Types of Taxes, New & Old Regime, Role and Impact of Income Tax & GST.

1. Unravelling the Relevance and Impact of Income Tax and GST
on the Indian Economy
A STUDY OF TAXATION
DYNAMICS IN INDIA

2. An amount of money that a
government requires people
to pay according to their
income, the value of their
property, etc., and that is used
to pay for the schemes and
plans executed by the
government.
TAX?

3. EvolutionofTax
COLONIAL
The British introduced land
revenue systems like the
Permanent Settlement,
Ryotwari System, and
Mahalwari System.
ANCIENT &
MEDIVEAL
Taxes were often collected in kind,
including agricultural produce and
goods. The Mauryan and Gupta
periods had well-organized systems
of revenue collection.
MUGHAL
The Mughals introduced
systems such as the "Zabt"
system, the "Jizya" (a tax on
non-Muslims) and "Khums" (a
tax on booty and war spoils)

4. Post-Independence
(1947-1991)
The Income Tax Act of 1961 replaced the
earlier Income Tax Act of 1922, and other
tax laws were enacted to streamline
taxation
The era saw the introduction of wealth
tax, gift tax, and the implementation of
various indirect taxes.
1991 Economic Liberalization- Turning Point
Drawing inferences: The first major indirect
tax reform was the introduction of the Central
Sales Tax (CST) in 1956

5. Economic Liberalization- Turning
Point
1. LPG
2. GST
3. NEW
REGIME
A move towards
liberalization, privatization,
and globalization (LPG)
the introduction of the Goods and Services
Tax (GST) in 2017
A new tax regime was introduced in
Budget 2020 wherein the tax slabs were
altered, and taxpayers were offered
concessional tax rates

6. TYPES OF TAXES
Indirect taxes are levied on the sale and provision of
goods and services respectively and the burden to
collect and deposit taxes is on the sellers.
Further Diversification:
VAT/GST
Sales tax
Excise Duty
Custom Duty
Entertainment tax
Direct taxes are levied on taxable income earned by
individuals and corporate entities, the burden to
deposit taxes is on the assesses themselves.
Further Diversification:
Income tax
Corporate tax
Wealth tax
Capital Gain tax
Property tax
Directandindirecttaxes
DIRECT INDIRECT

7. INCOME TAX
& GST
Income tax & GST in India serves several
important purposes and offers various
benefits to the government and the broader
society.
INCOME TAX : It is one of the most
common forms of Direct Tax. The tax
rates may vary based on the level of
income and taxpayer’s filing status.
GST : GST is a consumption tax that is
applied at each stage of production and
distribution chain. It is based on the
value added to a product or service and
the final consumer bears the ultimate
burden.
Revenue Generation
Public Services and
Infrastructure Development
Redistribution of Wealth
Social Welfare Programs
Defence and National Security
Encouraging Savings and
Investments
BENEFITS OF
INCOME TAX & GST

8. OLD VS NEW
INCOMETAX
This is one of the most common
forms of direct tax. It is levied on the
income of individuals, corporations,
and other entities.
Both the Regime can be taken on
diffrentail basis
Tax slab
STRUCTURE
Introduced in Budget 2020
wherein the tax slabs were
altered
The government in Budget
2023 introduced 5 key
changes

9. S.80C Investments (Rs 1,50,000)
S.80CCC Premium for Pension Plan
S.80D Medical Insurance
S.80DD Maintenance of Handicapped
S.80E Interest on Higher Education
S.80TTA Deduction on Interest on
Deposits in Savings Account
S.80TTB Senior Citizen
Yes, the government does give
Standard Deduction and Family
Pension Deduction such as:
Standard Deduction 50,000
Family Pension
Reduced Surcharge for High-
Net-Worth Individuals
Higher Leave Encashment
Exemption
ANSWER
Doesn’t Government
gives any Deduction
or Concession?
QUESTION: DEDUCTION UNDER CHAPTER IV-A:

10. On July 1, 2017, GST laws were
implemented, replacing a complex
web of Central and State taxes.
Under the Indian GST, goods and
services are categorized into
different tax slabs, including 5%,
12%, 18%, and 28%.
LOGISTICS
Goods and Services Tax is actually increasing
competitiveness and performance in India’s
manufacturing sector. However, declining exports, as
well as high infrastructure spending, are a few of the
concerns in this sector.
GST
SECTOR WISE IMPACT
REAL ESTATE
PHARMA
AUTOMOBILES
FREELANCERS
FMCG
AGRICULTURE
TELECOMMUNICATIONS
E-COMMERCE
START-UP TEXTILES

