TAX LAWS - ICSI
STUDY MATERIALEXECUTIVE PROGRAMMETAX LAWSMODULE IPAPER 4(VOLUME II)ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444 fax 91-11-2462 6727email info@icsi.edu website www.icsi.edui
THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSMonday to FridayOffice Timings – 9.00 A.M. to 5.30 P.M.Public Dealing TimingsWithout financial transactions – 9.30 A.M. to 5.00 P.M.With financial transactions – 9.30 A.M. to 4.00 P.M.Phones011-41504444, fo@icsi.eduLaser Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, andPrinted at M P Printers / March 2018ii
EXECUTIVE PROGRAMME – TAX LAWSThe subject of Tax Laws at CS Executive Level is divided into two parts with equal weight age of marks.lPart I – Direct Tax (50 Marks)lPart II – Indirect Tax (50 Marks)PART I – DIRECT TAX (50 MARKS)Income Tax Act, 1961 provides for levy, administration, collection and recovery of Income Tax. It providesprogressive rate schedule, exemption limits, and incorporates number of incentive provisions. It provides soundtax system. Rate schedule & Exemption limits are prescribed by Finance Act.Indian tax legislative and judicial environment is constantly evolving, along with globalization, economic shifts,and operational adjustments. Businesses are faced with a tax regime with greater complexities and challenges,nonetheless moving towards a globally cohesive tax world. Now, more than ever, businesses must have anongoing system for adapting to and staying on top of these complex changes.The tax laws of the country undergo significant changes every year on the passing of Annual Finance Act. Apartfrom the amendments coming out every year through the Finance Act, there are circulars / notifications issuedby the CBDT / CBEC to implement the provision of the act, clarifying the scope of the provision.The part I of the study material is related to Direct Taxes and comprises of Total 10 lesson. The broad coverageof the lessons is summarized in the below chart.Basics Concepts of Income Tax[Lesson 2]Direct Taxes at a glance[Lesson 1]Exempt Income[Lesson 3]Clubbing provisions and Set Off and / orCarry Forward of Losses [Lesson 5]Computation of Income under Various Heads[Lesson 4]Deductions from Gross Total Income & Rebate andRelief [Lesson 6]Computation of Total Income and TaxLiability of various entities [Lesson 7]Classification and Tax Incidence on Companies[Lesson 8]Procedural Compliance [Lesson 9]Assessment, Appeals & Revision [Lesson 10]iii
ROLE OF COMPANY SECRETARIES IN DIRECT TAXThe Company Secretaries as experienced tax professionals can assist in resolving various challenges such askeeping abreast with tax regulations, efficiently manage compliances, address uncertain tax positions, among manyothers. The Company Secretaries can provide with an insight into how to best work to meet the business needs.The following are the key important areas under the direct tax regime where a Company Secretaries can playa vital role.AdvisoryRoleRepresentationServicesRole of aCompanySecretariesTaxCompanianceAdvisory : Corporate taxation is an essential aspect of doing business in India and its importance cannot beundermined. The Company Secretaries can provide the corporate tax advisory services in the following areas:lEstablishing tax efficient Indian business presence for an MNC.lAssisting an entrepreneur in establishing business).lExpanding into new sectorslPlanning a heavy capital outlay in the existing businesslAddressing concerns about cash flow and examining tax inefficiencieslEnsuring that the tax function is aligned with the business planlAssessing the impact of any tax and regulatory changes/ amendmentsTax Compliance : As the complexities of businesses increase, the amount of time spent by professionals incracking up the law codes increases. However, tax and regulatory systems of even the most developed countriescannot keep pace with the developments across each industry as businesses emerge day by day. These alsobring out the requirements for new compliances and the challenges of meeting them every single day. Moredetailed Income Tax Return forms including disclosures on tax residency certificates and details of foreignassets, and higher penalties for non disclosures require businesses to gear up for efficient tax compliance.lAdvising on withholding tax obligations on paymentslObtaining no-objection certificateslAssisting in filing various tax returns and making adequate disclosures.lTax diagnostic reviewsiv
