Government formulates five pronged strategy to tackle black money issue
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Finance Minister Pranab Mukherjee today said a group has been formed to look into the possibility of an amnesty scheme to encourage people to bringback black money stashed abroad.
"So far there are no reliable estimates of black money both inside and outside the country," Mukherjee said, adding an interim task force in 2009 found illicit funds to range between $500 billion and what is now the size of India's economy of $1.4 trillion.
more by Pranab Mukherjee - 2 hours ago - Reuters India (5 occurrences)
The government of India Incs and LPG Mafia on Tuesday announced a slew of measures, including stronger disclosure pacts with foreign countries, to curb tax crimes potentially worth about $1 trillion in the latest move by a government trying to boost its image.
The Indian government defended itself Tuesday against criticism that it was failing to prevent hundreds of billions of dollars being squirrelled away in overseas tax havens.
Days after the Supreme Court condemned what it described as the "mind-boggling plunder" of the nation's wealth by tax evaders, Finance Minister Pranab Mukherjee insisted the government was hamstrung by legal restrictions.
Mukherjee said India had completed negotiations on tax information exchange agreements with 10 renowned tax havens -- including Bermuda and the Cayman Islands -- and had initiated similar negotiations with 65 other countries.
"No sovereign country is going to share information unless there is a legal framework in place," he told a news conference.
Estimates for the amount of illicit money deposited secretly in overseas bank accounts by wealthy Indians and corporations range from $500 billion to $1.4 trillion.
"But all these estimates are based on unverifiable assumptions and approximations," the minister said, adding that a government committee had been set up to put together a more accurate figure.
The recent criticism of the government came after it filed an affidavit with the Supreme Court restricting information on money deposited by 26 unidentified Indians in a Liechtenstein bank.
Mukherjee said those on the list could not be named as the information had been received "on condition of secrecy."
"If I divulge those secrets, the day after tomorrow the other countries will not give us information," he said.
"The government has nothing to hide," he added.
Mukherjee said steps in the past 18 months had led to the detection of 150 billion rupees ($3.3 billion) in undisclosed income.
Opposition parties have been quick to pick up on the Supreme Court's outrage over the black money issue, accusing the government of seeking to cover up the scale of the problem.
Finance Minister Pranab Mukherjee on Tuesday said authorities had discovered cases of tax evasion on 150 billion rupees ($3.3 billion) in the last 18 months.
Mukherjee said India did not have reliable estimates of how much of "black money" was there in the country.
But Finance Minister Pranab Mukherjee's five-point strategy was unlikely to pacify the opposition which has mounted a frontal attack on a government dogged by multi-billion dollar corruption scams and a growing feeling it has failed to curb graft.
Mukherjee's call to arms is not the first time government officials have tried to clamp down on corruption. But little has emerged from those investigations and convictions of high officials or politicians for graft remain negligible.
"I have appointed a group to look into it (of amnestyscheme) and to make suggestions and recommendations to me,"the Finance Minister said when asked if the government wasconsidering granting amnesty to those who have stashed awayblack money overseas.
Mukherjee, however, did not elaborate on the nature ofthe group and its members.
His remarks come ahead of the budget for which theproposals are being finalised by the Finance Ministryofficials. The budget for 2011-12 will be unveiled byMukherjee on February 28.
The Minister, while addressing a press conference here,said that the issue of granting amnesty to convert black moneyinto white was a tricky one like "a double-edged sword".
"You know there is always a double side to these amnestyschemes. Sometimes if somebody is allowed, you will be highlycriticised because this will be at the cost of the honest taxpayers. Sometimes it helps to bring some money," he said.
Central Board of Direct Taxes Chairman Sudhir Chandralater clarified that there was no step to grant amnestyimmediately. "Right now there is nothing," he said, adding agroup has been set up to bring black money back to India.
The government in the past had come out with amnestyschemes to encourage people to disclose unaccounted money.
Although these schemes have generated tax income for thegovernment, they were criticised for being unfair to honesttaxpayers.
Pointing out "no reliable estimate of black money bothinside and outside the country" is available, Mukherjee said"a multi-disciplinary (will) estimate the quantum of illicitfund generated by Indian citizens".
The Finance Minister said three organisations -- NationalInstitute of Public Finance Policy, National Institute ofFinancial Management and NCAER will help in the process bygiving recommendations to the group to estimate the amount ofblack money.
"It will take some time ... we will try to have it asexpeditiously as possible," Mukherjee said.
