Taxation — GST & Income Tax

Article 279A provides for the constitution of the GST Council by the President to govern GST-related decisions.

The Union Finance Minister serves as the Chairperson of the GST Council, with Finance Ministers of States as its members.

Income Tax is a direct tax because the burden of the tax cannot be shifted to another person; it is paid directly by the person or entity to the government.

The Central Board of Direct Taxes (CBDT) is the statutory authority that functions under the Central Board of Revenue Act, 1963, and administers direct taxes.

GST replaced several indirect taxes like VAT, Service Tax, Excise Duty, and Luxury Tax, effectively subsuming them into a single regime.

A progressive tax is one where the tax rate increases as the taxable amount increases, meaning higher income earners pay a larger percentage of their income than lower income earners.

GST is a destination-based tax because it is levied where the goods or services are consumed, rather than where they are produced.

IGST stands for Integrated Goods and Services Tax, which is levied on all inter-state supplies of goods and/or services.

The Central Board of Indirect Taxes and Customs (CBIC) deals with the tasks of formulation of policy concerning levy and collection of Customs, GST, and Central Excise.

The tax-to-GDP ratio is a measure of a nation's tax revenue relative to the size of its economy, indicating the government's ability to mobilize revenue.

The Assessment Year is the year in which the income earned in the previous financial year is assessed and taxed.

The components of GST are CGST (Central), SGST (State), and IGST (Integrated). RGST does not exist.

The Laffer Curve illustrates the theory that there is an optimal tax rate that maximizes government revenue, beyond which increasing tax rates will decrease total revenue.

Corporate Tax is a direct tax imposed on the net income or profit that corporations make from their business operations.

PAN stands for Permanent Account Number, a ten-character alphanumeric identifier issued by the Income Tax Department.

Petroleum products (crude oil, petrol, diesel, ATF, and natural gas) are currently kept outside the ambit of GST and continue to be taxed by states/center via old methods.

A cess is a tax on tax, levied by the government for a specific purpose (e.g., Education Cess, Health Cess) and is deposited into the Consolidated Fund of India.

Fiscal policy, which deals with taxation and government expenditure, is formulated by the Ministry of Finance.

Property tax is a classic example of a tax levied by local municipal bodies, which is a source of revenue for local governments.

The standard GST rate slabs in India are 0%, 5%, 12%, 18%, and 28%. 25% is not a recognized GST slab.

A regressive tax takes a larger percentage of income from low-income earners than from high-income earners.

Article 276 empowers State Legislatures to make laws regarding taxes on professions, trades, callings, and employments, subject to specific limits.

TDS stands for Tax Deducted at Source; it is a means of collecting income tax in India to reduce tax evasion by collecting tax at the point of income generation.

Wealth Tax (though abolished in 2016) is a direct tax, as the liability to pay cannot be shifted to another person.

GSTN is a non-profit, non-government private limited company that provides the IT infrastructure and services for the GST portal.

Article 266 provides for the Consolidated Fund of India and the Consolidated Fund of States, where all tax revenues received are credited.

ITC allows a business to reduce the tax paid on inputs from the tax payable on the final output, avoiding the cascading effect of taxes.

The composition scheme is designed for small taxpayers whose turnover is below a certain threshold, allowing them to pay tax at a lower fixed rate.

Under Article 269, taxes on the sale or purchase of newspapers and on advertisements published therein are levied by the Union but collected by the States.

MAT is a provision under the Income Tax Act to ensure that companies that make high profits but pay little or no tax due to exemptions pay at least a minimum amount of tax.

Sin goods are taxed under the highest GST slab and further attract a 'Compensation Cess' to fund state losses.

DTAA is a tax treaty signed between two countries to ensure that taxpayers do not have to pay tax on the same income in both countries.

The Empowered Committee of State Finance Ministers, based on the recommendation of the Vijay Kelkar Task Force, laid the groundwork for GST.

In India, the Financial Year (or Fiscal Year) runs from April 1st of a year to March 31st of the following year.

The ITAT is the second appellate authority and the final fact-finding authority in the hierarchy of direct tax disputes.

Under the GST Act, exports and supplies to Special Economic Zones (SEZ) are considered 'zero-rated' to ensure goods remain competitive in global markets.

In an indirect tax, the burden is shifted by the seller to the buyer (consumer) as part of the price of the commodity.

Tax avoidance is the utilization of the tax regime to one's advantage to reduce the amount of tax that is payable by means that are within the law.

Petroleum products (crude oil, petrol, diesel, ATF, and natural gas) are currently outside GST and taxed via State-level VAT/Sales Tax.

Under Article 279A(11), the Supreme Court of India is the final authority to adjudicate any dispute arising out of the GST Council's recommendations.

Under Section 10(1) of the Income Tax Act, 1961, agricultural income is exempt from income tax in India.

The Raja Chelliah Committee (1991) recommended the introduction of VAT, which was a significant step toward the eventual adoption of GST.

VAT is a multi-stage tax that allows for credit on tax paid at earlier stages, thereby removing the 'tax on tax' or cascading effect.

Exports are considered 'Zero-rated supply' under the IGST Act, 2017, allowing exporters to claim input tax credits.

The Finance Act, 2020 abolished the Dividend Distribution Tax (DDT) and made dividends taxable in the hands of the shareholders.

Section 80C of the Income Tax Act provides for deductions from gross total income in respect of specified investments and expenditures.

Under RCM, the liability to pay tax is on the recipient of the supply of goods or services rather than the supplier.

The CBDT is the apex body for the administration of direct taxes in India and functions under the Department of Revenue, Ministry of Finance.

A proportional tax, or 'flat tax', remains at the same percentage rate regardless of the income of the taxpayer.