Thursday, March 26, 2015
Basics on Fiscal Policy
At the outset, it is important to clarify certain basic concepts. The most elementary is
perhaps the difference between revenue and capital flows, be they receipts or
expenditures. While there are various complex legal and formal definitions for these
ideas, presenting some simplified and stylised conceptual clarifications is deemed
appropriate. A spending item is a capital expenditure if it relates to the creation of an
asset that is likely to last for a considerable period of time and includes loan
disbursements. Such expenditures are generally not routine in nature. By the same logic a
capital receipt arises from the liquidation of an asset including the sale of government
shares in public sector companies (disinvestments), the return of funds given on loan or
the receipt of a loan. This again usually arises from a comparatively irregular event and is
not routine. In contrast, revenue expenditures are fairly regular and generally intended to
meet certain routine requirements like salaries, pensions, subsidies, interest payments,
and the like. Revenue receipts represent regular „earnings‟, for instance tax receipts and
non-tax revenues including from sale of telecom spectrums.
There are various ways to represent and interpret a government‟s deficit.
The simplest is the revenue deficit which is just the difference between revenue receipts and revenue expenditures.
Revenue Deficit = Revenue Expenditure – Revenue Receipts (that is Tax + Non-tax Revenue) A more comprehensive indicator of the government‟s deficit is the fiscal deficit. This is the sum of revenue and capital expenditure less all revenue and capital receipts other than 6 loans taken. This gives a more holistic view of the government‟s funding situation since it gives the difference between all receipts and expenditures other than loans taken to meet such expenditures.
Fiscal Deficit = Total Expenditure (that is Revenue Expenditure + Capital Expenditure) – (Revenue Receipts + Recoveries of Loans + Other Capital Receipts (that is all Revenue and Capital Receipts other than loans taken)) “The gross fiscal deficit (GFD) of government is the excess of its total expenditure, current and capital, including loans net of recovery, over revenue receipts (including external grants) and non-debt capital receipts.” The net fiscal deficit is the gross fiscal deficit reduced by net lending by government (Dasgupta and De, 2011). The gross primary deficit is the GFD less interest payments while the primary revenue deficit is the revenue deficit less interest payments. 3. India’s fiscal policy architecture
The Indian Constitution provides the overarching framework for the country‟s fiscal policy. India has a federal form of government with taxing powers and spending responsibilities being divided between the central and the state governments according to the Constitution. There is also a third tier of government at the local level. Since the taxing abilities of the states are not necessarily commensurate with their spending responsibilities, some of the centre‟s revenues need to be assigned to the state governments. To provide the basis for this assignment and give medium term guidance on fiscal matters, the Constitution provides for the formation of a Finance Commission (FC) every five years. Based on the report of the FC the central taxes are devolved to the state governments. The Constitution also provides that for every financial year, the government shall place before the legislature a statement of its proposed taxing and spending provisions for legislative debate and approval. This is referred to as the Budget.
The central and the state governments each have their own budgets. The central government is responsible for issues that usually concern the country as a whole like national defence, foreign policy, railways, national highways, shipping, airways, post and telegraphs, foreign trade and banking. The state governments are responsible for other items including, law and order, agriculture, fisheries, water supply and irrigation, and public health. Some items for which responsibility vests in both the Centre and the states include forests, economic and social planning, education, trade unions and industrial disputes, price control and electricity. There is now increasing devolution of some powers to local governments at the city, town and village levels. The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods. The state governments are vested with the power to tax agricultural income, land and buildings, sale of goods (other than inter-state), and excise on alcohol. 7 Besides the annual budgetary process, since 1950, India has followed a system of fiveyear plans for ensuring long-term economic objectives. This process is steered by the Planning Commission for which there is no specific provision in the Constitution. The main fiscal impact of the planning process is the division of expenditures into plan and non-plan components. The plan components relate to items dealing with long-term socioeconomic goals as determined by the ongoing plan process. They often relate to specific schemes and projects. Furthermore, they are usually routed through central ministries to state governments for achieving certain desired objectives. These funds are generally in addition to the assignment of central taxes as determined by the Finance Commissions. In some cases, the state governments also contribute their own funds to the schemes. Non-plan expenditures broadly relate to routine expenditures of the government for administration, salaries, and the like. While these institutional arrangements initially appeared adequate for driving the development agenda, the sharp deterioration of the fiscal situation in the 1980s resulted in the balance of payments crisis of 1991, which would be discussed later. Following economic liberalisation in 1991, when the fiscal deficit and debt situation again seemed to head towards unsustainable levels around 2000, a new fiscal discipline framework was instituted. At the central level this framework was initiated in 2003 when the Parliament passed the Fiscal Responsibility and Budget Management Act (FRBMA).
