BUDGET 2018_DIRECT TAX
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Group 6 presented information on direct taxes in India. The group members are Snehal Nemane, Sayli Mahalle, Shruti Adyalkar, and Vrushabh Agarwal. Direct taxes are taxes paid directly by individuals and organizations to the government. Major changes in direct taxes included no changes to income tax rates but a new 4% health and education cess. Corporate tax rates were reduced to 25% for companies with turnover less than Rs. 250 crore. Long-term capital gains on equity shares and funds will be taxed at 10%.
BUDGET 2018_DIRECT TAX
- 1. Group-6 Snehal Nemane (H-91) Sayli Mahalle (H-82) Shruti Adyalkar (H-90) Vrushabh Agarwal (H-108)
- 2. What is Direct Tax? A direct tax is the tax which is paid directly by an individual or organization to an imposing entity (government).
- 3. Major changes in Direct Taxes No Change in Income Tax Slab & Tax Rates for Individuals 3% Education Cess to be replaced with Health and Education Cess @ 4% for all tax payers Corporate Tax: Benefit of Corporate tax @ 25% available for Companies with turnover up to Rs 250 Crore Long-term capital gains above Rs 1 lakh on the sale of equity shares and equity oriented mutual funds to be taxed @ 10%.However, Capital gains tax for until 31 January 2018 will be grandfathered Senior citizens not covered by insurance can claim reimbursement of medical expenditure upto Rs. 50,000. Earlier this benefit was available only for very senior citizens.
- 4. INCOME TAX
- 6. CORPORATE TAX Companies with the turnover less than Rs. 250 crore in FY17 would be required to pay tax at 25% instead of approx. 34%. Thus, the difference in the tax rate is expected to improve their profits after tax margin and it will lead to better earnings visibility.
- 7. Impact on Political Factors Elasticity: Elasticity in indirect taxes implies that more revenue is collected by the government by simply raising the rates of taxation. In other words, revenue of government may be increased by increasing the incomes. The impact of direct-indirect taxation on consumer of the people. Therefore, the income of the government from direct taxes may increase with the increase in the incomes of the people.
- 8. Impact on Economic Factors Negative sides of direct taxes on the economic growth: • Individual’s income generation process of economy is hampered. • This decreases the production of luxury commodities in the economy • It adversely affects the GDP and standards of living. Positive sides of direct taxes on the economic growth: • Better capital formation • Inducement of saving and investment • Surety of Government’s revenue growth • Increase in planned expenditure of government • Decrease in inflation rate due to lesser availability of disposable income to persons • Timely availability of revenue to the Government
- 9. Impact on Social Factors Equitable: • Direct taxes such as income tax, taxes on property, capital gains tax are equitable. • Direct taxes are taxed according to the ability to pay by the tax payers. • Higher incomes are taxed more heavily and lower incomes slightly, the larger the income the higher the rate of taxes. Reduce inequalities: • Rich people are subjected to higher rates of taxation, while poor people are exempted from direct tax obligations. • Rates of taxes increase as the levels of income of persons rise.
- 10. Impact on Technological Factors As the direct taxes changed the accounting software also have to be updated with the new tax slabs. Ex: In tally software they have to update the tax rate and its effects on the balance sheet.
- 11. Impact on Legal Factors As the government change the rules and regulations it affects the legal bindings of the tax payers. Ex: as the tax rate had changed last year the legal bindings of the tax payers also changed but the tax rates are same this year so the legal bindings are also same.
- 12. References https://incometaxdoubts.wordpress.com/2018/02/04/budget-2018-highlights-direct- taxes/ http://www.investsaver.com/budget-highlights-changes/ http://insurancefunda.in/long-term-capital-gain-ltcg-tax/ https://economictimes.indiatimes.com/wealth/tax/latest-income-tax- slabs/articleshow/62751981.cms http://yourfinancebook.com/corporate-tax-rate-in-india/ IndianJobs4u.com Moneycontrol.com file:///C:/Users/user/Downloads/ICAI%20- %20Highlights%20of%20Tax%20Proposals%20-%20Union%20Budget%202018- 19%20(Direct%20Tax).pdf
- 13. Questions