ROHIT TRIPATHI

ASSIT. PROF.
COMMERCE
SHMV
E-TAXATION

E-taxation Is The Practice Of Electronic Payment Of

Taxes, And Filing Of Returns By Companies, And
Individuals To The Government. E-taxation Is The
Automated Way Of Managing All Affairs Related To
Taxes. This Has Been Possible Due To E-commerce
Technology.

E-taxation Could Also Include The Taxation Related To

E-commerce Transactions, Which Could Be National
Or International.
 WHAT IS TAX-

 The Money That You Have To Pay To The

Government So That It Can Provide Public
Services.
 Taxes are mandatory contributions levied on
individuals or corporations by a government
entity—whether local, regional, or national. Tax
revenues finance government activities,
including public works and services such as
roads and schools, or programs such as Social
Security and Medicare.
 Direct Tax-
 Direct taxes refer to taxes that
are filed and paid by an
individual directly to the
government.
 A type of tax where the impact
and the incidence fall under the
same category can be defined
as a Direct Tax. The tax is paid
directly by the organisation or
an individual to the entity that
has imposed the payment. The
tax must be paid directly to the
government and cannot be paid
to anyone else.
Indirect Tax-
 Indirect taxes- on the other hand, are taxes that
can be transferred to another entity. Therefore,
the burden of paying them can be put on another
person's shoulders
 Income Tax:
 Depending on an individual's age and earnings,
income tax must be paid. Various tax slabs are
determined by the Government of India which
determines the amount of Income Tax that must
be paid. The taxpayer must file
Income Tax Returns (ITR) on a yearly basis.
Individuals may receive a refund or might have
to pay a tax depending on their ITR. Huge
penalties are levied in case individuals do not
file ITR. •
 Wealth Tax:
 The tax must be paid on a yearly basis and depends on the
ownership of properties and the market value of the
property. In case an individual owns a property, wealth tax
must be paid and does not depend on whether the property
generates an income or not. Corporate taxpayers, Hindu
Undivided Families (HUFs), and individuals must pay
wealth tax depending on their residential status. Payment
of wealth tax is exempt for assets like gold deposit bonds,
stock holdings, house property, commercial property that
have been rented for more than 300 days, and if the house
property is owned for business and professional use.
 Corporate Tax:
 Domestic companies, apart from shareholders,
will have to pay corporate tax. Foreign
corporations who make an income in India will
also have to pay corporate tax. Income earned via
selling assets, technical service fees, dividends,
royalties, or interest that is based in India are
taxable. The below-mentioned taxes are also
included under Corporate Tax
Securities Transaction Tax
(STT):
›
› The tax must be paid for any income that is earned
via security transactions that are taxable.
 Dividend Distribution Tax
(DDT):
 In case any domestic companies declare,
distribute, or are paid any amounts as dividends
by shareholders, DDT is levied on them.
However, DDT is not levied on foreign
companies
 › Fringe Benefits Tax: Companies that provide fringe benefits for
maids, drivers, etc., Fringe Benefits Tax is levied on them.
›
› Minimum Alternate Tax (MAT): For zero tax companies that
have accounts prepared according to the Companies Act, MAT is
levied on them.

 Capital Gains Tax: It is a form of direct tax that is paid due
to the income that is earned from the sale of assets or
investments. Investments in farms, bonds, shares,
businesses, art, and home come under capital assets. Based
on its holding period, tax can be classified into long-term
and short-term. Any assets, apart from securities, that are
sold within 36 months from the time they were acquired
come under short-term gains. Long-term assets are levied if
any income is generated from the sale of properties that have
 Advantages of Direct Taxes
The main advantages of Direct Taxes in India are mentioned
below:

 Economic and Social balance:

 The Government of India has launched well-balanced
tax slabs depending on an individual's earnings and age.
The tax slabs are also determined based on the economic
situation of the country. Exemptions are also put in place
so that all income inequalities are balanced out.
 Productivity:
 As there is a growth in the number of people who work
and community, the returns from direct taxes also
increases. Therefore, direct taxes are considered to be
very productive.
 Inflation is curbed:
 Tax is increased by the government during inflation.
The increase in taxes reduces the necessity for goods
and services, which leads to inflation to compress.
 Certainty:
 Due to the presence of direct taxes, there is a sense
of certainty from the government and the taxpayer.
The amount that must be paid and the amount that
must be collected is known by the taxpayer and the
government, respectively.
 Distribution of wealth is equal:
 Higher taxes are charged by the government to
the individuals or organizations that can afford
them. This extra money is used to help the poor
and lower societies in India.
 Demerits of direct taxation are:1. Pinching 2. Inconvenient
3.Evasion and Corruption 4.Uneconomical 5. Narrow based
6. Arbitrary