Taxes are the main source of government revenues. Direct taxes are so named since they are charged upon and collected directly from the person or organisation that ultimately pays the tax (in a legal sense).2 Taxes on personal and corporate incomes, personal wealth and professions are direct taxes. In India the main direct taxes at the central level are the personal and corporate income tax. Both are till date levied through the same piece of legislation, the Income Tax Act of 1961. Income taxes are levied on various head of income, namely, incomes from business and professions, salaries, house property, capital gains and other sources (like interest and dividends).3 Other direct taxes include the wealth tax and the securities transactions tax. Some other forms of direct taxation that existed in India from time to time but were removed as part of various reforms include the estate duty, gift tax, expenditure tax and fringe benefits tax. The estate duty was levied on the estate of a deceased person. The fringe benefits tax was charged on employers on the value of in-kind non-cash benefits or perquisites received by employees from their employers. Such perquisites are now largely taxed directly in the hands of employees and added to their personal income tax. Some states charge a tax on professions.
Most local governments also charge property owners a tax on land and buildings. 2 Economic theory indicates that the incidence of a tax depends on various factors. In the case of commodity taxes these include the respective elasticties of supply and demand. 3 A capital gain (or loss) arises when a person sells off a capital asset. The gain (or loss) is the difference between the price at which the asset was purchased and the price at which it is sold and represents an appreciation (or fall) in value. Often an adjustment to the basic value of the asset is made to include factors like cost inflation or economic depreciation due to wear and tear. 8 Indirect taxes are charged and collected from persons other than those who finally end up paying the tax (again in a legal sense). For instance, a tax on sale of goods is collected by the seller from the buyer. The legal responsibility of paying the tax to government lies with the seller, but the tax is paid by the buyer. The current central level indirect taxes are the central excise (a tax on manufactured goods), the service tax, the customs duty (a tax on imports) and the central sales tax on inter-state sale of goods. The main state level indirect tax is the post-manufacturing (that is wholesale and retail levels) sales tax (now largely a value added tax with intra-state tax credit). The complications and economic inefficiencies of this multiple cascading taxation across the economic value chain (necessitated by the constitutional assignment of taxing powers) are discussed later in the context of the proposed Goods and Services Tax (GST).
Evolution of Indian fiscal policy till 1991 India commenced on the path of planned development with the setting up of the Planning Commission in 1950. That was also the year when the country adopted a federal Constitution with strong unitary features giving the central government primacy in terms of planning for economic development (Singh and Srinivasan, 2004). The subsequent planning process laid emphasis on strengthening public sector enterprises as a means to achieve economic growth and industrial development. The resulting economic framework imposed administrative controls on various industries and a system of licensing and quotas for private industries. Consequently, the main role of fiscal policy was to transfer private savings to cater to the growing consumption and investment needs of the public sector. Other goals included the reduction of income and wealth inequalities through taxes and transfers, encouraging balanced regional development, fostering small scale industries and sometimes influencing the trends in economic activities towards desired goals (Rao and Rao, 2006).
In terms of tax policy, this meant that both direct and indirect taxes were focussed on extracting revenues from the private sector to fund the public sector and achieve redistributive goals. The combined centre and state tax revenue to GDP ratio increased from 6.3 percent in 1950-51 to 16.1 percent in 1987-88.4 For the central government this ratio was 4.1 percent of GDP in 1950-51 with the larger share coming from indirect taxes at 2.3 percent of GDP and direct taxes at 1.8 percent of GDP. Given their low direct tax levers, the states had 0.6 percent of GDP as direct taxes and 1.7 percent of GDP as indirect taxes in 1950-51 (Rao and Rao, 2006). The government authorised a comprehensive review of the tax system culminating in the Taxation Enquiry Commission Report of 1953. However, the government then invited the British economist Nicholas Kaldor to examine the possibility of reforming the tax system. Kaldor found the system inefficient and inequitable given the narrow tax base and inadequate reporting of property income and taxation. He also found the maximum marginal income tax rate at 92 percent to be too high and suggested it be reduced to 45 4 The Indian financial year commences on the 1st of April of a calendar year and ends on the 31st of March of the next calendar year. 9 percent. In view of his recommendations, the government revived capital gains taxation, brought in a gift tax, a wealth tax and an expenditure tax (which was not continued due to administrative complexities) (Herd and Leibfritz, 2008).