Citing a study by the Global Financial Integrity, hesaid the present outflow of illicit money is estimated at USD462 billion, while an interim recommendation of BJP task force2009 said it is between USD 500 billion and YSD 1400 billion.
"All these estimates are based on unverifiableassumptions and approximations," Mukherjee said.
BJP says it will pursue black money issue
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Indian Black Money in Swiss Bank
In 2006, the most recent Global Financial Integrity study, shows that the average amount stashed away from India annually during 2002-06 is $27.3 billion (about 136,466 crore). It means that during the five-year period the amount stashed away is 27.3x5=136.5 billion (about 692,328 crore).
It is not that all these amounts went to Swiss banks. It has gone to different tax and secret shelters. The share of Swiss banks in dirty money being a third of the global aggregate, some $45 billion out of the 136.5 billion stashed away from India would have been hoarded in these years in Swiss banks.
The important point is that this is only for five years. More amounts were stashed away during the Nehruvian regime. So the loot for 55 years will be several times higher. In fact, in those days the rupee commanded a better value per dollar. So fewer rupee could get more dollars. So the estimation that the Indian money stashed away may be of the order of $1.4 trillion (about Rs 71 lakh crore).
Source: Swiss black money can take India to the top
http://www.blackmoneyindia.com/
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What has turned out to be a lightning rod for political protests now is a potential $39 billion fraud in awarding of telecoms licences in 2008, a row that has caused a political deadlock in the country with the opposition refusing to allow the December parliament session to function.
Mukherjee told a press conference that the steps would help track and repatriate illicit funds or "black money" stashed away abroad, a move many see as a public relations measure to boost government image ahead of key state elections over the next year.
While the government stands accused of tolerating corruption, the country's Supreme Court has chatised Singh's coalition for failing to unearth illicit funds kept in Swiss banks and other tax havens. Singh has had to also defend himself in court against allegations of inaction in the telecoms case.
Among the measures announced by Mukherjee was modifying double taxation avoidance pacts with as many as 74 countries to "broaden the scope" of exchange of information, including those related to banking.
Eight Indian tax units were being set up abroad and staff at foreign tax division boosted. He also announced a panel to look into the possibility of granting amnesty to offenders who pay up.
"So far there are no reliable estimates of black money both inside and outside the country," Mukherjee said, adding an interim task force in 2009 found illicit funds to range between $500 billion and what is now the size of India's economy of $1.4 trillion.
He said the authorities had discovered cases of tax evasion on $3.3 billion in the last 18 months and stronger enforcement had resulted in higher tax receipts.
Singh is already under pressure from an opposition demand for a joint parliamentary probe into a $39 billion telecoms scam, leading to the sacking of Telecoms Minister Andimuthu Raja.
The scandal has deadlocked politics in Asia's third-largest economy, and the main opposition Bharatiya Janata Party (BJP) has said it could block the February session of parliament as well, in which the budget is due to be debated, if the joint parliamentary committee does not investigate the case.
BJP rejected Mukherjee's prescription to fight graft.
"It shows the government is reluctant to show any meaningful effort ... because if the names are (out in the) open, this government may have some problems," BJP spokesman Ravi Shankar
Black money abroad pegged at $500 bn to $1,400 bn: FM
Indo-Asian News Service, January 25, 2011 (New Delhi)
Finance Minister Pranab Mukherjee on Tuesday said $462 billion to $1.4 trillion in black money is estimated to have been stashed abroad by Indians and all steps were being taken to bring it back. But the names of the perpetrators can't be revealed yet.
Unless legal provisions are in place in other countries, the two pacts India has been inking to track black money -- double tax avoidance treaties and information exchange agreements -- cannot help in revealing the names of perpetrators, Mukherjee said.
"We have nothing to hide. But there are legal provisions," the finance minister told a press conference here, which was called at the behest of Prime Minister Manmohan Singh to clarify the government's position on black money.
"Information we have received from other countries is on condition of secrecy. Today, if I divulge the secrecy (the names), thereafter tomorrow the other countries will not give us information. They will raise accusing fingers against us," he said.
"I also have no authority of knowing the names. Our income tax officers discharge their functions under the act," he said, adding the government will come to know of the names as and when the tax department starts prosecution proceedings in courts.
Nonetheless, the finance minister said the government had set up a multi-disciplinary group to estimate the actual quantum of black money abroad and the way forward. "They have been asked to expeditiously give their report."
The clarification was given by the finance minister on steps being taken by the Indian government to bring back this ill-gotten money and to prevent the outflows of illegal money from the country's shores in the future.