 1. Pinching:
 Since direct taxes are to be paid in a lump-sum
they pinch the tax payers more.Thus, the
announcement effect of a direct tax always tends
to cause resentment among the tax payers.
 2. Inconvenient:
 Direct taxes do not conform to the canon of
convenience as returns of income tax, wealth tax,
etc., are to be filed in time and complete records
are to be maintained up-to-date by each
individual tax payer. Moreover, it is very
inconvenient to pay these taxes as they are
collected in lump-sum.
 3. Evasion and Corruption:
 Since the assessment of direct taxes depends
upon the voluntary declaration of the tax payer
about has income, wealth, etc., there is great
scope for tax evasion by concealing real income.
Thus, in fact, under direct taxation, honesty is
taxed while dishonesty is rewarded. Tax evasion
in effects leads to corruption also.
 4. Uneconomical:
 Direct taxes are not so economical as they are
claimed to be. They are uneconomical when the
tax base is narrow. Further, elaborate machinery
is required for their collection as each and every
assessee has to be contacted individually and
properly checked to prevent tax evasion.
 Nevertheless, it must be permitted that direct
taxes are generally more productive of revenue
than indirect taxes. Moreover, indirect taxes, too,
are uneconomical in this respect.
 5. Narrow based:
 Direct taxes are generally narrow based;
therefore, a large section of masses remains
untouched and to that extent, they fail to achieve
their objective of promoting civic sense among
the citizens. Especially, the poor section of the
community remains untouched under direct
taxes.
 6. Arbitrary:
 The nature and base of direct taxes are arbitrarily
decided by the exchequer. The Finance Minister
uses his own value judgments in determining the
taxation potential of the tax payer. There is no
scientific formula or base for evolving the mode
of gradation and progression in direct taxation.
 7. Disincentiveness:
 Direct taxes being based on income and wealth,
if they are excessive may discourage savings and
kill the incentive to work hard
 INDIRECT TAX-

 Indirect taxes- on the other hand, are taxes that can be

transferred to another entity. Therefore, the burden of paying
them can be put on an other person's shoulders .
 Its incidence is borne by the consumers who ultimately consume
the product or the service, while the immediate liability to pay
the tax may fall upon another person such as a manufacturer or
provider of service or seller of goods. Also called consumption
taxes, they are regressive in nature because they are not based on
the principle of ability to pay. All the consumers, including the
economically challenged bear the brunt of the indirect taxes
equally. Indirect taxes are levied on consumption, expenditure,
privilege, or right but not on income or property.
 Hitherto, a number of indirect taxes were levied
in India, namely, excise duty, customs duty,
service tax, central sales tax (CST), value added
tax (VAT), entry tax, purchase tax, entertainment
tax, tax on lottery, betting and gambling, luxury
tax, tax on advertisements, etc.
 However, indirect taxation in India has witnessed
a paradigm shift on July 01, 2017 with utterance
into a unified indirect tax regime wherein a large
number of Central and State indirect taxes have
been amalgamated into a single tax – Goods and
Services Tax (GST). The introduction of GST is
a very significant step in the field of indirect tax
reforms in India. Customs duty will continue in
post GST regime. Economists world over agree
that direct and indirect taxes are complementary
and therefore, a rational tax structure should
incorporate in itself both types of taxes.
 TYPES OF INDIRECT TAXES IN INDIA
Some of the most important types of indirect tax in
India are as follows-
 1. Goods and Services Tax (GST)
 GST subsumed as many as 17 different indirect
taxes in India like Service Tax, Central Excise,
State VAT, and more. It is a single,
comprehensive, indirect tax which is imposed on
all the goods and services as per the tax slabs laid
by the GST council. One of the biggest benefits
of GST is that it mostly eliminated the cascading
or tax-on-tax effect of the previous tax regime
 2. Customs Duty
 When you purchase something that needs to be
imported from a foreign country, you are required
to pay customs duty on it. Irrespective of whether
the product has come to India by air, land, or sea,
you will have to pay the customs duty on it. The
goal of imposing this indirect tax is to make sure
that every product entering India is taxed.
 3. Value Added Tax (VAT)
 A VAT is a type of consumption tax imposed on
products whenever its value increases throughout
the supply chain. It is imposed by the state
government, which also decides the VAT
percentage on different goods. While GST has
mostly eliminated VAT, it is still imposed on
some products such as items that contain alcohol.
 FEATURES OF INDIRECT TAXES
अप्रत्यक्ष करों की विशेषताएं
› An important source of revenue: Indirect taxes are a
major source of tax revenues for Governments
worldwide and continue to grow as more countries
move to consumption-oriented tax regimes. In India,
indirect taxes contribute more than 50% of the total
tax revenues of Central and State Governments.
 Shifting of burden:

 There is a clear shifting of tax burden in respect of

indirect taxes. For example, GST paid by the supplier of
the goods is recovered from the buyer by including the
tax in the cost of the commodity.

 No perception of direct pinch:

 Since, value of indirect taxes is generally inbuilt in the

price of the commodity, most of the time the tax payer
pays the same without actually knowing that he is
paying tax to the Government. Thus, tax payer does not
perceive a direct pinch while paying indirect taxes.
 Inflationary:

 Tax imposed on commodities and services causes an all-

round price spiral. In other words, indirect taxation
directly affects the prices of commodities and services
and leads to inflationary trend.

 Wider tax base:

 Unlike direct taxes, the indirect taxes have a wide tax

base. Majority of the products or services are subject to
indirect taxes with low thresholds.
 Promotes social welfare:

 High taxes are imposed on the consumption of harmful

products (also known as ‗sin goods‘) such as alcoholic
products, tobacco products etc. This not only checks
their consumption but also enables the State to collect
substantial revenue.
 Regressive in nature:

 Generally, the indirect taxes are regressive in nature. The

rich and the poor have to pay the same rate of indirect
taxes on certain commodities of mass consumption. This
may further increase the income disparities between the
rich and the poor.
 BENEFITS OF GST जीएसटी के लाभ

 GST is a win-win situation for the entire country.

It brings benefits to all the stakeholders of
industry, Government and the consumer. It will
lower the cost of goods and services, give a boost
to the economy and make the products and
services globally competitive. The significant
benefits of GST are discussed hereunder:
 Creation of unified national market:

 GST aims to make India a common market with

common tax rates and procedures and remove the
economic barriers thus paving the way for an
integrated economy at the national level
  Mitigation of ill effects of cascading:

 By subsuming most of the Central and State taxes

into a single tax and by allowing a set-off of
prior-stage taxes for the transactions across the
entire value chain, it would mitigate the ill effects
of cascading, improve competitiveness and
improve liquidity of the businesses
  Elimination of multiple taxes and double
taxation:

 GST has subsumed majority of existing indirect

tax levies both at Central and State level into one
tax i.e., GST which is levy able uniformly on
goods and services. This will make doing
business easier and will also tackle the highly
disputed issues relating to double taxation of a
transaction as both goods and services.
 Boost to ‗Make in India' initiative:

 GST will give a major boost to the ‗Make in

India' initiative of the Government of India by
making goods and services produced in India
competitive in the national as well as
international market.
 Buoyancy to the Government Revenue:

 GST is expected to bring buoyancy to the

Government Revenue by widening the tax base
and improving the taxpayer compliance.
 DISADVANTAGES OF INDIRECT TAXES
A few cons of indirect taxes are as follows-
 Regressive- Indirect taxes are widely known to
be regressive in nature. While they make sure
that everyone pays taxes irrespective of their
income, they are not equitable. People from
every income group are required to pay indirect
taxes at the same rate.
 Makes Products and Services More Expensive-

 As indirect tax is added to the price of goods and

services, it makes them more expensive. For instance,
products like cigarettes, high-end bikes, premium cars,
etc. are included in the 28% tax slab of GST.

 Lacks Civic-Consciousness-

 As indirect tax is added to the price of the product or

service, the consumers are generally unaware of the tax
they are paying. This is opposite to direct taxes where
the taxpayer clearly knows the taxes he/she is paying.
 DIFFERENCES BETWEEN DIRECT AND INDIRECT TAX
 Here is a table pointing out the biggest direct vs. indirect tax differences-

