economic development

Nirmala Sitharaman

Tax Revenue

Officials say the department is facing issues in implementation of faceless scrutiny and this could hit tax revenue collections

FY20 gross tax revenue likely to fall short by around Rs 2 trillion

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This year, the government was successful to convince the Reserve Bank of India to  pass on enhanced dividend to the former

accounts, tax

fund distribution

N K Singh, Chairman, 15th Finance Commission

At Rs 13.2 trillion, Centre missed tax revenue target by 11% in FY19

tax, income tax, tax returns

Income Tax, Tax

cow, cattle

Moodys

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	Taxation is the primary source of income for the government. The most important revenue receipts for the government, taxes are involuntary fees levied on individuals and corporations to finance government activities. Revenue receipts can be of two types &mdash; non-tax revenue and tax revenue. Tax revenue is the income gained by the government through taxation.</div>
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	Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget.</div>
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	Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country&#39;s output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy&#39;s resources.</div>
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	Taxes collected from both direct tax and indirect tax are the government&rsquo;s tax revenue. It includes collections from income tax, corporation tax, customs, wealth tax, tax on land revenue, etc.</div>
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	Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied. Income tax, wealth tax, corporation tax and property tax are some examples of direct tax. Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of indirect tax. Corporation tax forms a large chunk of the government&rsquo;s tax revenue.</div>
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Learn what is Tax revenue, Tax revenue Definition, Tax revenue News and more here at Business Standard.

What is Tax revenue, Tax revenue Definition, Tax revenue News

What is Tax Revenue

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	Income tax is a direct tax that a government levies on the income of its citizens. The Income Tax Act, 1961, mandates that the central government collect this tax. The government can change the income slabs and tax rates every year in its Union Budget.&nbsp;</div>
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	Income does not only mean money earned in the form of salary. It also includes income from house property, profits from business, gains from profession (such as bonus), capital gains income, and &#39;income from other sources&#39;. The government also often provides certain leeway such that various deductions are made from an individual&#39;s income before the tax to be levied is calculated.&nbsp;</div>
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	<strong>Income Tax Returns</strong></div>
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	Income Tax Returns (ITR) form are the basis of calculating a person&#39;s income tax. It is a statement showing the status of a person, all their sources of revenue, deductions and, lastly, the tax payable or tax refund, if any.&nbsp;</div>
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	<strong>Income Tax slabs</strong></div>
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	What income tax rate a person pays depends on the slab they fall in. The government has categorised incomes into slabs like &mdash; up to Rs 250,000, Rs 250,000-Rs 5,00,000, Rs 5,00,000-Rs 1 million, and more than Rs 1 million. The rates on different slabs might be different based on age groups.</div>
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	<strong>Standard deduction</strong></div>
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	Tax on some components of income can be waived by the government. These tax reliefs are known as standard deductions.</div>

Learn what is Income Tax, Income Tax Definition, Income Tax Planning, Income Tax Returns, Income Tax Slabs, Income Tax deduction and more Income Tax news at Business Standard.

What is Income Tax, Income Tax Planning, IT Returns, Income Tax Slabs

Income tax

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	Capital gains mean the profit earned by an individual on the sale of his investment in assets such as stocks, real estate, bonds, commodities, etc. Basically, it is the &#39;gain&#39; made on &#39;capital investment&#39;. In some tax jurisdictions &mdash; a country, state or city &mdash; capital gains are taxed if an individual sells an asset after holding it for a certain &#39;long&#39; period. This period is often twelve months. However, it could also be defined differently for various assets.&nbsp;</div>
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	In India, &#39;long-term&#39; and &#39;short-term&#39; are defined by the Income Tax Act, 1961. While a holding period of one year is considered &#39;long-term&#39; for equities, the same is two years for real estate.&nbsp;</div>
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	The Union Budget 2018 proposed to levy long-term capital gains tax (LTCG) of 10 per cent on gains exceeding Rs 100,000 from sale of equity shares. However, no change was made in the definition of short-term capital gains tax (STCG).</div>
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	LTCG on sale of shares / stocks was removed in 2005, making India one of the most liberal stock market regimes. However, there were demands from a section of stakeholders that the LTCG tax on equities be brought back. The BSE had reportedly told the government that the revenue forgone on the LTCG tax exemption on listed securities could be as high as Rs 50,000 crore per year.</div>
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	Another change that was made in the Union Budget 2018 was that an individual could get an exemption by investing long-term capital gains from the sale of house property in up to two house properties, against the earlier provision of investment in one house property with same conditions. However, the capital gains on the sale was restricted at Rs 2 crore for the exemption.</div>
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	The LTCG and STCG tax rates also vary based on the asset class &mdash; they might be different for equities, real estate, bonds, mutual funds etc &mdash; and the income tax slab an individual falls under.</div>
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Learn what is meant by Long-Term Capital Gains Tax, LTCG definition and more Long-Term Capital Gains Tax news here at Business Standard.