The Supreme Court had last week queried why the government cannot name those involved in this national plunder, based on a petition by noted lawyer Ram Jethamalani which had led to a discussion by the cabinet presided over by the prime minister.
The apex court's remarks came after Jethamalani wanted it to issue directions to the government to bring back such ill-gotten money, which he estimated at a whopping $1.5 trillion, or nearly one-and-half times India's gross domestic product.
"It is not a case of tax. The issue involved is of serious nature. Keep aside all the things. Let us consider the persons named," said the apex court bench of Justice B. Sudarshan Reddy and Justice S.S. Nijjar.
But Mukherjee said the situation had tied down the government's hands as it required the cooperation of other countries and jurisdictions as well.
"The responsibility of the government is not to indulge in any rhetoric but to find out the facts. The government has to function on basis of the facts," the finance minister said, when asked to respond to the apex court's remarks.
"The entire issue of black money became a matter of debate at the international fora at the G20 finance minister's conference in 2009. At G20 Summit in Pittsburgh, the leaders emphasised on it and after that various countries started cooperating," Mukherjee said.
The finance minister said an earlier report on black money abroad had estimated it at anywhere between $500 billion and $1,400 billion. Thereafter another recent study had projected black money at $462 billion.
"These are, at best, estimates," he said, adding the government had broadened its talks to 65 countries for exchange of information on banking transactions as also on the tax payers not covered by existing double taxation agreements to prevent illegal outflows.
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Black money trail: Can't disclose names, says FM
NDTV Correspondent & Agencies, January 25, 2011
The government today said that it cannot disclose information received from foreign entities on black money held by Indians abroad because of absence of legal framework. Finance Minister Pranab Mukherjee said, "No sovereign country is going to share information unless there is a legal framework." (Watch: Finance Minister on black money trail)
Last week, the Supreme Court had criticized the government for its reluctance to reveal publically the 26 Indians who hold accounts, allegedly for black money, in Germany's Liechtenstein Bank. "It is a pure and simple theft of national money. We are talking about a mind-boggling crime, not niceties of various treaties... This is the plunder of the nation," the Court had said.
The finance minister's explanation comes after the PM reportedly raised the issue of black money in the Cabinet meeting and asked Finance Minister Pranab Mukherjee to hold a public, detailed brief on the government's strategy to uncover and recover black money stashed abroad.
Mukherjee said that the government can obtain information under the Double Taxation Avoidance Agreement (DTAA) and Exchange of Taxation Information Agreement, "but the problem is information which we have obtained has come under some conditions of secrecy. Today, if we disclose, tomorrow other countries will not give me the information raising an accusing finger that you do not meet international commitments," he said.
Listing out the measures that the government has taken, the finance minister said, "The government has already amended pacts with 23 countries to get information from banks...As and when the Income Tax Authorities will be in a position to prosecute cases against tax evaders you will come to know."
Mukherjee said the government has formulated a five pronged strategy comprising joining the global crusade against 'black money'; creating an appropriate legislative framework; setting up institutions for dealing with illicit funds; developing systems for implementation; and imparting skills to the manpower for effective action.
The Finance Minister said there were no reliable estimates of black money both inside and outside the country. However, he cited a recent study by Global Financial Integrity that estimated the present value of illicit money outflow to be $462 billion.
On whether the government would come out with an amnesty scheme to bring back unaccounted money abroad, he said a group has been constituted to look into such possibility.
He said India has also initiated process of negotiation with 65 countries to broaden the scope of article concerning Exchange of Information to specifically allow for exchange of banking information and information regarding taxpayers not covered by DTAA.
"Thirteen new DTAAs have also been finalised where the Exchange of Information Article is in line with the international standards," the minister said.
He said the government was strengthening the administrative machinery by setting up eight more income tax overseas units. Two such units are operational in Singapore and Mauritius, Mukherjee added.
The government is also setting up an Exchange of Information (EoI) Cell, which will help in effective exchange of information to curb tax evasion, he said.
While the finance minister tried convincing the people today, the government will have to explain its stand on the issue to the Supreme Court on the 27th of this month.
