Q N0 2 GST IN INDIA;;GST is known as the Goods and Services Tax.

It is an and development, depreciation, and other operating costs.. Corporate

indirect tax which has replaced many indirect taxes in India such as the excise tax rates vary widely by country, with some countries considered to
duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in be tax havens  due to their low rates. Corporate taxes can be lowered
the Parliament on 29th March 2017 and came into effect on 1st July 2017.In by various deductions , government subsidies , and tax loopholes , and
other words,Goods and Service Tax (GST) is levied on the supply of goods so the effective corporate tax rate , the rate a corporation actually
pays, is usually lower than the statutory rate; the stated rate before
and services. Goods and Services Tax Law in India is a comprehensive, any deductions.
multi-stage, destination-based tax that is levied on every value
addition. GST is a single domestic indirect tax law for the entire country
Understanding Corporate Tax in India

Types of GST in India;;;;The four different types of GST are given below: A corporation is an individual with a distinct and autonomous legal body
compared with its shareholders. According to the Income Tax Act, domestic and
international corporations are liable to pay income tax.
1. Central Goods and Services Tax : CGST is charged on
theintrastate supply of products and services.
2. State Goods and Services Tax : SGST, like CGST, is charged on While a domestic corporation is taxed on its universal income, a foreign
the sale of products or services within a state. corporation is imposed only on the income earned within India, i.e. accrued or
3. Integrated Goods and Services Tax : IGST is charged on inter- obtained within India.
state transactions of products and services.
4. Union Territory Goods and Services Tax : UTGST is levied on the
supply of products and services in any of the Union Territories in For tax calculation under the Income Tax Act, the types of companies may be
the country, viz. Andaman and Nicobar Islands, Daman and Diu,
described as:
Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST
is levied along with CGST.
1. Domestic Company: Domestic Company is one that is listed under India's
Companies Act and also involves the foreign-owned firm that has control and
GST Changes According to Union Budget 2023-2024The following are the
changes in Goods and Services Tax (GST), as per the Union Budget 2023-2024 management wholly based in India. A domestic business includes both private and
announced by honorable finance minister, Nirmala Sitharaman: public companies.

Section 10 amended: Composition scheme can be opted if taxpayer 2. Foreign Company: Foreign Company is one that is not listed under the Indian
supplying goods through e-commerce operators Company Act and has control and management outside of India.

Section 16 amended: Failing to pay the supplier invoice value along with GST Corporate tax is based on a company's taxable profit or net income. A company's
within 180 days from invoice issuance, then recipient taxpayer must pay the operating profit/net profits is the overall sum left with the company after the
value with interest compounded under Section 50. requisite deduction of different expenditures has been made. A company incurs a
host of expenses for selling products.