What is Long-Term Capital Gains Tax, LTCG Meaning, LTCG Definition, Long-Term Capital Gains Tax News

Long-term capital gains tax, or LTCG

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	Corporation tax is a direct tax imposed on the net income or profit that enterprises make from their businesses. Companies, both public and privately registered in India under the Companies Act 1956, are liable to pay corporation tax. This tax is levied at a specific rate according to the provisions of the Income Tax Act, 1961.</div>
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	In a major move, Finance Minister Nirmala Sitharaman in September 2019 announced sharp cuts in the corporation tax among a series of announcements. The government decided to slash domestic corporate tax to an effective 25.17 per cent, inclusive of all surcharges and cess, in a bid to promote growth and investments amid an economic slowdown. The move would cost the exchequer Rs 1.45 trillion.</div>
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	The government proposed to reduce the corporate tax rate from the existing 30-25 per cent (depending on the turnover thresholds) to 22 per cent (effective rate 25.17 per cent, including surcharge and cess) for all the domestic companies, subject to them not availing of a specified list of exemptions. These include, among others, exemptions available to units in special economic zones, deductions for certain scientific research expenditure, additional depreciation available on fresh investments and the losses, if any, attributable to such deductions.</div>
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	The minimum alternate tax (MAT), introduced to facilitate the taxation of zero-tax companies, will also not be applicable to companies availing of the reduced rate of taxation.</div>
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	Companies claiming exemptions could continue to avail of them and pay taxes at pre-amended rates, that is, 25-30 per cent. They might opt to pay taxes at lower rates at a future date. However, the option to pay taxes at the reduced rate of 22 per cent, once selected could not be changed. Significantly, where the companies continue to avail of exemptions, the MAT rate has been reduced from 18.5 per cent to 15 per cent.</div>
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	Any new domestic manufacturing company, incorporated on or after October 1, 2019, is to be allowed to pay corporation tax at the rate of 15% (effective rate 17.01%). No MAT is to be imposed on these companies either.</div>
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	Enhanced surcharge will not apply to capital gains on sale of any securities, including derivatives, in the hands of Foreign Portfolio Investors (FPIs).</div>
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	The finance minister also announced an expansion in the scope of corporate-social responsibility (CSR) activities. The companies can now spend 2% of the money on state or Union govt incubators, PSUs, state universities, IITs, public-funded entities.</div>

What is Corporate Tax: Get latest news on Corporation Tax, corporate tax rate, corporate tax cuts, corporate tax in India, corporate income tax on Business Standard.

What is Corporate Tax, What is Corporation Tax, Corporation Tax News

Corporation Tax

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	An indirect tax is one that is not paid directly by a person to the government but collected by an intermediary and passed on to the government. Indirect taxes are imposed on goods and services on the basis of production, supply, sale or purchase of products or provision of services, in the form of goods and services tax (GST).</div>
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	GST, rolled out in 2017, replaced various indirect tax laws that previously existed in India, such as import and export duty, excise, sales tax, value-added tax (VAT), service tax, entertainment tax, electricity duty, tax on passenger fares, freights etc.</div>
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	<strong>How are indirect taxes collected?</strong></div>
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	An indirect tax is collected from the consumer by an intermediary, such as manufacturer, trader or service provider. The intermediary files a tax return and forwards the tax proceeds to the government with the tax return. The consumer bears the final economic burden of the tax by paying more for the product.</div>
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	By comparison, direct taxes are imposed on persons and collected by the government directly from those on whom they are imposed.</div>
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	In indirect taxation, the obligation of tax payment varies from one consumer to another, as these taxes are levied by the government on goods and services &mdash; not on the income, profit or revenue of an individual. These taxes can be shifted from one taxpayer to another. This is unlike direct taxes, which are borne by the person on whom the tax is levied.</div>
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	<strong>What is GST?</strong></div>
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	GST was rolled out on July 1, 2017, as India&rsquo;s most comprehensive indirect tax reform. It consolidated multiple indirect tax that existed previously into a single one. The implementation of GST aimed to make the indirect tax system more unified across the many states of the country. Read more... (https://www.business-standard.com/about/what-is-goods-and-services-tax)&nbsp;</div>

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What is Indirect tax, Indirect tax News, Budget 2020 News, Indirect tax Calculation

