitive explanations of marketing phenomenon.
Exploratory research design is used to establish priorities among those competitive explanations.

The exploratory research design is used to increase familiarity of the analyst with problem under
investigation. This is particularly true when researcher is new in area, or when problem is of
different type.

This design is followed to realize following purposes:

1. Clarifying concepts and defining problem

2. Formulating problem for more precise investigation

3. Increasing researcher’s familiarity with problem

4. Developing hypotheses

5. Establishing priorities for further investigation

Exploratory research design is characterized by flexibility to gain insights and develop hypotheses. It
does not follow a planned questionnaire or sampling. It is based on literature survey, experimental
survey, and analysis of selected cases. Unstructured interviews are used to offer respondents a great
deal of freedom. No research project is purely and solely based on this design. It is used as
complementary to descriptive design and causal design.

2. Descriptive Research Design:

Descriptive research design is typically concerned with describing problem and its solution. It is more
specific and purposive study. Before rigorous attempts are made for descriptive study, the well-
defined problem must be on hand. Descriptive study rests on one or more hypotheses.
specific. Unlike exploratory research, it is not flexible. Descriptive research requires clear
specification of who, why, what, when, where, and how of the research. Descriptive design is
directed to answer these problems.

3. Causal or Experimental Research Design:

Causal research design deals with determining cause and effect relationship. It is typically in form of
experiment. In causal research design, attempt is made to measure impact of manipulation on
independent variables (like price, products, advertising and selling efforts or marketing strategies in
general) on dependent variables (like sales volume, profits, and brand image and brand loyalty). It
has more practical value in resolving marketing problems. We can set and test hypotheses by
conducting experiments.

Data collection:
Data collection is the process of gathering and measuring information on variables of interest, in an
established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes. The data collection component of research is common to all
fields of study including physical and social sciences, humanities, business, etc. While methods vary
by discipline, the emphasis on ensuring accurate and honest collection remains the same.

Collected data include

 inability to answer research questions accurately

 inability to repeat and validate the study
 distorted findings resulting in wasted resources
 misleading other researchers to pursue fruitless avenues of investigation
 compromising decisions for public policy
 causing harm to human participants and animal subje
Data Collection Sources:

1. Primary
2. Secondary

Primary Source: Primary data will be data that you gather particularly with the end goal of
our research. It is particularly customized to our analysis needs. A drawback is that it is costly
to get hold of. Primary data is otherwise called raw information; the information gathered
from the first source in a controlled or an uncontrolled situation. Cases of domain are
experimental where certain variable are being controlled by the analyst.

 The data required for the study has been collected from questionnaire survey
among the official employees.

Secondary Source: The secondary data source is internal as well as external. Inner source
incorporate data that exist and is stored in the organization. External data refers to the data
that is gathered by other individuals or associations.

The secondary data has been collected from the internet, websites, books Harvard business
magazines.

Sampling:

Sampling is a statistical procedure that is concerned with the selection of the individual
observation; it helps us to make statistical inference about the population. In sampling we
assume that samples are drawn from the populations and sample means and population means
are equal.

 Sample was done by random sampling method

Objectives of the study

 To enlist and evaluate the taxation process at ANYA POLYTECH AND

FERTILIZERS PVT. LTD. To analyze the taxation process see whether the company is
prepared with enough data to face any kind of contingencies.

Need of the study

 The main purpose of this project is to get greater insight to the use of TAXATION
RETURNS as nowadays taxation management is a very important part of financial
management.
 Apart from this objective was also to check the real life situations in an industry as
differing from theories. The project throws a light on how to link theory with the
business world. Taxation is a part of Corporate Finance, and to understand it, one has
to get involved with it.

Limitations of the study

 We cannot do comparisons with other companies unless and until we have the data of
other companies on the same subject.
 Only the printed data about the company will be available and not the back-end
details.
 Future plans of the company will not be disclosed to the trainees.
 Lastly, due to shortage of time it is not possible to cover all the factors and details
regarding the subject of study.
 The latest financial data could not be reported as the company’s websites have not
been updated.