Tax avoidance – Legally Done in Lawful Ways Implemented by the Government . One should save or invest money in particular field may leads to reduction in taxable income and its lawful
Tax Evasion : Illegal and Punishable offence. One should not fill income report or claim for unauthorized deductions.
Progressive Tax : Tax as a percentage rises if the income rises
Regressive Tax : It hits both lower & higher income individuals. E.g. Sales Tax (Poor People can’t afford it comparing to high income people).
Proportional Tax : Tax as a constant percentage if income rises
Ad Valorem : Taxes on real-estate & personal property
Negative Income Tax : Subsidy is a negative income tax.
Pigovian Tax : Tax collected from the negative externality products (E.g. cigarettes, automobiles à it will affect third party. Carbon tax – On fossil fuel.)
Octopi Tax: Tax imposed on the entry of the goods. Biggest revenue of the urban Local bodies.
Tax Buoyancy : The percentage of tax revenue increases and it will increase in respect to national income. (Growth based income).
Tax elasticity : The percentage of tax revenue increased with relevant to the rate of tax Increased.
Tax Stability : Frequent stable tax & no change in the policy while it’s predictable & Transports manner.
Tobin Tax
- It is the tax imposed on all foreign exchange transactions.
- Both inflow and out flow.
- It will affect FII’s small short term investment.
- It checks speculative flows.
It can be justified in two grounds
- It would reduce exchange rate volatility & improve macroeconomic influence.
- It stabilizes the exchange rate and supports for the development efforts.
- India doesn’t impose Tobin tax (CAD country & no surplus).
- Major reason for the south East Asian currency crises 1997.
MAT: Minimum Alternative Tax
Companies’ taxable income is less than certain % of the book profits then default the book profits are considered to be the taxable income. (The present MAT rate as of FY 2019-20 is 15% ) (Intro in 1997-1998).
Dividend Distribution Tax : Distributed dividends by a company need to be pay tax
Wealth tax: Non productive assets –> Home, Jewellery, Motor etc.… (residential)
Capital gain tax : Buy & selling of lands, shares etc.
Withholding tax: Salaries to employee, professional etc.… Same as TDS.
Securities transaction tax: (Intro 2004-05) : Tax on the value of all transactions of purchases of securities in stock exchange.
Cess: (Tax on Tax)
- Like to mean tax. It is an additional levy on tax.
- Surcharge is different.
- Latter –> Cess –> collected after sometime. (Education CESS etc.…).