11. The impact of the Goods and
Services Tax (GST) on consumers
can be both direct and indirect.
GST is a comprehensive indirect
tax that subsumes various taxes
like excise duty, service tax, and
VAT (Value Added Tax).
IMPACT ON INFLATION
GST
IMPACT ON CONSUMERS
PRICE CHANGE
INPUT TAX CREDIT
COMPLIANCE COSTS
SIMPLIFIED TAX STRUCTURE
REDUCED TAX BURDEN
E-COMMERCE & ONLINE SHOPPING
CONSUMER BEHAVIOUR

12. ROLE OF INCOME TAX & GST
REVENUEGENERATION
The interplay between taxation and economic
development is a complex and dynamic phenomenon
that often mirrors the broader financial landscape of
a nation. A recent report released by the Finance
Ministry sheds light on a compelling aspect of this
relationship – the equilibrium between Goods &
Services Tax (GST) and personal income tax in terms
of their contribution to the Gross Domestic Product
(GDP).
Revenue receipt from Direct taxes
Revenue receipt from Indirect taxes
2
0
1
5
-
1
6
2
0
1
6
-
1
7
2
0
1
7
-
1
8
2
0
1
8
-
1
9
2
0
1
9
-
2
0
2
0
2
0
-
2
1
2
0
2
1
-
2
2
2
0
2
2
-
2
3
0
500000
1000000
1500000
2000000
Amount in crore

13. ROLE OF INCOME TAX & GST
REVENUEGENERATION
Compared to previous chart this chart shows rate of change of
growth in taxes. When GST was Introduced on 1st July, 2017 we
can see a steep decline in the growth of tax collected. Previously
various taxes were imposed on Various goods and services.
Initial burden of all the taxes were imposed on Consumer, After
GST was introduced it lightened the burden on the consumer.
Due to increasing population with consumer need increasing we
see that there is no negative change in tax collection. Whereas
Income tax has been fluctuating over the years. During COVID19
period Various loss in jobs and lockdown resulted in negative
gross collection of Income tax.
Increase percent Direct taxes
Increase percent Indirect taxes
2
0
1
6
-
1
7
2
0
1
7
-
1
8
2
0
1
8
-
1
9
2
0
1
9
-
2
0
2
0
2
0
-
2
1
2
0
2
1
-
2
2
2
0
2
2
-
2
3
-20.00
0.00
20.00
40.00
60.00
80.00
Per-cent of change

14. ECONOMIC DEVELOPMENT
ROLEOFINCOME
TAX&GST
Tax has been a major contributing factor in
boosting a country's economic growth. It is a
predominant aspect to determine the influx of
foreign investments.
Significant Variation in Corporate tax.
Understanding these differences can be
important for businesses considering
expansion or relocation.
Domestic companies are taxed in the range
of 15% - 30% based upon certain criteria
and foreign companies are taxed @ 40%
exclusive of surcharge and education cess.
In 2019, Indian government increased surcharge on income
tax for the high-income earners in India bringing the
effective tax rates to 42.7%. This is very high as compared to
most of the developing economies but still not as high as tax
rates levied by the developed economies like US, UK, China,
and Canada are 50.3%, 45%, 45% and 54% respectively
Stimulating economic growth through taxation

15. SOCIAL WELFARE
ROLEOFINCOME
TAX&GST
Pradhan Mantri Jeevan Jyoti Yojana
(PMJJBY)
Pradhan Mantri Suraksha Bima Yojana
(PMSBY)
Atal Pension Yojana
Pradhan Mantri Awaas Yojana – Gramin
(PMAY-G)
Ayushman Bharat-Pradhan Mantri Jan
Arogya Yojana (AB-PMJAY)
Pradhan Mantri Kisan Mandhan Yojana
Similarly all other welfare scheme are
presented and greatly utilized tax
revenue can be seen
Out of 16 crore enrolments under PMJJBY, about 72%
insured are from rural India and 28% from urban
India. The other interesting point to note is that the
scheme is strengthening financial security across
genders, with about 48% male insured and about
51% insured being female
Utilization of tax revenue for social programs
EFFECTIVENESS OF THE PROGRAMS

16. RecentChangesinTaxPolicies
Why is there was a need to
Change tax polices in India
Was the Change even helpful
what were the Potential effect
on Economy?
Introduction of GST in 2017
New Tax Regime in 2023-24
1 2

17. AnalysisofTaxreforms
Simplifying Tax Structures, Reducing
Complexity
Fostering a business-friendly environment and
encouraging investment through reasonable tax
rates may contribute to economic growth. It's
essential to strike a balance between generating
revenue for the government and supporting
economic development.
Tax reforms was implemented to incentivize
investment, promote innovation, and enhance
competitiveness. Such changes aim to create a
conducive environment for businesses, leading to
increased job opportunities and economic expansion.
Tax policies was adjusted to address income inequality by
introducing progressive tax structures or targeted credits.
Environmental concerns may also drive tax policy changes.
Encouraging sustainable practices and discouraging
activities with negative ecological impacts. Political
factors, including electoral promises or responses to
economic crises, has influenced tax policy decisions.
Overall, the rationale behind tax policy changes reflects a
delicate balance between economic goals, social
considerations, and political imperatives.
1
2
3
4
5
6