--Exerpt from Fiscal Policy in India: Trends and Trajectory by Supriyo De January, 2012
The simplest is the revenue deficit which is just the difference between revenue receipts and revenue expenditures.
Revenue Deficit = Revenue Expenditure – Revenue Receipts (that is Tax + Non-tax Revenue) A more comprehensive indicator of the government‟s deficit is the fiscal deficit. This is the sum of revenue and capital expenditure less all revenue and capital receipts other than 6 loans taken. This gives a more holistic view of the government‟s funding situation since it gives the difference between all receipts and expenditures other than loans taken to meet such expenditures.
Fiscal Deficit = Total Expenditure (that is Revenue Expenditure + Capital Expenditure) – (Revenue Receipts + Recoveries of Loans + Other Capital Receipts (that is all Revenue and Capital Receipts other than loans taken)) “The gross fiscal deficit (GFD) of government is the excess of its total expenditure, current and capital, including loans net of recovery, over revenue receipts (including external grants) and non-debt capital receipts.” The net fiscal deficit is the gross fiscal deficit reduced by net lending by government (Dasgupta and De, 2011). The gross primary deficit is the GFD less interest payments while the primary revenue deficit is the revenue deficit less interest payments. 3. India’s fiscal policy architecture
The Indian Constitution provides the overarching framework for the country‟s fiscal policy. India has a federal form of government with taxing powers and spending responsibilities being divided between the central and the state governments according to the Constitution. There is also a third tier of government at the local level. Since the taxing abilities of the states are not necessarily commensurate with their spending responsibilities, some of the centre‟s revenues need to be assigned to the state governments. To provide the basis for this assignment and give medium term guidance on fiscal matters, the Constitution provides for the formation of a Finance Commission (FC) every five years. Based on the report of the FC the central taxes are devolved to the state governments. The Constitution also provides that for every financial year, the government shall place before the legislature a statement of its proposed taxing and spending provisions for legislative debate and approval. This is referred to as the Budget.
The central and the state governments each have their own budgets. The central government is responsible for issues that usually concern the country as a whole like national defence, foreign policy, railways, national highways, shipping, airways, post and telegraphs, foreign trade and banking. The state governments are responsible for other items including, law and order, agriculture, fisheries, water supply and irrigation, and public health. Some items for which responsibility vests in both the Centre and the states include forests, economic and social planning, education, trade unions and industrial disputes, price control and electricity. There is now increasing devolution of some powers to local governments at the city, town and village levels. The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods. The state governments are vested with the power to tax agricultural income, land and buildings, sale of goods (other than inter-state), and excise on alcohol. 7 Besides the annual budgetary process, since 1950, India has followed a system of fiveyear plans for ensuring long-term economic objectives. This process is steered by the Planning Commission for which there is no specific provision in the Constitution. The main fiscal impact of the planning process is the division of expenditures into plan and non-plan components. The plan components relate to items dealing with long-term socioeconomic goals as determined by the ongoing plan process. They often relate to specific schemes and projects. Furthermore, they are usually routed through central ministries to state governments for achieving certain desired objectives. These funds are generally in addition to the assignment of central taxes as determined by the Finance Commissions. In some cases, the state governments also contribute their own funds to the schemes. Non-plan expenditures broadly relate to routine expenditures of the government for administration, salaries, and the like. While these institutional arrangements initially appeared adequate for driving the development agenda, the sharp deterioration of the fiscal situation in the 1980s resulted in the balance of payments crisis of 1991, which would be discussed later. Following economic liberalisation in 1991, when the fiscal deficit and debt situation again seemed to head towards unsustainable levels around 2000, a new fiscal discipline framework was instituted. At the central level this framework was initiated in 2003 when the Parliament passed the Fiscal Responsibility and Budget Management Act (FRBMA).