5. Sections 37, 39, 44, and 52: Restricts taxpayers from filling
GSTR-1, GSTR-3B, GSTR-9, and GSTR-8 after expiry of three Corporate Tax Calculation ;; For determining the corporation tax, the
years from due date during the tax period. company’s taxable income has to be ascertained. Consequently, the following
6. E-commerce operator will be charged Rs.10,000 or equivalent
tax amount, whichever higher in the following cases: formula is used to compute the corporate tax amount:
(i) If unregistered person is allowed to sell goods, services, or
both through these operators except those cases where they are
exempted from GST
(ii) Allowing inter-state supply of goods or services by registered
person where they are ineligible for it
(iii) If a person exempted from GST registration do not provide The Adjusted Gross Income (AGI) can be obtained by deducting the
accurate details in the GSTR-8 of goods sold by these people
7. Decriminalization of following offences: applicable adjustments from gross income. The Gross Income is the total
(i) Under the CGST Act, an officer is prevented from discharge of income arising from goods sales, commissions, interests, rent, and other
duties by a person sources. The applicable adjustments include early withdrawal penalties,
(ii) Material evidence or documents are tempered by the person
employee expenses, operation expenses, and other business expenses.
(iii) Either a person fails to provide supply information or
provided false information under CGST Act or Rules The Internal Revenue Service (IRS) allows itemized deductions, but if the
8. Limits changed to 25% to 100% of the tax involved regarding the taxpayer does not claim that, the standard deduction will be applied.
compounding offences Now, let us go through the basic steps involved in the calculation of the
9. (iv) Generation of e-bill or e-invoice, To allow businesses to corporate tax:
share GST data with digital consent, Section 158A has been
inserted in CGST Act. This section prescribes the registered
person in the portal the manner and condition of sharing 1. First, find the adjusted gross income and the allowed deductions
information as declared in: to compute the taxable income.
(i)  Outward supplies statement, or
2. Evaluate the corporation’s taxable income using this
(ii) Application of registration, or
(iii) Returns filled under GSTR-1, 3B, or 9, or formula: Taxable income = Adjusted Gross Income – All
or any other details Applicable Deductions.
3. Multiply the corporation tax percentage with the taxable income
to determine the corporation tax liability: Corporate
10. GST is an indirect tax for the whole country, it had replaced Tax=Taxable Income × Corporate Tax Rate.
several indirect taxes levied by the Central and State
Governments. Indirect taxes such as excise duty, customs duty,
entertainment tax, luxury tax and so on has been replaced in the Corporate Tax Planning;Firms can legitimately reduce the taxable income by
GST regime. After the implementation of GST, it made India one utilizing tax planning alternatives—not to be confused with unethical means
unified common market. GST is a single tax on the supply of —non-payment or tax evasion. By planning ahead, firms can avoid paying
goods and services, credit of input tax paid at each stage will be
excessive taxes.Tax consultants and chartered accountants decrease tax
available in the subsequent stage of value addition, which makes
GST essentially a tax only on value addition at each stage. liability by using various deductions, credits, government subsidies, and
Ultimately, GST will be borne by the final consumer. exemptions approved by the Internal Revenue Service (IRS). These
professionals have an in-depth knowledge of tax regulations, tax
management, and tax planning.
Parliament passed the GST Bill in India and it was rolled out from 1st
July 2017. Goods and Service Tax had been categorized at various rates
starting from 0 to 28 per cent. The GST Council Meeting had Advantages;Some of its other benefits are discussed below:
announced four- a tier GST structure which includes 5 per cent, 12 per
cent, 18 per cent and 28 per cent, with lower rates for essential items
and the highest for luxury and ‘demerit’ goods that would also attract an Unbiased: The corporation tax is levied on all the registered corporations
additional cess.
equitably, whether it is a public company or a private company.

Q NO3;CORPRATE TAX;; A corporate tax is a tax on the profits of a

corporation. The taxes are paid on a company's taxable income,
which includes revenue minus cost of goods sold  (COGS), general
and administrative (G&A) expenses , selling and marketing, research
Source of Government Revenue: The government acquires enormous societies, Hindu undivided families (HUFs), trusts, and similar organizations, on
revenue through corporation taxes. The government relies on the collected the total income earned. Indirect Taxes are levied by the government and
revenue to fund public services like infrastructure, defense, and collected by an intermediary authority from the person who shoulders the
transportation. ultimate burden of the tax. This means that if you are buying some goods or
services from somewhere and if you are the final consumer, the tax levied on
the manufacturer will be passed on to you
Tax Deductions: Companies can seek tax deductions on employee medical
insurance, employee wages, and other employee expenses. Bad debts and
losses can also be deducted from the taxable amount.

Q What is input credit?Input credit means at the time of paying tax on

Efficient Corporate Tax Planning: With proper tax planning, corporations
output, you can reduce the tax you have already paid on inputs. Say,
can ethically reduce tax liabilities.
you are a manufacturer – tax payable on output (FINAL PRODUCT) is Rs
450 tax paid on input (PURCHASES) is Rs 300 You can claim INPUT
Q 4 DIRECT TAX What are Direct Taxes?Direct taxes are one type of CREDIT of Rs 300 and you only need to deposit Rs 150 in taxes. Input
taxes an individual pays that are paid straight or directly to the Tax Credit or ITC is the tax that a business pays on a purchase and that it
government, such as income tax, poll tax, land tax, and personal can use to reduce its tax liability when it makes a sale. In other words,
property tax. Such direct taxes are computed based on the ability of businesses can reduce their tax liability by claiming credit to the extent
the taxpayer to pay, which means that the higher their capability of
of GST paid on purchases. Goods and Services Tax (GST) is an integrated
paying is, the higher their taxes are. For example, in the case of
tax system where every purchase by a business should be matched with a
income taxation, an individual who earns more pays higher taxes. It
is computed as a percentage of the total income. Additionally, direct sale by another business. This makes flow of credit across an entire
taxes are the responsibility of the individual and should be fulfilled supply chain a seamless process. Who can claim IIT
by no one else but him.