18. ANALYSIS
Impactonbusiness
Income*
CIT rate (%)
Turnover does not exceed
INR 4 billion in FY 2020/21
For other domestic
companies
Foreign companies having
PE in India
Basic Effective**
Basic
Effective** Basic Effective **
Less than 10
million Indian
rupees (INR)
25 26.00 30 31.20 40 41.60
More than INR
10 million but
less than INR
100 million
25 27.82 30 33.38 40 42.43
More than INR
100 million
25 29.12 30 34.94 40 43.68
A resident company is taxed on its worldwide
income. A non-resident company is taxed only on
income that is received in India, or that accrues or
arises, or is deemed to accrue or arise, in India.
These taxes are majorly:
Corporate Income Tax (CIT)
Minimum Alternate Tax (MAT)
EffectonCorporateEntities

19. Does Job
Get Good grades
Manage Household
Expense
Does everything
Particularly
Jobless
Usually Creates mess
Not Good at Academics
No lean Focus on
Career
Usually small child
Doesnt get that
appreciation
Usually less
pampered
Constantly Burdened
Most Pampered
Less restricted
Enjoying life
Not Burdened as the
other child
RESPONSIBLE ONE IR-RESPONSIBLE ONE

20. Less than 5% Pays
Income tax
Contributing towards
economy
About 95% of
Population in India has
no Obligation to pay
Tax
Usually Lower
contribution in
economy
Doesn’t get any
Benefits regarding
schemes
Usually busy in
creating wealth
Gets most of the
Advantages through
schemes, free
facilities, etc
Usually strive for
moreover help
TAX PAYERS NON-TAX PAYERS

21. FacilitiesGiven

22. TaxEvasion
A series of notices to Asian Paints, Eicher Motors, LIC, Zomato, ICICI Prudential, and Nestle India,
with regards to pending GST dues and penalties for FY19 and FY20, have rattled corporate India.
Besides the corporates, the insurance industry has been handed a ₹5,500 crore bill, the gaming
industry has also been on the receiving end of a staggering cumulative demand of ₹1.5 lakh crore,
and the real estate industry's demands exceed ₹2,000 crore. As many as 33,000 GST notices have
been issued by authorities for return discrepancies and short tax payments in FY18 and FY19.
These notices, while not directly affecting business operations, have cast shadows over mergers
and acquisitions (M&As). Companies are recalibrating their strategies, ensuring they account for
tax liabilities before finalizing deals and other transactions, as per an Economic Times report.
It added that multinational companies are grappling with challenges like the taxation of expatriate
salaries by Indian units, prompting legal challenges and delays in business deals. Companies are
also lamenting the lack of clarity in tax applications, which causes them to spend time and
resources to resolve multiple notices issued by various authorities, it said.
CASE STUDY

23. Tax planning, tax avoidance, and
tax evasion are terms that fall
within the parlance of the
Income-tax Act, 1961. However, tax
evasion is illegal and Chapter XXII
of the Income Tax Act, 1961, is
clear about penalties.
NOT GETTING ACCOUNTS AUDITED
TAX
MAJOR METHODS FOR EVASION
CONCEALING INCOME TO EVADE TAX
NON-COMPLIANCE WITH TDS REGULATIONS
WILFUL ATTEMPT TO EVADE TAX
LATE FILING OF INCOME TAX RETURN
PROVIDING INCORRECT PAN NUMBER

24. Formalisation of the Economy
Identifying High-Income Earners
in the Informal Sector
Bringing Agricultural Income into
the Tax Net
Tax collection at source (TCS)
MeasuresImplemented

25. BELGIUM- 79.5
FINLAND- 66.75
PORTUGAL- 64
UK- 63.25
SWITZERLAND- 59.7
ARUBA- 58.95
ESTONIA- 58.4
JAPAN- 55
AUSTRIA- 55
INDIA - 30
WHY?

26. Both Income Tax and GST play pivotal roles in contributing to India's
economic growth and maintaining fiscal stability. The analysis of the
Income Tax system reveals its crucial role in shaping individual financial
behaviors, influencing investment decisions, and contributing significantly
to government revenue. However, challenges such as tax evasion and
complexities in compliance persist, warranting a closer examination of
policy efficacy. The Goods and Services Tax (GST) has emerged as a
transformative force, streamlining tax structures, promoting a unified
market, and easing the burden on businesses. Case studies underscore how
GST has impacted supply chains, pricing strategies, and consumer
behaviour, presenting a shift in the pattern of indirect tax landscape.
CONSLUSION