ALTERNATIVE TAX REGIME BY CMA S VENKANNA COST

Transcript:ALTERNATIVE TAX REGIME BY CMA S VENKANNA COST:
ALTERNATIVE TAX REGIME BY CMA S VENKANNA COST ACCOUNTANT 18/05/2021 ICMAI Behind Every Successful Business Decision, There Is Always A CMA Introduction A progressive tax is a tax system that increases rates as the taxable income goes up. It is divided into tax brackets that progress to successively higher rates. For example, a progressive tax rate may move from the lowest and highest brackets, as the taxable amount increases. In a progressive tax system, a taxpayer’s marginal tax rate is higher than their average tax rate. 18/05/2021 ICMAI Methods Various tax methods that governments may use include progressive, regressive, digressive, or proportional. The Progressive Tax System is one where the tax burden increases as taxable income increases. In some cases, there is a minimum tax-free income where individuals earning less than the stated minimum taxable amount are not liable for any payments to tax authorities. The opposite of the progressive system is the regressive tax rate Here tax liability reduces as the taxable amount increases. Regardless of the rate used, the government aims to collect money from citizens. 18/05/2021 ICMAI Economist’s View Progressive tax imposes a higher percentage rate on taxpayers who have higher incomes. The U.S. income tax system is an example. A regressive tax imposes the same rate on all taxpayers, regardless of ability to pay. GST is an example. 18/05/2021 ICMAI Alternative Tax Regime At present available to both Corporate Sector - from the year AY 2017-18 Required Corporate Tax Planning Sec.115BA Sec.115BAA Section BAB Non corporate sector From AY 201-22 Tax Planning to Non Corporate Sector Sec.115BAC Sec.115BAD 18/05/2021 ICMAI Maximum Marginal Rate of Tax All assesses 30% Plus Applicable Surcharge Plus HEC at 4% 18/05/2021 ICMAI Corporate Sector – Part I Section 115BA - Conditions Applicable to Domestic Company Company in the manufacturing or production of articles or things Company Registered or afte lst March 2016 First Assessment Year - from the Assessment Year 2017-18 Gross Receipts or Turnover should not exceed Rs.400 crores in in the year 2017-28 (Rs.250 crores for the year 2016-17) However MAT under section 115JB Applicable Companie does not opt for section 115BAA then it shall be chargeable to tax at the rate of 25% plus applicable surcharge and health & education cess. The surcharge in such a case shall be 7% or 12% when the total income of the company exceeds Rs. 1 crores or Rs. 10 crores, respectively.