Indirect Tax

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	Other than taxation being a primary source of income, the government also earns a recurring income, which is called non-tax revenue. While sources of tax revenue are few, the sources of non-tax revenue are many, with the number of collections per source. Although there are many sources of non-tax revenue, the amount per source is much less than that for tax revenue.</div>
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	For example, when citizens use services offered by the government, they pay bills, which are categorised as non-tax revenue, as the government provides infrastructure support to implement the services. Non-tax revenue also includes the interest collected by the government on the loans or funds offered to states.</div>
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	The difference between tax revenue and non-tax revenue is that the former is charged on income earned by an entity, which is a direct tax and on the value of transaction of goods and services, which falls under indirect tax.</div>
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	On the other hand, non-tax revenue is charged against services provided by the government. It is mandatory to pay a part of the income generated and the amount of goods and services consumed as tax. However, non-tax revenue becomes payable only when services offered by the government are availed of.</div>
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	There are various services provided by the government that become sources of non-tax revenue, such as police services, electricity, municipal services, etc. These sources become a medium of non-tax revenue for the state government concerned.</div>

Learn what is Non-Tax Revenue, Non-Tax Revenue Definition and more Non-Tax Revenue news here at Business Standard.

What is Non-Tax Revenue, Non-Tax Revenue News, Budget News, Non-Tax Revenue Receipts

Non-Tax Revenue

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	Short-term capital gain tax (STCG) is a tax levied on capital gains from the sale of an asset held for a short period.</div>
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	<strong>What are capital gains?</strong></div>
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	The gains or profits from sale of capital assets are classified as capital gains. The most common examples of capital assets are land, building, house property, gold, trademarks, equity shares, patents, leasehold rights, machinery, etc. If a capital asset is sold within government-defined short-term holding period, gains from it are known as short-term capital gains.</div>
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	<strong>How is STCG tax calculated?</strong></div>
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	After taking full value of an asset into account, deduct the expenditure incurred in connection with the transfer. Also, deduct the cost of acquisition and improvement costs. The remainder amount is the short-term capital gain, which is then taxed under STCG.</div>
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	<strong>How is short-term holding period defined?</strong></div>
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	The short-term holding period differs for various items. For security assets like shares listed on stock exchange, debentures, mutual funds, and government securities, the holding period is up to 12 months. For other immovable assets, such as land, property, the period is up to 24 months.</div>
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	<strong>Taxation and exemptions with rest to short-term capital gains</strong></div>
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	For securities, the tax rates are discussed under Section 111A of the Income-Tax Act. For instance, the short-term capital gains tax levied on listed equity shares is 15 per cent.</div>
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	There are certain exemptions to taxation on securities which do not fall under Section 111A. Short-term capital gains on sale of equity shares through unrecognised stock exchange, gains due to sale of any shares apart from equity shares, among others, do not attract any tax.</div>
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	In real estate, all property transactions attract short-term capital gains tax, provided property transfer happens within 24 months of ownership/purchase. Inherited property does not attract short-term capital gains tax. However, if one sells the inherited property, one has to pay tax on it. When short-term capital gains tax is levied on non-securities (such as property), it is added to the income-tax return, and the taxpayer is taxed according to their income-tax slab.</div>
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	Individuals who wish to claim deductions or exemptions on short-term capital gains can do so under Sections 80C to 80U of the Income Tax Act, provided short-term capital gains do not fall under Section 111A. In cases where gains fall under the ambit of Section 111A, individuals cannot opt for deductions under Sections 80C to 80U.</div>

Learn what is Short-term capital gains tax, Short-term capital gains tax Definition, STCG tax and more Short-term capital gains tax news here at Business Standard.

What is Short-term capital gains tax, STCG tax, Budget News, Short-term capital gains tax Definition

Short-term capital gains tax (STCG)

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	As the name suggests, direct taxes are thoe that are levied directly on taxpayers &mdash; the income-tax, wealth tax, corporation tax, etc. In other words, it is a type of tax where the impact and the incidence fall under the same category.</div>
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	Direct taxes in India are overseen by the Central Board of Direct Taxes (CBDT). It was formed as a result of Central Board of Revenue Act, 1924.</div>
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	<strong>Some examples of direct tax:</strong></div>
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	<strong>Income tax</strong>: Income tax is paid by an individual based on his/her taxable income in a given financial year. Taxable income refers to total income minus applicable deductions and exemptions.</div>
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	<strong>Corporation tax: </strong>Corporation Tax is the money paid by companies and businesses on the income earned by them in a given financial year.</div>
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	On September 2019, the central government announced a cut in the rate of corporation tax for domestic companies to 22 per cent from 30 per cent previously. This brought effective corporation tax rate, including all additional levies, to about 25.2 per cent, for companies that do not receive any incentives or exemptions.</div>
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Page 5 - Latest Updates on Tax Revenue

How should the government revive demand?

FY20 gross tax revenue likely to fall short by around Rs 2 trillion

After corporate tax cut, fiscal crisis reaches states' doorstep

15th Finance Commission likely to cut devolution to states marginally

Centre's tax revenue at Rs 13.2 trillion in FY19, missed target by 11%

Centre hopes to mop up Rs 4.4 trillion from cess and surcharges in FY20

Unfair levy

For more tax revenue