Types of Direct Taxes Reversal of Input Tax CreditITC can be availed only on goods and
1. Income taxIt is based on one’s income. A certain percentage is taken from a services for business purposes. If they are used for non-business
(personal) purposes, or for making exempt supplies ITC cannot be
worker’s salary, depending on how much he or she earns. The good thing is claimed . Apart from these, there are certain other situations where ITC
that the government is also keen on listing credits and deductions that help will be reversed.
lower one’s tax liabilities.
2. Transfer taxesThe most common form of transfer taxes is the estate tax.
Such a tax is levied on the taxable portion of the property of a deceased
individual, including trusts and financial accounts. A gift tax is also another ITC will be reversed in the following cases-
form wherein a certain amount is collected from people who are transferring
properties to another individual.
1) Non-payment of invoices in 180 days– ITC will be reversed for invoices
3. Entitlement taxThis type of direct tax is the reason why people enjoy social which were not paid within 180 days of issue.
programs like Medicare, Medicaid, and Social Security. The entitlement tax is
collected through payroll deductions and is collectively grouped as the Federal
Insurance Contributions Act. 2) Credit note issued to ISD by seller– This is for ISD. If a credit note was
issued by the seller to the HO then the ITC subsequently reduced will be
4. Property taxProperty tax is charged on properties such as land and
reversed.
buildings and is used for maintaining public services such as the police and
fire departments, schools and libraries, as well as roads.
5. Capital gains taxThis tax is charged when an individual sells assets such as 3) Inputs partly for business purpose and partly for exempted supplies
stocks, real estate, or a business. The tax is computed by determining the or fr personal use – This is for businesses which use inputs for both
business and non-business (personal) purpose. ITC used in the portion of
difference between the acquisition amount and the selling amount.
input goods/services used for the personal purpose must be reversed
Advantages of Direct TaxesThough it is strictly implemented on every proportionately.
individual who does not qualify for an exemption, there are actually
numerous advantages of paying taxes directly. They include:
4) Capital goods partly for business and partly for exempted supplies or
1. Promotes equalitySince direct taxes are based on the ability of a person to for personal use – This is similar to above except that it concerns capital
pay, it promotes equality among payers and citizens. Every person is charged a goods.
different amount, depending on how much they make.
2. Promotes certaintyThe good thing about direct taxes is that they are
5) ITC reversed is less than required- This is calculated after the annual
determined and made final before they are even paid. In the case of income return is furnished. If total ITC on inputs of exempted/non-business purpose is
tax, the annual tax is the same every year as long as the salary does not more than the ITC actually reversed during the year then the difference
change. amount will be added to output liability. Interest will be applicable.

3. Promotes elasticityTaxes are the earnings of the government, and when they
fluctuate, the earnings also change. They can go higher or lower. Optimising Credits in the Amended Rules for Input Tax Credit Utilisation
4. Saves time and moneyThe government does not need to spend on the
collection of taxes because they are already taken right at the source of the CGST Circular No. 98/17/2019 was issued on 23 April 2019 has clarified the
income. Some companies use automatic payroll deduction systems, which help order of ITC utilisation for each tax head. It further stated that until the Rule
save time and money. 88A of the CGST Rules was implemented on the GST portal, taxpayers had to
follow the facility available on the GST portal up to July 2019. The facility was
made available from July 2019 returns onwards.

Disadvantages of Direct tax Restrain investment – Many people avoid

investing because of direct taxes such as capital gain tax and security
transaction tax. Direct taxes, in a sense, stifle investment. Considered a
“Section 49A: Notwithstanding anything contained in section 49, the input
tax credit on account of central tax, State tax or Union territory tax shall be
burden – Taxpayers are considered a burden since they are compelled to pay
utilised towards payment of integrated tax, central tax, State tax or Union
direct taxes such as income tax in a single lump payment every year. territory tax, as the case may be, only after the input tax credit available on
Furthermore, the documentation procedure is inherently difficult and time- account of integrated tax has first been utilised fully towards such payment. 
consuming.