Taxes are the main source of government revenues. Direct taxes are so named since they are charged upon and collected directly from the person or organisation that ultimately pays the tax (in a legal sense).2 Taxes on personal and corporate incomes, personal wealth and professions are direct taxes. In India the main direct taxes at the central level are the personal and corporate income tax. Both are till date levied through the same piece of legislation, the Income Tax Act of 1961. Income taxes are levied on various head of income, namely, incomes from business and professions, salaries, house property, capital gains and other sources (like interest and dividends).3 Other direct taxes include the wealth tax and the securities transactions tax. Some other forms of direct taxation that existed in India from time to time but were removed as part of various reforms include the estate duty, gift tax, expenditure tax and fringe benefits tax. The estate duty was levied on the estate of a deceased person. The fringe benefits tax was charged on employers on the value of in-kind non-cash benefits or perquisites received by employees from their employers. Such perquisites are now largely taxed directly in the hands of employees and added to their personal income tax. Some states charge a tax on professions.
Most local governments also charge property owners a tax on land and buildings. 2 Economic theory indicates that the incidence of a tax depends on various factors. In the case of commodity taxes these include the respective elasticties of supply and demand. 3 A capital gain (or loss) arises when a person sells off a capital asset. The gain (or loss) is the difference between the price at which the asset was purchased and the price at which it is sold and represents an appreciation (or fall) in value. Often an adjustment to the basic value of the asset is made to include factors like cost inflation or economic depreciation due to wear and tear. 8 Indirect taxes are charged and collected from persons other than those who finally end up paying the tax (again in a legal sense). For instance, a tax on sale of goods is collected by the seller from the buyer. The legal responsibility of paying the tax to government lies with the seller, but the tax is paid by the buyer. The current central level indirect taxes are the central excise (a tax on manufactured goods), the service tax, the customs duty (a tax on imports) and the central sales tax on inter-state sale of goods. The main state level indirect tax is the post-manufacturing (that is wholesale and retail levels) sales tax (now largely a value added tax with intra-state tax credit). The complications and economic inefficiencies of this multiple cascading taxation across the economic value chain (necessitated by the constitutional assignment of taxing powers) are discussed later in the context of the proposed Goods and Services Tax (GST).
Evolution of Indian fiscal policy till 1991 India commenced on the path of planned development with the setting up of the Planning Commission in 1950. That was also the year when the country adopted a federal Constitution with strong unitary features giving the central government primacy in terms of planning for economic development (Singh and Srinivasan, 2004). The subsequent planning process laid emphasis on strengthening public sector enterprises as a means to achieve economic growth and industrial development. The resulting economic framework imposed administrative controls on various industries and a system of licensing and quotas for private industries. Consequently, the main role of fiscal policy was to transfer private savings to cater to the growing consumption and investment needs of the public sector. Other goals included the reduction of income and wealth inequalities through taxes and transfers, encouraging balanced regional development, fostering small scale industries and sometimes influencing the trends in economic activities towards desired goals (Rao and Rao, 2006).
In terms of tax policy, this meant that both direct and indirect taxes were focussed on extracting revenues from the private sector to fund the public sector and achieve redistributive goals. The combined centre and state tax revenue to GDP ratio increased from 6.3 percent in 1950-51 to 16.1 percent in 1987-88.4 For the central government this ratio was 4.1 percent of GDP in 1950-51 with the larger share coming from indirect taxes at 2.3 percent of GDP and direct taxes at 1.8 percent of GDP. Given their low direct tax levers, the states had 0.6 percent of GDP as direct taxes and 1.7 percent of GDP as indirect taxes in 1950-51 (Rao and Rao, 2006). The government authorised a comprehensive review of the tax system culminating in the Taxation Enquiry Commission Report of 1953. However, the government then invited the British economist Nicholas Kaldor to examine the possibility of reforming the tax system. Kaldor found the system inefficient and inequitable given the narrow tax base and inadequate reporting of property income and taxation. He also found the maximum marginal income tax rate at 92 percent to be too high and suggested it be reduced to 45 4 The Indian financial year commences on the 1st of April of a calendar year and ends on the 31st of March of the next calendar year. 9 percent. In view of his recommendations, the government revived capital gains taxation, brought in a gift tax, a wealth tax and an expenditure tax (which was not continued due to administrative complexities) (Herd and Leibfritz, 2008).