lEnhancing ERP systems to meet tax management requirementslTax implications on payments (local or overseas) to a host of partieslReporting of multilayered tax issuesRepresentation Services : The Company Secretaries can also represent the client before appellate authorityat various levels.lRepresentation before the income tax and withholding tax authoritieslProviding corporate tax litigation assistance, including representation serviceslObtaining advance rulings and opinion from senior counselsNote : The Study material on Income tax Laws is based on the provisions of income tax law as amended by theFinance Act, 2017 and the significant circulars issued upto 31st December, 2017. The computational / practicalproblems have been solved on the basis of the provisions of income tax laws applicable for AY 2018-19. Thestudy material is relevant for the students for December, 2018 examinations.PART II – INDIRECT TAX (50 MARKS)Indirect taxes are the taxes levied on goods and services on the basis of production, sale or purchase of goodsor provision of services, in the form of import and export duty, excise, sales tax, Value Added Tax (VAT), servicetax, entertainment tax, electricity duty, tax on passenger fares and freights etc. They are called indirect taxesas the burden on tax is passed on to the consumer unlike direct taxes which are supposed to be borne by thepersons on whom these taxes are levied.Broadly, the existing indirect tax regime can be looked at from the point of view of Central and State laws. Forthe Central Government, Central Excise, Customs and Service tax were the three main components of indirecttaxes. Similarly, for the State Governments, Value Added Tax and Central Sales Tax were major taxes alongwith Octroi , Entertainment Tax etc.The taxation reforms in India go back right from liberalization and globalization in the early 1990s to the recentGoods and Services Tax (GST). Goods and Services Tax is one of the most comprehensive single tax reformsof independent India. GST is a comprehensive indirect tax levied on goods as well as services at the nationallevel. It consolidated multiple indirect tax levies into a single tax thus subsuming an array of tax levies. However,Basic Customs Duty continues to be levied on imports.Sales tax/Vat/CSTService taxExcise DutyGSTvEntryTax/Entertainment tax/Othertaxes at Stateand Centrelevel
GST consists of the following four Acts :Central Goods& Services TaxAct, 2017State Goods &Services TaxAct, 2017Union TerritoryGoods &Services TaxAct, 2017Goods &Services(Compensationto States) Act,2017The study material broadly covers an overview of the four GST Acts focusing upon the following keytopics- basics, registration, returns, payments, Composition Scheme, concept of Supply, ReverseCharge Mechanism and other aspects of GST. The purpose of this study material is to impart conceptualunderstanding to the students of the provisions of the novel indirect tax law along with an overview ofprovisions of Customs.GST and Opportunities Galore for Company SecretariesCompany Secretaries, who practice in almost all the branches of law and possess a robust understandingon accounting, are competent professionals to handle the regulatory compliance under the GST laws. Theyare skilled professionals who understand legal, financial and compliance dimensions of business entitycomprehensively. Company Secretaries are already acting as extended arms of the regulatory mechanism andare well equipped to partner in the tasks under GST Regime to facilitate the stakeholders in GST preparednessby extending their needful services.vi