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Names of black money hoarders to go public after I-T assessment BJP says Pranab misleading the country; Minister says even he does not have the authority to know the names
By Iftikhar Gilani Delhi Going by what Finance Minister Pranab Mukherjee said on Tuesday the nation would know names of hoarders who have stashed black money in foreign banks. However, it will be possible only after the Income Tax (I-T) Department assesses and launches its prosecution, affirming that government has nothing to hide. "Their names cannot be divulged forthwith," Mukherjee said. "This is because of the international confidentiality restriction." Mukherjee said even he does not have the authority to know the names. He laughed at the Opposition claiming that the government would fall if the names are disclosed. Mukherjee said black money as a whole is an issue of concern, which is generated through tax evasions or corrupt practices. He said proactive steps are underway to unearth it whether hoarded in India or abroad. FIVE-PRONGED STRATEGY: The government has formulated a five-pronged strategy to join the global crusade against 'black money.' It will create an appropriate legislative framework, set up institutions for dealing with illicit funds, developing systems for implementation and training for effective action, Mukherjee said. He disclosed that information has started pouring in from several countries, signatory to treaties, about the money stashed in their banks. The information is in different stages of processing and investigation. "But the problem is information which we have obtained has come under some conditions of secrecy. Today, if we disclose, tomorrow other countries will not give me the information raising an accusing finger that you do not meet international commitments," he said. " The I-T officers have statutory powers under which they perform their duties and they are outside the purview of the administrative control of the ministry," Mukherjee said, adding "as and when the I-T Authorities will be in a position to prosecute cases against tax evaders, you will come to know them." LEICHTENSTEIN MONEY: As regards the Indians' bank accounts in Leichtenstein obtained from Germany, Mukherjee said the I-T Department is assessing 18 cases and the names will become public once prosecution is launched. However, the names have already been furnished to the Supreme Court in a sealed letter. On Pune's stud farm owner Hasan Ali's case, in whose Swiss account an arms dealer deposited huge sums, the Finance Minister said several cases have been registered against him. Besides alleged tax evasion one FIR registered against him in Mumbai is for having two passports. The documents seized in his case turned out to be forged on which no information could be procured, Mukherjee said. He pointed out that the Enforcement Directorate pinpointed three accounts but there was no money in them. Interestingly, the fourth account in which $60,000 were deposited were withdrawn the very next day. The cases against Hasan Ali are being pursued by the Enforcement Directorate and the Income Tax officials. CONCRETE FIGURES: He also disclosed that flight of Rs 33,784 crore to foreign countries has been averted by the Directorate of Transfer Pricing in the past 18 months since UPA II came to power. The Directorate of International Taxation has collected taxes of Rs 34,601 crore during this period and the Income Tax Department has unearthed another Rs 15,000 crore as undisclosed black money income. Mukherjee said there are no reliable figures of black money inside and outside the country except for the estimates "based on various unverifiable assumptions and approximations. One estimate was drawn by BJP Task Force 2009, which pegged the amount at $500 billion to $1,400 billion and another by Global Financial Integrity at $462 billion. A finance ministry official later clarified that a section of media misquoted him as if he was himself giving the estimate of the black money stashed abroad between $462 billion to $1.4 trillion. The finance minister announced formation of a multidisciplinary committee to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens that may help the government start cracking. He said the government is also setting up an Exchange of Information (EoI) Cell, which will help to curb tax evasion. Also, necessary provisions have been made in the proposed Direct Tax Code to create legislative framework to check illicit outflows of funds. Pointing out that no sovereign country will share information on the black money, Indians are stashing in their banks unless there is a legal framework, Mukherjee said the government is inking two treaties to track down the black money -- Double Tax Avoidance Agreement (DTAA) and Tax Information Exchange Agreement (TIEA). PROGRESS CARD: He claimed substantial progress has been made with TIEA in place with 10 of the 22 countries identified as tax heavens, namely Bahamas, Bermuda, British Virgin Islands, Isle of Man, Cayman Islands, Jersey, Monaco, Saint Kitts & Nevis, Argentina and Marshall Islands. Process to allow exchange of information on banking and taxpayers has been initiated with 65 countries to broaden the scope of the article in the agreements, which are not covered under DTAA, Mukherjee said. He pointed out that 10 have initiated the article update, while 13 others have finalised new DTAA in line with international standards. His detailed clarification on the government's multi-pronged strategy to unearth black money, including that going abroad came after the Prime Minister asked him to take the nation into confidence. The PM's directive came in the context of the Supreme Court rap for not disclosing names of the national plunderers on a petition filed by noted lawyer Ram Jethmalani and other prominent citizens. Mukherjee pointed out that India had played a very active role in G-20 Finance Ministers' Conference in 2009 that resulted in a communiqué focusing on menace of the black money and its role in funding terrorist activities. "At the G20 Summit in Pittsburgh, the leaders emphasised on it and after that various countries started cooperating," he said adding that India became vice chair of the peer review group, namely The Global Forum on Transparency and Exchange of Information for Tax Purposes because of its active role on this front. He also disclosed that eight more income tax overseas units are being set up to catch the black sheep. Two such units are operational in Singapore and Mauritius. Strength of foreign tax division has also been doubled and as a part of capacity building exercise, 36 officers were sent abroad for specialised training in transfer pricing and international taxation. Some other pro-active steps listed by Mukherjee are: -- India getting membership of the Financial Action Task Force (FATF), an inter-governmental body to combat money laundering and terrorist financing, last June in recognition of the strength of its anti-money laundering and anti-tax evasion measures. -- India gained membership of the Eurasian Group (EAG) and joined the Task Force on Financial Integrity and Economic Development to bring greater transparency and accountability in the financial system. -- Amendments in the Prevention of Money Laundering Act (PMLA) in June 2009 to cover wide range of offences.