Section 49B: Notwithstanding anything contained in this Chapter and subject

CONCULISION OF DIRECT TAX to the provisions of clause (e) and clause (f) of sub-section (5) of section 49,
the Government may, on the recommendations of the Council, prescribe the
order and manner of utilisation of the input tax credit on account of integrated
The Direct Tax levy is payable directly by a person or a company who is tax, central tax, State tax or Union territory tax, as the case may be, towards
obliged to pay the direct tax and indirect tax meaning with example the same. payment of any such tax.”. 
Direct taxes can’t be transferred to anybody else. Income tax, as already said,

Subsequently, the rule 88A has been inserted to notify the above new
is the commonest form of direct tax. It’s payable by individuals, cooperative provision via CT notification no. 16/2019 dated 29th March 2019
Rule 88A: Order of utilization of input tax credit:- Input tax credit on FY 2013-14 Rs 5 lakhs Rs 2,000
account of integrated tax shall first be utilised towards payment of integrated FY 2014-15 Rs 5 lakhs Rs 2,000
tax, and the amount remaining, if any, may be utilised towards the payment of
central tax and State tax or Union territory tax, as the case may be, in any FY 2015-16 Rs 5 lakhs Rs 2,000
order. Provided that the input tax credit on account of central tax, State tax or FY 2016-17 Rs 5 lakhs Rs 5,000
Union territory tax shall be utilised towards payment of integrated tax, central FY 2017-18 Rs 3.5 lakhs Rs 2,500
tax, State tax or Union territory tax, as the case may be, only after the input
tax credit available on account of integrated tax has first been utilised fully. FY 2018-19 Rs 3.5 lakhs Rs 2,500
FY 2019-20 Rs 5 lakhs Rs 12,500
FY 2020-21 Rs 5 lakhs Rs 12,500
FY 2021-22 Rs 5 lakhs Rs 12,500

. Under both the old and new income tax regimes, the amount of the refund
under Section 87A for FY 2021-22 2022-23 [(AY (2022-23) (2023-24)] has
Q NO 6Section 87A – Income Tax Rebate remained unchanged. A resident individual with taxable income up to Rs
5,00,000 will be eligible for a tax rebate of Rs 12,500, or the amount of tax
The income tax rebate under Section 87A offers some relief to the payable (whichever is lower). Under the new income tax regime, the amount
taxpayers who fall under the tax slab of 10%. Any individual whose of the rebate under Section 87A for FY 2023-24 (AY 2024-25) has been
annual net income is not more than Rs.5 Lakh is eligible to a claim tax modified. A resident individual with taxable income up to Rs 7,00,000 will
receive a Rs 25,000 tax relief. The former tax regime remains the same, i.e.
rebate under Section 87A of the Income Tax Act, 1961. This means an 12,500 for income up to Rs 5,000,000
individual can get a rebate on the tax of up to Rs. 2,000. In this way, the
deduction will be Rs. 2,000 or 100% of the salary of an individual,
whichever is smaller.The income tax rebate in Section 87A is offered only
to individuals and not the people of Hindu Undivided Families, BOI/ AOP,
Company, or Firm. Moreover, the total rebate amount should not be
more than the amount of the income tax calculated before the deduction Conclusion
The Section 87A tax refund is an excellent way to save money on income
on the total income of the person with whom they will be charged for
taxes in India throughout a fiscal year. It is nevertheless critical to save
the assessment year
taxes with key investments such as a life insurance policy that is both
tax-saving and financially beneficial.
To read more about income tax and how you can save on taxes, explore
tax related articles on Finserv MARKETS.

Section 87A – Points to Remember

Mentioned below are the points to remember for Section 87A:

Section 87A is added to the Income Tax Act, 1961 for the betterment and
is applicable from the 1st of April of the financial year. This act is applied
to a tax assessment year and its subsequent tax assessment years.

The non-residential Indians are not eligible to get the benefits of this tax
rebate. Indian residents only are eligible to avail of this tax deduction
benefit.

Both female and male assessee can get the benefits of this tax rebate.

Super senior citizens (above 80 years of age) are not eligible to get a tax
rebate under Section 87A.

Section 87A of the Income Tax Act also restricts the tax rebate to the
total tax that is payable, if it is less than Rs. 2,000.

Tax Liabilities Against Which Individuals Can Claim Rebate Under

Section 87A

Individuals can avail a tax rebate against the following tax liabilities under
Section 87A:Individuals can claim a tax rebate under this Section on their income
taxable according to the income tax slab rate.Assessee can claim a tax rebate on the
following capital gains:Long-term capital gains as specified under Section 112 - This
applies when an individual sells a capital asset other than an equity-oriented mutual
fund scheme or listed equity shares. Individuals must note that they cannot adjust tax
payable on LTCG on equity-oriented mutual fund schemes and equity shares.Short-
term capital gains as specified under Section 111A - This applies to equity-oriented
mutual fund schemes and listed equity shares. The short-term capital gain is taxed at a
flat rate of 15%.