 Context Direct Tax

Indirect Tax
 1. Imposed on Income and profits All the goods and services
 2. Who pays Individuals and businesses End-consumers
 3. How much Depends on income and profits Same for everyone
 4. Transferability Not transferable Transferable
 5. Tax Evasion Possible Not
possible
 6. Nature Progressive
Regressive
 7. Collections Complex Convenient
 8. Common examples Income tax and securities transaction tax GST, excise duty,
 and VAT
 The main goal of every taxpayer is to minimize his
Tax Liability. To achieve this objective taxpayer may
resort to following Three Methods :
 o Tax Planning
 o Tax Avoidance
 o Tax Evasion
 It is well said that “Taxpayer is not expected to
arrange his affairs in a such manner to pay maximum
tax “ . So, the assesses shall arrange the affairs in a
manner to reduce tax. But the question what method
he adopt for Tax Planning, Tax Avoidance, Tax
Evasion Let us see its meaning and their difference.
 MEANINNG OF TAX PLANNING Tax

Planning involves planning in order to avail all exemptions, deductions and
rebates provided in Act. The Income Tax law itself provides for various
methods for Tax Planning, Generally it is provided under exemptions u/s 10,
deductions u/s 80C to 80U and rebates and relief’s. Some of the provisions
are enumerated below :
  Investment in securities provided u/s 10(15) . Interest on such securities is
fully exempt from tax.
  Exemptions u/s 10A, 10B, and 10BA
  Residential Status of the person
  Choice of accounting system
 Choice of organization. For availing benefits, one should resort to bonafide
means by complying with the provisions of law in letter and in spirit. Where
a person buys a machinery instead of hiring it, he is availing the benefit of
depreciation. If is his exclusive right either to buy or lease it . In the same
manner to choice the form of organization, capital structure, buy or make
products are the assesse’s exclusive right. One may look for various tax
incentives in the above said transactions provided in this Act, for reduction
of tax liability. All this transaction involves tax planning
 Why Every Person Needs Tax Planning ?
 Tax Planning is resorted to maximize the cash
inflow and minimize the cash outflow. Since Tax
is kind of cast, the reduction of cost shall increase
the profitability. Every prudence person, to
maximize the Return, shall increase the profits by
resorting to a tool known as a Tax Planning.
 Methods Of Tax Planning Various methods of
Tax Planning may be classified as follows
 Short Term Tax Planning : Short range Tax Planning means the
planning thought of and executed at the end of the income year to
reduce taxable income in a legal way.
 Long Term Tax Planning : Long range tax planning means a plan
chaled out at the beginning or the income year to be followed around
the year. This type of planning does not help immediately as in the
case of short range planning but is likely to help in the long run
 Permissive Tax Planning : Permissive Tax Planning means making
plans which are permissible under different provisions of the law, such
as planning of earning income covered by Sec.10, specially by Sec.
10(1) , Planning of taking advantage of different incentives and
deductions, planning for availing different tax concessions etc.
 Purposive Tax Planning : It means making plans with specific
purpose to ensure the availability of maximum benefits to the assessee
through correct selection of investment, making suitable programme
for replacement of assets, varying the residential status and
diversifying business activities and income etc.
 Tax Avoidance
 It is an act of dodging tax without breaking the Law. It means when a
taxpayer arranges his financial activities in such a manner that
although it is within the four corner of tax law but takes advantages of
loopholes which exists in the Tax Law for reduction of tax a liability.
In other words though he has complied the letter of law but not the
sprit behind the law. Following transactions are held as Tax
Avoidance which are :
 1. Where tax law is complied with by using colorable devices which
means that use dubious method or a method which is unfair for
reduction of tax liability.
 2. Where the fact of the case is presented in a false manner.
 3. Where the sprit behind the law is avoided.
 4. There is a mollified intention. It means that method adopted for
reducing tax liability should be within the framework of law. If it is
not within the framework of law, it amounts to tax avoidance and not
Tax planning.
 Tax Evasion

 Any illegal method which leads to reduction of
tax liability is known as Tax Evasion. The Tax
Evasion is resorted to by applying following
dishonest means :
 1. Concealing the Income
 2. Claiming excessive expenditure 3.Falsification
of accounts.
 4. Willful violence of Rules
 Tax management

 Tax management involves the compliance of law

regularly and timely as well as the arrangement of the
affairs of the business in such a manner that it reduces the
tax liability. Functions under tax management includes
maintenance of accounts, filing of return, deduction and
deposit of TDS on timely basis, payment of tax on time.
Poor tax management can lead to imposition of interest,
penalty, prosecution. Losses may not be carried forward
and set off if return of loss is not filed by due date. Tax
management emphasizes on compliance of legal
formalities for minimization of taxes while tax planning
emphasis on minimization of tax burden.
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