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Taxation in India
From Wikipedia, the free encyclopedia
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| | This article needs additional citations for verification.Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (September 2007) |
TaxationAn aspect of fiscal policy |
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Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such the Municipality or the Local Council.
The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Centre and the State. An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law."[1] Therefore each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature.
Contents[hide]
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[edit] Central Board of Direct Taxes
The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue in the Ministry of Finance, Government of India. The CBDT provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through Income Tax Department. The CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963.
[edit] Constitutionally established scheme of Taxation
Article 246[2] of the Indian Constitution, distributes legislative powers including taxation, between the Parliament and the State Legislature. Schedule VII[3] enumerates these subject matters with the use of three lists;
- List - I entailing the areas on which only the parliament is competent to make laws,
- List - II entailing the areas on which only the state legislature can make laws, and
- List - III listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently.
Separate heads of taxation are provided under lists I and II. There is no head of taxation in the Concurrent List (Union and the States have no concurrent power of taxation).[4] The list of thirteen Union heads of taxation and the list of nineteen State heads are given below:[5]
[edit] Central government
S. No. | Parliament |
1 | Taxes on income other than agricultural income (List I, Entry 82) |
2 | Duties of customs including export duties (List I, Entry 83) |
3 | Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I, Entry 84) |
4 | Corporation Tax (List I, Entry 85) |
5 | Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I, Entry 86) |
6 | Estate duty in respect of property other than agricultural land (List I, Entry 87) |
7 | Duties in respect of succession to property other than agricultural land (List I, Entry 88) |
8 | Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I, Entry 89) |
9 | Taxes other than stamp duties on transactions in stock exchanges and futures markets (List I, Entry 90) |
10 | Taxes on the sale or purchase of newspapers and on advertisements published therein (List I, Entry 92) |
11 | Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce (List I, Entry 92A) |
12 | Taxes on the consignment of goods in the course of inter-State trade or commerce (List I, Entry 93A) |
13 | All residuary types of taxes not listed in any of the three lists (List I, Entry 97) |
[edit] State governments
S. No. | State Legislature |
1 | Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues (List II, Entry 45) |
2 | Taxes on agricultural income (List II, Entry 46) |
3 | Duties in respect of succession to agricultural income (List II, Entry 47) |
4 | Estate Duty in respect of agricultural income (List II, Entry 48) |
5 | Taxes on lands and buildings (List II, Entry 49) |
6 | Taxes on mineral rights (List II, Entry 50) |
7 | Duties of excise for following goods manufactured or produced within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics (List II, Entry 51) |
8 | Taxes on entry of goods into a local area for consumption, use or sale therein (List II, Entry 52) |
9 | Taxes on the consumption or sale of electricity (List II, Entry 53) |
10 | Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54) |
11 | Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55) |
12 | Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry 56) |
13 | Taxes on vehicles suitable for use on roads (List II, Entry 57) |
14 | Taxes on animals and boats (List II, Entry 58) |
15 | Tolls (List II, Entry 59) |
16 | Taxes on profession, trades, callings and employments (List II, Entry 60) |
17 | Capitation taxes (List II, Entry 61) |
18 | Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling (List II, Entry 62) |
19 | Stamp duty (List II, Entry 63) |
Any tax levied by the government which is not backed by law or is beyond the powers of the legislating authority may be struck down as unconstitutional.
