INCOME TAX PRESENTATION1.pptx

MERITS AND DEMERTIS IN INCOME TAX VS GST

1. INCOME TAX PRESENTATION GROUP-1 MEMBERS- AARUSHI JATIAN ABHAY KUMAR ABHIJEET SINGH ADITI AGNIHOTRI ADITYA BHAVSINGHKA ADITYA JHA

2. TOPIC MERITS AND DEMERITS OF INCOME TAX VS GST

3. CONTENTS INTRODUCTION MEANING OF INCOME TAX AND GST MERITS OF INCOME TAX DEMERITS OF INCOME TAX MERITS OF GST DEMERITS OF GST CONCLUSION

4. INTRODUCTION WHAT IS TAX ?

5. TYPES OF TAXES

6. MEANING INCOME TAX – Tax levied on the earnings of companies and individuals. GST - Goods and services tax. GST is the largest indirect tax reform of India.

7. MERITS OF INCOME TAX Equity: A direct tax is an equitable tax. Through it the rich can be made to pay more than the poor. In case of necessity, the poor people can be granted exemption from payment of such taxes. A direct tax is equitable in the sense that it is levied according to the taxable capacity of the people. The rates of direct taxes, like the income tax, can be fixed in such a way that the higher the income of a man, the greater is the rate at which he has to pay the tax. Such a system is known as progressive taxation. Certainty: A direct tax satisfies the canon of certainty. For instance, a person liable to pay income tax knows how much he will be required to pay; for that purpose he can appropriate steps beforehand.

8. MERITS OF INCOME TAX Elasticity: A direct tax has elasticity. It can be varied according to the needs of the government and changes in the income of the people. When the income of the people goes up, the rate of income tax can also be increased. If the income of the people falls, the rate of income tax can also be lowered. Productivity : Direct taxes constitute an important source of government revenue. Their collection charges are also low. There­fore, direct taxes are productive.

9. MERITS OF INCOME TAX People’s Consciousness: A direct tax increases the civic sense of the people. When the people are fully aware of the payment of taxes, they are also conscious of the way the government spends the money. They resent unproductive or wasteful expenditure. As a result, the government becomes careful in its expenditure.

10. DEMERITS OF INCOME TAX Lack of Popularity: First , such taxes are not very popular, because the people have to bear the burden of such taxes directly. That is why, when the rate of a direct tax is raised, most people express their resentment against the government. For instance, when the rate of personal income tax or corporate profit tax is raised, criticism from those affected be­comes very strong . Evasion: The second disadvantages of a direct tax is that it is liable to be evaded. By submitting false returns, many people try to evade income tax. Unless the civic sense of the people is well — developed and there is spread of education among them, the admi­nistration of direct taxes is very difficult.

11. DEMERITS OF INCOME TAX People’s Indifference : The third dis­advantage of a direct tax is that it does not develop the civic sense of those who do not pay such taxes. In the case of income tax, people with incomes below a certain level are not liable to pay tax. In a low-income country like India, the majority of the people are not required to pay income tax. When a man directly bears the burden of a tax, he tries to know how the government spends that money. Those who are not directly affected by the burden of taxation remain indifferent as to the way the public expenditure is incurred.

12. DEMERITS OF INCOME TAX Disincentive to Work and Save: Another disadvantage of direct taxes is that they reduce the desire to work and save. The rate of direct taxes are usually high. Many business ventures are not undertaken on the ground that a large part of the income earned will have to be given to the government in the form of taxes. Thus, direct taxes reduce incen­tives to work hard and save. As the direct taxes have these defects, in a good tax system there should be indirect taxes, too.

13. MERITS OF GST Eliminates multiple layers of taxation: The primary benefit of GST Registration is that it integrates different tax structures like Sales Tax, Central Excise, Special Additional Duty of Customs, Service Tax, Luxury Tax, etc. into a unified tax. It abolishes multiple layers of tax levied on goods and services . Removes cascading effects : Under the current GST regime, the final tax is to be paid by the consumer over purchase of goods and services. However, there is an input tax credit structure in place to ensure the cascading effect that was evident previously is eliminated. GST is imposed only on the value of goods or services.

14. MERITS OF GST Creates a common national market : With the introduction of GST, there has been a significant rise in India’s tax to Gross Domestic Product ratio that helps promote economic efficiency in the long-run. The comprehensive tax leads to uniformity among different sectors concerning ‘tax on tax’. It eradicates economic distortion and forms a common national market . Ease of doing business : With online GST processes, from registration to return filing, indirect tax compliance has been reduced. This is one of the key benefits of GST that assists companies to carry out their business operations with ease. The major benefit of GST registration for start-ups is that they do not have to get involved in different registrations like VAT, Service tax, excise, etc.

15. DEMERITS OF GST Increases costs due to software purchase: Businesses are required to update their existing accounting software to GST software to continue business operations & be GST compliant. This leads to increased cost of software purchase and training company personnel to efficiently utilize the new billing software . Higher Tax Burden of SMEs: Earlier Small and Medium Enterprises were required to pay excise duty only on a turnover exceeding INR 1.5 Crore every financial year. At present, businesses with a turnover exceeding INR 40 Lacs are liable to pay GST under the GST administration.

16. DEMERITS OF GST Increase Burden of Compliance: The new GST regime states that companies have to mandatorily get GST registered in all the states they operate their businesses in. This leads to an unnecessary burden on businesses for tedious paperwork processes and compliance. No GST charged on petroleum products : The GST Council excludes petrol and petroleum products under its administration. These products attract other taxes such as central excise duty and value added tax (VAT) levied by states.

17. CONCLUSION INCOME TAX Rather than assuming that income tax is a burden, citizens should contribute to the progress of a nation by paying income tax. The general population should endeavor to comprehend the significance of income tax and the perceived role their money plays in the country's growth. GST Implementation of GST is one of the best decision taken by the Indian government. If you are doing any kind of business then you should register for GST as it is not only going to help Indian government but will help you also to track your business weekly as in GST you have to make your business activity statement each week. INCOME TAX GOODS & SERVICES TAX