--Exerpt from Fiscal Policy in India: Trends and Trajectory by Supriyo De January, 2012
Sunday, February 22, 2015
Top 5 Budget Expectations ; e-Commerce & Other Businesses
1. Implementation of Goods & Services Tax and Tax Benefits
With states currently having different tax rates for different categories, it becomes difficult for e-commerce players to do business in India. It is not unheard of among e-commerce players, that they get Income Tax notices from state municipalities for non-compliance, especially for Cash on Delivery shipments. Hence, quick implementation of GST is a much needed improvement.
IT services companies like TCS and Infosys were able to generate huge employment at their time because of the tax holiday which they enjoyed. Now, it is e-commerce which will be the key employment generator for the next 10 years. Re-investment of profits into businesses will enable that and hence, this sector is one of the front runners in deserving a tax holiday.
2. Allowing Foreign Direct Investment in B2C
Small e-commerce players in B2C space face difficulty in raising funds at the initial stages as the depth of angel and VC investors is not like the foreign markets. The first institutional round generally comes from HNIs and there is no clarity on foreign HNIs investing in Indian startups. Getting risk capital from Indian banks is out of the question. For debt, startups have to wait for 3 years to be eligible in the current environment. Hence, many B2C e-commerce players face the challenge of scaling up with lack of intelligent capital backing them. The government can easily allow FDI with a maximum capital limit so that only early stage startups can benefit. Having more number of e-commerce players will lead to more choice for retail customers.
3. Investment in Infrastructural backbone
No courier company in India covers even 25% of the total pin codes in India. Coupled with the fact that there is an acute shortage of warehousing space, except in Tier 1 cities, it pushes up delivery costs of the packages shipped to customers drastically. Government needs to come out with a clear policy, coupled with a single window clearance, to create warehousing and logistical infrastructure. This will attract private players, both domestic and foreign, to invest in this sector, where investment is much needed.
In addition to this, faster implementation of broadband rollout and dedicated terminals for railways and air shipments, will also give a fillip to the e-commerce sector.
4. More investment required in skilling youth
Currently most of the e-commerce players, specially the smaller ones, train their workforce themselves as there is a shortage of skilled manpower. This leads to a gestation period before the new employees become productive. 'Skill India' should be implemented at a quick pace to ensure that this bottleneck is removed at the earliest. E-commerce players will be more than happy to partner with the government to train youth in the different skills required to work in this emerging industry.
5. Entrepreneurship support for Tech ecosystem
The government should encourage more tech startups to come into their own. Setting up a National Tech Entrepreneurship program and providing funds, incubation and mentorship to such startups, especially in colleges of India will ensure that innovation happens, here in India. Benefits of such a program for e-commerce players will be huge as they are always in need of new technology ideas to improve their systems and ensure better service, both to their vendors and customers.
Positive movement on the above five will provide a huge fillip to the sector and create growth opportunities for small and medium e-commerce players and greatly benefit consumers.
Economic Times, 18th February, 2015
(The author is the co-Founder of Shopatplaces, a private label e-retail venture, where he leads the Business Development and Finance divisions. He has worked with firms like JP Morgan and Casa Capital. He is an MBA graduate from FMS Delhi, and an Electronics engineer from Jamia, Delhi)
With states currently having different tax rates for different categories, it becomes difficult for e-commerce players to do business in India. It is not unheard of among e-commerce players, that they get Income Tax notices from state municipalities for non-compliance, especially for Cash on Delivery shipments. Hence, quick implementation of GST is a much needed improvement.
IT services companies like TCS and Infosys were able to generate huge employment at their time because of the tax holiday which they enjoyed. Now, it is e-commerce which will be the key employment generator for the next 10 years. Re-investment of profits into businesses will enable that and hence, this sector is one of the front runners in deserving a tax holiday.
2. Allowing Foreign Direct Investment in B2C
Small e-commerce players in B2C space face difficulty in raising funds at the initial stages as the depth of angel and VC investors is not like the foreign markets. The first institutional round generally comes from HNIs and there is no clarity on foreign HNIs investing in Indian startups. Getting risk capital from Indian banks is out of the question. For debt, startups have to wait for 3 years to be eligible in the current environment. Hence, many B2C e-commerce players face the challenge of scaling up with lack of intelligent capital backing them. The government can easily allow FDI with a maximum capital limit so that only early stage startups can benefit. Having more number of e-commerce players will lead to more choice for retail customers.