[edit] Income Tax Act of 1961
Main article: Income tax in India
The major tax enactment in India is the Income Tax Act of 1961 passed by the Parliament, which imposes a tax on income of individuals and corporations.[6] This Act imposes a tax on income under the following five heads:[7]
- Income from house and property,
- Income from business and profession,
- Income from salaries,
- Income in the form of Capital gains, and
- Income from other sources
However, this Act is about to be repealed and be replaced with a new Act which consolidates the law relating to Income Tax and Wealth Tax, the new proposed legislation is called the Direct Taxes Code (to become the Direct Taxes Code, Act 2010). The new Act is purported to come into effect from 1 April 2011.
[edit] Income tax rates
In terms of the Income Tax Act, 1961, a tax on income is levied on individuals, corporations and body of persons. The rate of taxes are prescribed every year by the Parliament in the Finance Act, popularly called the Budget. In terms of the Finance Act, 2009, the rate of tax for individuals, HUF, Association of Persons (AOP) and Body of individuals (BOI) is as under;
- A surcharge of 2.50% of the total tax liability is applicable in case the Payee is a Non-Resident or a Foreign Company; where the total income exceeds Rs 10,000,000.
Note : -
Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any. A marginal relief may be provided to ensure that the additional IT payable, including surcharge, on excess of income over Rs 1,000,000 is limited to an amount by which the income is more than this mentioned amount.
[edit] Service tax
Service tax is a part of Central Excise in India.[8] It is a tax levied on services provided in India, except the State of Jammu and Kashmir. The responsibility of collecting the tax lies with the Central Board of Excise and Customs(CBEC).
The Finance Minister of India, Pranab Mukherjee in his Budget speech has indicated the government's intent of merging all taxes like Service Tax, Excise and VAT into a common Goods and Service Tax by the year 2011. To achieve this objective, the rate of Central Excise and Service Tax will be progressively altered and brought to a common rate.[citation needed] In budget presented for 2008-2009 It was announced that all Small service providers whose turnover does not exceed Rs10 lakhs need not pay service tax.
Circular No. 127/9/2010-ST, dated 16-8-2010 regarding Service tax on commercial training and coaching - Whether 'donation' is 'consideration'. A representation has been received seeking clarification whether donations and grants-in-aid received from different sources by a charitable Foundation imparting free livelihood training to the poor and marginalized youth, will be treated as 'consideration' received for such training and subjected to service tax under 'commercial training or coaching service'. 2. The matter has been examined. The important point here is regarding the presence or absence of a link between 'consideration' and taxable service. It is a settled legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to service tax. Donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered Foundation. Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest. In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training.
[edit] Other Major Taxation Laws
Other major taxation laws enacted by the Parliament are;
- Wealth Tax Act, which has a regular history of being passed and repealed;
- Service Tax,[9] imposed under Finance Act, 1994, which taxes the provision of services provided by service providers within India or services imported by Indian from outside India;
- Central Excise Act, 1944, which imposes a duty of excise on goods manufactured or produced in India;
- Customs Act, 1962, which imposes duties of customs, counterveiling duties and anti-dumping duties on goods imported in India;
- Central Sales Tax, 1956, which imposes sales tax on goods sold in inter-state trade or commerce in India;
- Transaction Tax, which taxes transactions of sale of securities and other specified transactions;
The major taxation enactments passed by the State Legislatures are in the nature of the following;
- Excise duties on tobacco, alcohol and narcotics;
- Sales tax, on sale of goods within the State;
- Stamp duties, on sale of property situated within the State;
- Entertainment taxes
[edit] Overall taxation
Total tax receipts of Centre & State amount to approximately 18% of national GDP.
Gross tax revenues of the Government of India have grown steadily from around Rs.1 billion in 1945 to over Rs.1 trillion by 1995. They are expected to reach Rs.8 trillion by 2010 at the current rate of growth. Below is a chart of gross tax revenues (before splitting shares of States) of the Government of India assessed by the Finance Commissions from time to time with figures in millions of Indian Rupees.
Year | Gross Tax Revenues | Excise Duties | Corporation Tax | Customs | Income Tax | Service Tax | Wealth Tax |
1945 | 463 | 753 | 736 | 1,023 | |||
1950 | 675 | 404 | 1,571 | 1,327 | |||
1955 | 1,452 | 370 | 1,667 | ||||
1960 | 3,949 | 1,375 | 1,275 | ||||
1965 | 16,827 | 8,141 | 3,716 | 4,195 | 2,940 | ||
1970 | |||||||
1975 | |||||||
1980 | |||||||
1985 | |||||||
1990 | |||||||
1995 | 1,060,220 | 458,220
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