g withIndirect taxesGST awarenessRoleof GSTPractitionerGST and Governance Professionals-in-MakingThe students are expected to gear up to enhance their perceptive knowledge and involve in capacity buildinginitiatives. They must make the best use of this opportunity to augment their professional ambit in future underindirect taxes. GST is subject to constant refinement through new rules and updated Notifications as well asCirculars. It is thus expected of the student to be regularly updated about the developments taking place underthe Law.Note: The study has been updated till 31 December, 2017. GST is based on the four Acts, passed by theParliament and related relevant Rules. The student is expected to update themselves from reference materialsavailable on the Academic Corner and GST Corner of ICSI website. ICSI brings out monthly ICSI-GST Newsletterand a daily GST Educational Series apar from various publications on GST, available at GST Corner of thewebsite. The students may update themselves of the latest developments, Notifications and Circulars of GSTfrom cbec.gov.in.vii
EXECUTIVE PROGRAMMEModule 1Paper 4Tax Laws (Max Marks 100)ObjectivePart I : To provide working knowledge on practical application of Direct Tax Laws.Part II :To provide conceptual knowledge of GST with practical application of GST Laws.PART I: DIRECT TAXES (50 MARKS)Detailed Contents1.Direct Taxes at a Glance : Background of Taxation system in India; Vital Statistics; Layout;Administration.2.Basic concepts of Income Tax : An overview of Finance Bill, ; Important definitions under IncomeTax Act, 1961; Distinction between Capital and Revenue Receipts and Expenditure; ResidentialStatus & Basis of Charge; Scope of Total Income; Tax Rates.3.Incomes which do not form part of Total Income : Incomes not included in Total Income; Taxholidays.4.Computation of Income under Various Heads : Income from Salary; Income from House Property;Profit and Gains of Business or Profession; Capital Gains; Income from Other Sources; Fair MarketValue.5.Clubbing provisions and Set Off and / or Carry Forward of Losses : Income of other personsincluded in Assessee’s Total Income; Aggregation of Income; Set off and / or Carry forward of losses.6.Deductions from Gross Total Income & Rebate and Relief : Deductions in respect of certainpayments; Specific deductions in respect of certain income; Deductions in respect for donations forexpenditure under CSR activities; Rebates and Reliefs.7.Computation of Total Income and Tax Liability of various entities : Individual; Hindu UndividedFamily ‘HUF’; Alternate Minimum Tax (AMT); Partnership Firm / LLP; Co-operative Societies;Association of Person ‘AOP’ and Body of Individual ‘BOI’; Political Parties; Electoral Trusts; Exemptorganization – Registration u/s 12A/ 12AA;8.Classification and Tax Incidence on Companies : Computation of taxable income and tax liability ofCompany; Dividend Distribution Tax; Minimum Alternate Tax ‘MAT’; Other Special Provisions Relatingto Companies; Equalization Levy.viii
9.Procedural Compliance : Permanent Account Number ‘PAN’ / Tax Collection Account Number ‘TAN’;Tax Deduction at Source ‘TDS’ & Tax Collection at Source ‘TCS’; Advance Tax &Self AssessmentTax ‘SAT’; Returns, Signatures, E-Filing ; Fee and interest for default in furnishing return of Income ;Collection, Recovery of Tax, Refunds.10.Assessment, Appeals & Revision : Assessment; Types of Assessment; Appeals; Revisions; Search,Seizure, Penalty and Offences.Case Laws, Case Studies & Practical Aspects.PART II: INDIRECT TAXES (50 MARKS)(A)Goods and Service Tax11.Concept of Indirect Taxes at a glance : Background; Constitutional powers of taxation; Indirect taxesin India – An overview; Pre-GST tax structure and deficiencies; Administration of Indirect Taxation inIndia; Existing tax structure.12.Basics of Goods and Services Tax ‘GST’ : Basics concept and overview of GST; ConstitutionalFramework of GST; GST Model – CGST / IGST / SGST / UTGST; Taxable Event; Concept of supplyincluding composite and mixed supply; Levy and collection of CGST and IGST; Composition scheme& Reverse Charge; Exemptions under GST.13.Concept of Time, Value & Place of Taxable Supply : Basic concepts of Time and Value of TaxableSupply; Basics concept of Place of Taxable Supply.14.Input Tax Credit & Computation of GST Liability- Overview.15.Procedural Compliance under GST : Registration; Tax Invoice, Debit & Credit Note, Account andRecord, Electronic way Bill; Return, Payment of Tax, Refund Procedures; Audit.16.Basic overview on Integrated Goods and Service Tax (IGST), Union TerritoryService tax (UTGST), and GST Compensation to States.(B)Customs Act17.Overview of Customs Act : Overview of Customs Law; Levy and collection of customs duties;Types of Custom duties; Classification and valuation of import and export goods; Exemption; Officersof customs; Administration of Customs Law; Import and Export Procedures; Transportation, andWarehousing; Duty Drawback; Demand and Recovery; Confiscation of Goods and Conveyances;Refund.Case Laws, Case Studies & Practical Aspects.ixGoods and
