DOMESTIC TAXATION V/S INTERNATIONAL TAXATION

DOMESTIC TAXATION V/S INTERNATIONAL TAXATION

1. DOMESTIC TAXATION V/S INTERNATIONAL TAXATION PRESENTED BY:- Suma. K. B. 2 nd M.com Under the guidance of Sundar B. N. Asst. Prof. & Course Co-ordinator GFGCW, PG Studies in Commerce Holenarasipura

2. TOPIC :- DOMESTIC TAXATION V/S INTERNATIONAL TAXATION Introduction of tax Meaning of domestic tax Definition Meaning of international tax Difference between the domestic tax and international tax Double taxation Double taxation avoidance agreement Objective of DTAAs

3. TAX A tax is compulsory financial charge or some other types of levy imposed on a taxpayer (an individual or legal entity ) by a governmental organization in order to get governmental spending and various public expenditures . A failure to pay, along with evasion of resistance to taxation ,is public expenditure . A failure to pay along with evasion of or resistance to taxation , is punishable by low.

4. Introduction OF tax Tax is a financial charges imposed on individual or company by a CG and SG. Collected tax amt is used for building nation (infrastructure and other development) to increase arms and for other welfare related work.

5. MEANING OF DOMESTIC TAX Domestic tax measure a tax chargeable on profits or gains. Under the laws of a territory in which an entity is established, that is similar to income tax corporation tax (including a charge under part 35B). DEFINITION:- Domestic law applied at the international level.

6. MEANING OF INTERNATIONAL TAX It is a body of legal provision embelded in the tax laws of each country to cover the tax aspects of “cross border” transactions. Global business has no border but tax laws and rules will continue to have a clear border. Risk (double taxation) and opportunity (reduction of total tax liability).

7. DIFFERENCE BETWEEN DOMESTIC TAX AND INTERNATIONAL TAX DOMESTIC TAX INTERNATIONAL TAX A domestic tax controlled transaction is a An international controlled transaction is transaction between associated a transaction between associated enterprises that are resident in the same enterprises in different tax jurisdictions. tax jurisdiction. Domestic double taxation arises when International double taxation arises when comparable taxes are imposed within a comparable taxes are imposed in two or federal state by sovereign tax jurisdiction more states on the same tax payer in of equal rank. respect of the some taxable income or capital. Domestic tax the primary purpose of International taxation is to manage the taxation is to raise revenue to meet huge cross of national tax system when public expenditure. Confronted with international transaction. It’s goal is to share the international tax , base by assigning tax, “prevent tax” “avoidance” & “prevent double taxation”.

8. Equalization livying concept is not Equalization levying see 165A is applicable for domestic taxation. Applicable for specified transaction in international ( annual service provide > Rs 100000) Filing of returns u/s 139(1) is mandatory Return of filing is not mandatory if certain (if income exceeds basic exemption cases when TDS has been deducted on Limits) that income see 115A (5)

9. DOUBLE TAXATION Where a taxpayer is resident in one country but has a source of income situated in another country. It gives rise to possible double taxation. Double Taxation Avoidance Agreement [DTAA] The Double Taxation Avoidance Agreement or DTAA is a tax treaty signed between India and another country (or any two/ multiple countries ). So that taxpayer can avoid paying double taxes on their income earned from the source country as well as the resident country.

10. Objectives of dtaa s To encourage transfer of technology To prevent tax avoidance , evasion , grant relief avail tax credits. To prevent discrimination between taxpayer. To improve the co-operation between two different taxing authorities. To attract foreign investment by providing relief from dual taxation. To provide clarity on how certain cross border transaction will be taxed. To promote exchange of goods and services movement of capital and person.

11. CONCLUSSION To conclude we can say that the instrument of taxation is of great significance on Increase the level of economic activities Reduce the income inequalities Promote economic growth