The income tax rebate under section 87A will be automatically claimed at the time of
filing your Income Tax Return. The condition to avail rebate under Section 87 A is:-
Only resident individuals are eligible
Senior citizens above 60 years and up to 80 years of age are eligible to claim rebate
under Section 87A.
Super senior citizens with age above 80 years are not eligible to claim the rebate.
The rebate is applicable to the total tax amount before implying 4% health and
education cess.
The total income aft

Section 87A Maximum Rebate Limit for Different Financial Years

Here is the list for maximum income eligible for the tax rebate and maximum
tax rebate applicable to each financial year:
Financial
Maximum Threshold for Taxable Income Maximum Rebate
Year
TDS - Tax Deducted at Source
TDS is the amount of tax which is deducted by the employer or deductor from
 Statutory Corporation or Authority
the taxpayer and is deposited to the Income Tax Department on behalf of  Company
him/her. The TDS rates are set on the basis of the age bracket and income of
different individuals  Partnership Firms

 Co-operative Society
TDS in Income Tax

Any person/HUF who has a total sales/gross receipts that exceeds the
Tax Deducted at Source (TDS) is a specific amount that is deducted when a specified monetary restricts as mentioned under the Section 44AB in the last
certain payment like salary, commission, rent, interest, professional fees, etc. is year
made. The person who makes the payment deducts tax at the source, while
the person who receives a payment/income has the liability to pay tax. It
lowers tax evasion because the tax will be collected at the time of making a Classification of Buyer for TCS
payment.

A buyer is one who as an individual or single entity obtains goods or even the
TDS be Deducted and who is Liable to Deduct right of receiving goods at a sale, tender, auction or other modes. The
following are people and organizations who are exempted from the
classification as buyers for tax collected at source:

 If you are making any sort of payment specified under the

Income Tax Act, then TDS will be deducted at the time of these
payments. However, no TDS will be deducted if you are an  Public Sector Entities or Companies
individual or Hindu Undivided Family (HUF), and your books are
not required to be audited.
 Central Government

 In case of rent payment by an individual or HUF member, where

 State Government
the amount payable exceeds Rs.50,000, then a TDS at 5% will be  Embassy of High Commission
deducted even if your books are not liable for a tax audit. You
will not be required to apply for a Tax Deduction Account  Consulate and other Trade Representation of a Foreign Nation
Number (TAN) if you are liable to have TDS deducted at 5%.
 Clubs such as sports clubs and social clubs
 If you are a working professional then your employer will deduct
TDS as per the applicable income tax slab rates. The bank with
whom you hold a working account will deduct TDS at 10%. Income tax
However, if they do not have your PAN details, then TDS at 20%
will be deducted. For the majority of payments, TDS rates are set
in the Income Tax Act the payer deducts TDS as per the rates It is a form of taxation that individuals, Body of Individuals (BOI), Association
applicable. of Persons (AOP), Hindu Undivided Family (HUF), and businesses need to pay
 You will not be required to pay any tax if you submit your to the central government. The government levies the tax on your income
investment proofs to your employer and your total income that during a financial year and uses the money for the country’s development. The
can be taxed is below the total taxable threshold. Thus, no TDS tax amount depends on your income and the tax slabs.
will be deducted in this case. You can also submit Form 15G and
Form 15H to the bank if the total taxable income is below the
total taxable limit. The bank in this case will not deduct any TDS
on your interest income. Income tax exemptions and deductions

 In case you failed to submit the investment proof to your Now, time for some good news. You already know that the government allows
employer and the bank deducted the TDS, you can file a return tax deductions and exemptions. These tax benefits lower your taxable income,
and claim a refund of it, provided your total taxable income is which leads to reduced tax. However, these are available only if you choose to
below the total taxable limit.
pay taxes as per the old income tax slabs in India.

