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Taxation Managment

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Taxation Management ­ FIN 623
VU
MODULE 1
LESSON 1.2
AN OVERVIEW OF TAXATION
What is Fiscal Policy?
Fiscal policy is a discipline that deals with arrangements which are adopted by government to collect the
revenue and make the expenditures so that social and economic stability could be attained / maintained.
Objectives of Fiscal Policy
Economic Development
Raising level of employment (Achieving full employment level)
Influencing consumption patterns
Price stability
Redistribution of income
Removal of deficit in Balance of Payments
Instruments of Fiscal Policy
Government Expenditures
Taxes
Deficit Financing
Subsidies
Transfer Payments--like Unemployment Allowances etc.
Sources for Revenue Generation for State
Taxes, Tariffs
Internal & External Borrowing
Penalties & Fines
Aids & Grants
Canons of Taxation:
Simplicity
This principle implies that taxation system should be plain, and easily understandable by the tax payer.
Convenience
The convenience of tax payer as well as tax collector must be the bottom line of any taxation system. The
time of payment of tax, mode of collection of tax, should be convenient for the tax payers.
Certainty
This cannon suggest that the amount of payment should be certain and there should not be any
arbitrariness or ambiguity with respect to the amount of tax to be paid by the tax payer.
Judicious
The taxation system should be based on the principles of equity, fair play, and all known principles of
natural justice.
Capacity to Pay
This principle suggests that taxation system must be based keeping in view the capacity to sacrifice by the
person on whom the tax is levied, those who have more income should pay taxes at high rates/
proportions, where as those who have low income, they should pay taxes at lower rates or proportion.
Benefit principle
This principle suggests that taxes should be levied according to the benefits derived by the person from the
state. Since more benefits are derived by lower income groups, hence according to this principle, those who
derive more income but enjoy less benefits from the state should be taxed at the lower rates and those
persons who derives less income but more benefits from State should be taxed at high rates.
Business Friendly
According to this principle, the taxation policy should be such as to boost business atmosphere and not
discouraging the investment environment.
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Table of Contents:
  1. AN OVERVIEW OF TAXATION
  2. What is Fiscal Policy, Canons of Taxation
  3. Type of Taxes, Taxation Management
  4. BASIC FEATURES OF INCOME TAX
  5. STATUTORY DEFINITIONS
  6. IMPORTANT DEFINITIONS
  7. DETERMINATION OF LEGAL STATUS OF A PERSON
  8. HEADS OF INCOME
  9. Rules to Prevent Double Derivation of Income and Double Deductions
  10. Agricultural Income
  11. Computation of Income, partly Agricultural,
  12. Foreign Government Officials
  13. Exemptions and Tax Concessions
  14. RESIDENTIAL STATUS & TAXATION 1
  15. RESIDENTIAL STATUS & TAXATION 2
  16. Important Points Regarding Income
  17. Geographical Source of Income
  18. Taxation of Foreign-Source Income of Residents
  19. Exercises on Determination of Income 1
  20. Exercises on Determination of Income 2
  21. SALARY AND ITS COMPUTATION
  22. Definition of Salary
  23. Significant points regarding Salary
  24. Tax credits on Charitable Donations
  25. Investment in Shares
  26. SALARY AND ITS COMPUTATION EXERCISES 1
  27. SALARY AND ITS COMPUTATION EXERCISES 2
  28. SALARY AND ITS COMPUTATION EXERCISES 3
  29. Tax treatment of Gratuity
  30. Gratuity Exercise
  31. PROVIDENT FUND
  32. Exemptions on Business income, Treatment of Speculation Business
  33. Deductions Allowed & Not Allowed
  34. Deductions: Special Provisions, Depreciation
  35. Methods of Accounting
  36. Taxation of Resident Company
  37. Taxation of Companies: Exercises
  38. Computation of Capital Gain
  39. Disposals Not Chargeable To Tax
  40. TAX RETURNS & ASSESSMENT OF INCOME UNIVERSAL SELF ASSESSMENT SCHEME
  41. Normal Assessment, USAS, Provisional Assessment, Best Judgment Assessment
  42. ADVANCE TAX COLLECTION & RECOVERY OF TAX PENALTIES & PROSECUTION
  43. What is Value Added Tax (VAT)?
  44. SALES TAX
  45. SALES TAX RETURNS