LESSON WISE SUMMARYTAX LAWSINDIRECT TAXES (PART II)Lesson 11: Concept of Indirect Taxes at a glanceChapter 11 contains the Constitutional powers of taxation and an overview of Indirect taxes in India alongwith Pre-GST tax structure and its shortcomings. It also lays an overview of Administration of IndirectTaxation in India and the Existing tax structure.Erstwhile indirect taxes consisted of various laws at Central and State level including VAT, Excise, ServiceTax etc. which had some challenges that were required to be addressed like multiplicity of taxes and theircascading effects.Goods & Services Tax brought a single tax regime which got levied on supply of goods or services or boththereby overcoming the gaps of previous indirect tax laws. Various Constitutional amendments have beenmade to enable centre and states to levy GST simultaneously and New Articles got inserted.Lesson 12: Basics of Goods and Services TaxThe chapter covers Basics of GST and GST Models including CGST / IGST / SGST / UTGST, Supply whichis the taxable event under GST. It is to be noted that supply can be of two types i.e., composite and mixedsupply. In a composite supply, the goods are naturally bundled. The Chapter contains the levy and collectionof CGST and IGST under the GST Law and broad rates prescribed therein.Composition scheme is a scheme wherein GST is not collected from the recipients / customers subject toa prescribed threshold turnover. In a composition levy, the supplier cannot himself take Input Tax Credit.Under Reverse Charge, the recipient pays the GST on the supply on behalf of the supplier. Exemptionsunder GST may be General or by a Special Order.Lesson 13: Concept of Time, Value & Place of Taxable SupplyThe chapter comprises of Basic concepts of Time and Value of Taxable Supply. Taxable event is the pointwhich gives rise to taxability and the point of levy is determined by Time of supply and thus value of supplydetermines value on which GST is payable. Valuation includes determining the value on which GST ispayable by following the Valuation Rules and principles, contained in the GST law.Basic concepts of Place of Taxable Supply include intra state and interstate supply as well as determiningthe place of supply under various situations. When the location of supplier and the place of supply are withinthe same state, it is an Intra-State Supply, and if these are in different states, then it is Inter-State supply.Lesson 14: Input Tax Credit & Computation of GST Liability – OverviewIntegrated GST, Central GST, State GST or Union Territory GST paid on inward supply of inputs, capitalgoods and services are called input taxes and its credit is Input Tax Credit (ITC). Company which distributesthe input tax credit to various units on the basis of their previous year turnover is called input servicedistributor. There is no offset of ITC available between the CGST and the SGST.x
GST is a consumption based tax levied on the basis of the “Destination principle.” It is an inclusive taxregime covering both goods and services, to be collected on value-added at each stage of the supply chain.Lesson 15: Procedural Compliance under GSTProcedural Compliances include the terms for eligibility of compulsory and voluntary Registration and thepersons exempt from Registration and procedure thereby. The Chapter explains the concept of Tax Invoices,Debit & Credit Note including cases where Delivery Challan or Bill of Supply is needed instead.The Act prescribes the Accounts and Records that an assessee should maintain. Electronic way Bills havebeen introduced under the GST Law for movement of goods. Under GST, various monthly, quarterly andannual returns are filed. Payment can be made via NEFT, RTGS, net banking, debit /credit card. The lawprescribes two types of