Example of TDS
1. Exemptions
Exemptions are available for salaried individuals. If you check the salary slip
Let's assume that a start-up company pays Rs.90,000 as rent every month to closely, it has some components like basic pay, travel allowance, House Rent
whoever owns the property. The TDS applicable to the amount is 10%, so the Allowance (HRA), and others. Some of these incomes are exempted from
company must subtract Rs.9,000 and pay Rs.81,000 to the property owner. In
taxation. For example, you receive HRA from the employer if you are currently
this case, the owner of the property will receive Rs.81,000 following TDS. The
living in a rented house. Even though it is a source of income, there is no need
owner can add the gross amount of Rs.90,000 to his income, thereby allowing
him to take credit for the Rs.9,000 that has already been deducted by the to pay any tax on it.
company

2. Deductions
Tax Collected at Source? Deductions are calculated on your total income during a financial year. It
includes all your investments and salary. To begin with, salaried people get a
standard deduction of ₹50,000 on their salary. Furthermore, the Income Tax
TCS full form is Tax Collected at Source. This TCS tax is payable by the seller
who collects in turn from the lessee or buyer. The goods are as specified under Act, 1961 has various sections under which the government allows other
section 206C of the Income Tax Act, 1961.Example: If the purchase value of a deductions. Some examples are as follows:
box of chocolates is Rs. 100, the buyer ultimately pays Rs. 20 where the Rs. 20
is the tax collected at source. The amount is then given to certain designated
branch of banks who have been given the authorization to receive the
payments. The seller is only responsible for the collection of this tax from the  Section 80D: It allows a yearly tax deduction of up to ₹25,000
buyer and actually not paying it himself or herself. The tax is meant to be on the premium paid towards health insurance policies. If you
collected when selling goods, transactions, when issued a receipt of a sum in buy the Mediclaim for your parents, you will get an additional
cash from the buyer or when issuing a cheque or draft, whichever mode is deduction of up to ₹25,000.
payed by the earliest.
 Section 80E: It allows a tax deduction on the interest paid for
the repayment of an educational loan.
This provision is made under the Section 206C of the Income Tax Act, 1961
 Section 80G: It allows a tax deduction on the amount paid as a
donation to specific charitable organizations and relief funds.
Classification of Seller for TCS
 Section 80EE: It allows a yearly tax deduction of up to ₹50,000
on the interest paid for the repayment of a home loan.
The following are people and organizations who are classified as sellers for tax
collected at source:  Section 80C: It allows a yearly tax deduction of up to ₹1.5 lakhs
for investments made in National Saving Certificate (NSC), Public
Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), Unit-
 Central Government Linked Insurance Plans (ULIPs), life insurance, Employee
Provident Fund (EPF), principal payment towards home loan,
 State Government Equity-Linked Savings Scheme (ELSS), Senior Citizen Savings
 Local Authority Scheme (SCSS), and much more.
Income Tax Law

Income-tax is a tax levied on the total income of an assessee, being a

person charged under the provisions of this Act, for the relevant
previous year. Benefits of Tax
Payment
For understanding Income tax law in India, the following components
need to be studied carefully:

(1) Income-tax Act, 1961

(2) Annual Finance Acts

(3) Income-tax Rules, 1962

Benefits of Tax
(4) Notification and Circulars, issued from time to time

(5) Judicial Decisions Payment

Providing sustainable finance and funding for governance, public and social services
and economic development.
TAX PROVISION IN RESPECT OF FREE TRADE ZONE Stimulating priority social and economic activities and sectors while discouraging less
preferred ones.
Promoting civic responsibility, patriotism by citizens and social responsibility by
Free Trade Zones (FTZs) are those locations or areas that allow the import, storage, corporate citizens.
manufacturing of goods, etc., without subjecting them to customs duties or taxes. Individuals and corporate organizations are conferred with definite benefits, rights and
Although FTZs have been around for quite some time, their responsibilities are now privileges in the system based on their tax compliance status.
diversifying to illustrate the nation-state’s and the private sector's roles in boosting Giving taxpayers the moral and legal right to demand for (thereby engendering) a
local, national, and global economic development. For instance, in an FTZ, the culture of accountability.
interaction between the private sector and government policies shapes the local and Bringing about the redistribution of wealth and bridging sharp disparities in living
regional development. standards.
Serving as a gauge for measuring the level, growth and health of economic units and
economic activities.
Companies setting up in an FTZ can take advantage of its various regulatory and
Tax compliance enables law abiding citizens to avoid the consequences, penalties and
fiscal incentives. These include the right to duty-free imports, retain and reinvest
sanctions of non-compliance.
foreign exchange earnings, and tax rebates, to name a few. Moreover, organizations
can avail of additional benefits if they adhere to the customs control and filing
requirements.
Conclusion :
The importance of taxes can be witnessed in the plethora of ways in
In short, an FTZ intends to attract investment, increase employment and, thus, reduce
which their regulation affects the ebb and flow of economic activity.
poverty and unemployment in the local area.
Proper regulation of the tax system and the efficient collection of
payments will provide governments with adequate funds to invest in
Benefits of Free Trade Zones improving the overall quality of life within their borders. The provision of
tax deductions on certain investments and services such as life
insurance allows individuals as well as organizations to operate with
The benefits offered by a free trade zone vary from one region to another. However,
more freedom and financial security. One such example is the Invest 4G
these are some of the common benefits associated with all free trade zones:-
term plan from Canara HSBC Life Insurance which allows for tax
deductions on premiums as per Section 80C of the Income Tax Act of
• Free trade zones offer duty reduction. It is also known as inverted tariff. It means 1961
users do not have to pay any duty on labor costs, overheads, and profits on goods
produced within a free trade zone.
CONDITION FOR CLAIMING EXEMPTION FROM U/S 10A
Section 10AA of the Income Tax Act
• Traders can defer on payment of duty till such time the goods are moved outside the Section 10AA of the Income Tax Act is a special provision that allows newly-
free trade zone. The goods exchanged within the free trade zone are duty free till the established businesses or units to enjoy income tax holidays and exemptions for
time they leave the zone. offering services in Special Economic Zones (SEZs). The objective of this section is
to promote exports and attract foreign investment by providing tax incentives to units
established in SEZs. Section 10AA was introduced in April 2000 under the Foreign
• Traders enjoy exemption of duty as they don’t have to pay duty on exports, re- Policy Act and was fully formulated in 2006 under the SEZ Act to provide tax
exports, or imports. concessions to businesses in SEZ. 

The Importance Of Taxes In India

Eligibility for Deduction Under Section 10AA
 The tax holiday is available to units established in SEZs on or after
Taxation has been the primary source of revenue for states across the April 1, 2005, and before April 1, 2020.
world for centuries and India is no exception to this. The nation has a
structured tax system that employs both progressive and proportional  To claim the tax holiday under section 10AA, the eligible unit must
taxation based on income and other factors and is determined by central comply with certain conditions, such as obtaining necessary approvals
and filing the prescribed returns.
and state governments. The money received by the government is known
as tax revenue and may be utilized for a broad spectrum of purposes
such as infrastructure development in the form of roads, railways,  Transfer of plant or machinery from a previous company to form a new
one makes it ineligible u/s 10AA.
bridges, dams etc., public healthcare and education, defence and civil
services, to name a few. Helping the government fulfill its development
goals is the main importance of taxes.  A unit that has claimed deductions u/s 10A for 10 consecutive years
before the SEZ Act 2005 is not eligible. 

India’s tax to GDP ratio as of 2018-19 was 10.9%, a worryingly low

 If the businesses’ profits were computed under sub-section (7B) of
Section 10A, only gains for the unexpired period of 10 years are
number given that the average ratio for OECD member states is around eligible u/s 10AA.
34%. A high tax to GDP ratio signifies the government’s ability to manage
its spending effectively, without relying on excess borrowing. High ratios
are also generally associated with developed nations. India’s relatively
 The company must commence production on or before 31 March 2023.

low figures could be indicative of the reduced collection of service taxes, Amount of Deduction Under Section 10AA
comparatively high GDP growth as well as income tax evasion prevalent The amount of deduction applicable u/s 10AA of the Income Tax Act is as follows:
among large corporations and the upper strata of society.

The provisions of this Act are applicable for companies that operated from April 1,
Types Of Taxes : Taxation can be broadly divided into two categories 2006, to April 1, 2021. The amount of deduction applicable u/s 10AA is as follows:
based on its mode of implementation:

BENEFITS OF TAX PAYING FOR A COUNTRY

  100% of the profits from the export for the first 5 consecutive
wealth, while service is the basic motive of a profession. Further, business
assessment years  requires huge capital investment, at its initial stage. Conversely, the actual
capital is the competency and specialization in the profession
 50% of such profits for 5 assessment years after the above period

 For the next 5 assessment years, not more than 50% of the profit is What Is a Short-Term Gain?
eligible for tax deduction (this deduction gets debited from an
assessee’s profit and loss statement and is credited to his/her ‘Special
Economic Zone Re-investment Reserve Account’.)  A short-term gain is a profit realized from the sale of personal or investment
property, a capital asset , that has been held for one year or less. These
gains are taxed as ordinary income , which is your personal income tax rate