Audit under GST - General and Special. Refund Procedures are contained in thegiven Chapter.Lesson 16: Basic overview on Integrated Goods and Service Tax (IGST), Union TerritoryGoods and Service tax (UTGST), and GST Compensation to StatesThe President of India gave assent to the following four Acts, related to GST: Central Goods & Services Tax Act,2017 Integrated Goods & Services Tax Act,2017 Union Territory Goods & Services Tax Act,2017 Goods & Services Tax (Compensation to States) Act,2017Apart from these, every State has its own State GST Act. Delhi and Puducherry are two Union Territories butUTGST Act, governing GST for Union Territories shall not be applicable there as they have their own StateLegislature and Government. State GST would be applicable in their case.IGST Act, 2017 governs Integrated Goods & Services Tax, which is levied and collected by the Centre oninter-state supply of goods and services including imports into India and supplies made outside India alongwith supplies to / from SEZs.The GST (Compensation to States) Act, 2017 ascertains the amount of compensation that shall be payableby the Government to states during the transition period of five years due to the revenue loss owing to levyof Goods and Services Tax. The Act provides for calculation and ascertainment of base year, projectedgrowth rate, compensation to be paid etc.Lesson 17: Overview of Customs ActWith the implementation of GST Law, the Basic Customs Duty is still levied on imports with other additionalduties being subsumed under GST.The basic and overview of Customs Act is contained in Chapter 17 which consists of provisions for levyand collection of customs duties and its types, Classification and valuation of import and export goodsalongwith exemptions, administration of Customs Law including Officers under the Law. Valuation Rulesare explained.xi
Interpretation Rules under the Customs Tariff Act, 1975General Rule forClassification[Rule 1]Unfinished Articles &Mixtures[Rule 2]Classification of Goodsclassifiable under morethan one head[Rule 3]Akin Principle[Rule 4]Cases / Containers forpackaging of goods[Rule 5]Sub-headings[Rule 6]The Chapter also consists of Import and Export Procedures, provisions for Transportation and Warehousingand Duty Drawback. The Chapter states the conditions for Confiscation of Goods and Conveyances andprocedures for Refund and Demand as well as Recovery.IMPORT & EXPORT PROCEDURES UNDERCUSTOMS LAWProcedure for Import through SeaRoute (Cargo Clearance)For theCarrier[Section 30 &31]For theCustodian[Section 45]Procedure for Export throughSea Route (Cargo Clearance)For theImporter[Section 46]xiiFor theCarrier[Section 39 &41]For theExporter[Section 50]
ARRANGEMENT OF STUDY LESSONModule-1 Paper-4TAX LAWSPART I (DIRECT TAX)1.Di
Broadly, the existing indirect tax regime can be looked at from the point of view of Central and State laws. For the Central Government, Central Excise, Customs and Service tax were the three main components of indirect taxes. Similarly, for the State Governments, Value Added Tax and Central Sales Tax were major taxes along
GUIDELINE ANSWERS EXECUTIVE PROGRAMME (New Syllabus)JUNE 2019 MODULE 1 ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 Phones: 41504444, 45341000; Fax: 011-24626727 E-mail: info@icsi.edu; Website: www.icsi.edu
CAREER IN COMPANY SECRETARYSHIP A HANDBOOK (Corrected upto 26th July, 2013) ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 tel 011-4534 1000, 4150 4444 fax 91-11-2462 6727 email info@icsi.edu website www.icsi.edu
Stamp Duty 83 Tax Payments and Tax Return Filing 85 Monthly tax obligations, Annual tax obligations, Early tax refunds Accounting for Tax 91 Tax Audits and Tax Assessments 93 Tax Collection Using Distress Warrant 100 Tax Dispute and Resolution 102
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94 4301 Direct Taxes Law & Practice Taxmann's 2004 360.00 Tax 95 2286 Inidan Tax Laws (1995) A N Aiyar's 1995 NA Law 96 2289 Income Tax Rules 1995 210.00 Law 97 3602 Direct Taxes Ready Reckoner R A Dhruv 2000 260.00 Tax 98 3600 Income Tax Act Ravi Puliani 1999 300.00 Law 99 3601 Income Tax Rules Ravi Puliani 1999 275.00 Law 100 2955 Indirect .
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