 A short-term gain is a profit realized from the sale of personal

or investment property that has been held for one year or less.
MEANING OF BUSSINESS AND PROFESSION
 The amount of the short-term gain is the difference between
the basis of the capital asset, the purchase price, and the sale
price received. 
Meaning of Business
 Short-term gains are taxed at the taxpayer's top marginal tax
Business is either an occupation, profession, or trade, or is a commercial rate or regular income tax bracket, which can range from 10%
activity which involves providing goods or services in exchange for to 37%.
profits.Profits in business are not necessarily money. It can be a benefit in any
form which is acknowledged by a business entity involved in a business
 Short-term capital gains receive less preferential tax treatment
compared to assets held for at least one year taxed at lower
activity long-term capital gain rates.
 Investors can avoid capital gain taxes by holding onto assets
for longer periods, donating assets to nonprofits, offsetting
Forms of Business gains and losses, and leveraging retirement accounts.

There are three main legal forms a business can take: (i) Sole proprietorship
(ii)Partnership (iii)Corporation What Is a Short-Term Gain?

A short-term gain is a profit realized from the sale of personal or investment

Each of these legal forms has distinct characteristics as well as advantages property, a capital asset , that has been held for one year or less.
and disadvantages. Thesegainsare taxed as ordinary income , which is your personal income tax
rate

Objective of the Businesses

 A short-term gain is a profit realized from the sale of personal
The business objective is what makes the business go on and conduct its or investment property that has been held for one year or less.
activities in a long run. It is the reason why the business exists. While most of  The amount of the short-term gain is the difference between
the people argue that profit making is the core objective of every business. the basis of the capital asset, the purchase price, and the sale
Few have come up with the new underlying objective. price received. 
 Short-term gains are taxed at the taxpayer's top marginal tax
rate or regular income tax bracket, which can range from 10%
According to the traditional concept, business exists only to earn profits by to 37%.
providing the goods and services to the customers.  Short-term capital gains receive less preferential tax treatment
compared to assets held for at least one year taxed at lower
long-term capital gain rates.
According to the modern concept, the underlying objective of every business  Investors can avoid capital gain taxes by holding onto assets
is customer satisfaction as this is what results in most profits. If the for longer periods, donating assets to nonprofits, offsetting
customer is satisfied, business excess. gains and losses, and leveraging retirement accounts.

Understanding Short-Term Gains

Meaning of Profession

A profession is a Accountability The amount of the short-term gain is the difference between the basis  of the
capital asset and the sale price received for selling it. Short-term gains are
taxed at the taxpayer's top marginal tax rate.1  The 2022 and 2023 regular
income tax brackets range from 10% to as high as 37%, depending on the
1. Based on specialized and theoretical knowledge investor's annual income.2 3
2. Autonomy
3. Morality
A short-term gain can only be reduced by a short-term loss. A taxable capital
loss is limited to $3,000 for single taxpayers and $1,500 for married
disciplined group of individuals who adhere to ethical standards and who hold taxpayers filing separately. Any excess capital losses above $3,000 can be
themselves out as, and are accepted by the public as possessing special carried forward to offset ordinary taxable income in later years until fully
utilized. Short-term gains and losses are netted against each other.1
knowledge and skills in a widely recognized body of learning derived from
research, education and training at a high level, and who are prepared to apply
this knowledge and exercise these skills in the interest of others. Conclusion
Individuals who want to invest in a short term capital asset should be aware
of the taxes that will be imposed on their gains. Any loss suffered as a result
Characteristics of a Profession of the transfer of a short-term capital asset can be set off (adjusted) against
any gain realised as a result of the sale or transfer of another short-term
There are some following characteristics of Profession are: capital asset. The most important thing that one must note is that Short term
capital loss (STCL) can be set off against both short-term capital gains
(STCG) and Long term capital gain (LTCG). Having said that, taxpayers should
keep in mind, that this loss cannot be offset against any other income.
1. Great responsibility

2. Ethical constraints
Short-term capital losses, on the other hand, can be carried forward for up to
eight assessment years from the year during which the losses were occurred..
Conclusion:

After a broad discussion on these two topics, it is quite clear that these two
are not same at all. Business is primarily set up to make a profit and acquire