3. Investment in Infrastructural backbone
No courier company in India covers even 25% of the total pin codes in India. Coupled with the fact that there is an acute shortage of warehousing space, except in Tier 1 cities, it pushes up delivery costs of the packages shipped to customers drastically. Government needs to come out with a clear policy, coupled with a single window clearance, to create warehousing and logistical infrastructure. This will attract private players, both domestic and foreign, to invest in this sector, where investment is much needed.
In addition to this, faster implementation of broadband rollout and dedicated terminals for railways and air shipments, will also give a fillip to the e-commerce sector.
4. More investment required in skilling youth
Currently most of the e-commerce players, specially the smaller ones, train their workforce themselves as there is a shortage of skilled manpower. This leads to a gestation period before the new employees become productive. 'Skill India' should be implemented at a quick pace to ensure that this bottleneck is removed at the earliest. E-commerce players will be more than happy to partner with the government to train youth in the different skills required to work in this emerging industry.
5. Entrepreneurship support for Tech ecosystem
The government should encourage more tech startups to come into their own. Setting up a National Tech Entrepreneurship program and providing funds, incubation and mentorship to such startups, especially in colleges of India will ensure that innovation happens, here in India. Benefits of such a program for e-commerce players will be huge as they are always in need of new technology ideas to improve their systems and ensure better service, both to their vendors and customers.
Positive movement on the above five will provide a huge fillip to the sector and create growth opportunities for small and medium e-commerce players and greatly benefit consumers.
Economic Times, 18th February, 2015
(The author is the co-Founder of Shopatplaces, a private label e-retail venture, where he leads the Business Development and Finance divisions. He has worked with firms like JP Morgan and Casa Capital. He is an MBA graduate from FMS Delhi, and an Electronics engineer from Jamia, Delhi)
Is social responsibility of Capitalism a recent phenomenon?
Geoffrey Jones of HBS writes this really interesting paper.
He says corporate responsibility has been associated with capitalism for a long time. It isn’t a recent development. However, the reasons why certain companies engaged in csr were for different reasons:
- Four factors have driven beliefs that corporations have responsibilities beyond making money for their owners. These factors are spirituality; self-interest; fears of government intervention; and the belief that governments were incapable of addressing major social issues.
- Many of the most forceful exponents of responsibility had strong religious or spiritual values. They did not accept the arguments of Adam Smith, Ted Levitt, and Milton Friedman that they should set aside these values in the sphere of business, and simply take on trust that self-interest and profit maximization would automatically deliver public good.
- Self-interest also mattered. In the United States, where corporate philanthropy acquired a unique importance, rich business leaders can be regarded as making investments in shaping the future. Less grandiosely, corporate social responsibility and philanthropy could be interpreted as reflecting the desire of business leaders to secure legitimacy for themselves and their firms. In the United States in particular wanting to pre-empt government intervention was important also.
- While most research has focused on developed countries, historically the non-Western world has produced many pioneers of corporate responsibility. These include Shibusawa Eiichi in late nineteenth and early twentieth century Japan, Jamnalal Bajaj in interwar India, Ibrahim Abouleish in postwar Egypt, and multiple Latin American companies today.
- Historically and today, there has never been a consensus on what responsibility means, and although the language of corporate responsibility has now diffused globally, there remain wide variations in the relationship between rhetoric and practice. A key challenge now is disentangling the now near-universal rhetoric of corporate responsibility with what is actually happening.
Business history esp of the kind Prof Jones writes is really exciting. Though, one does not really agree with his interpretation of what Smith said on businesses. Econs have pointed that Smith was as much concerned about moral issues than just economics ones. I so wish if Prof. Friedman had clarified his statement that only purpose for business is to make profits. It has been widely misinterpreted and stretched. It has led people to defend anything under the sun and has led fancy things like CSR becoming a style statement..
The passage on India and particularly how Bajaj and Tatas has social responsibility so early on is an interesting read. Wish we had more business historians in India as well..
(Blog Entry Adopted from Mostly Economics)
Wednesday, February 11, 2015
Income Tax Rates in India
The following INCOME TAX RATES ARE applicable for the Financial Year ending March 31, 2015 (Financial
Year 2014-15)-Assessment Year 2015-16):
Every year the income tax rates are
changed and it is important to get the latest income tax rates. We give below
the Income Tax Rates and Slabs applicable for the FY 2014-15 or AY
2015-16.
|
Income Range
|
General (non-senior
citizens) Category
|
Women (Below 60 years of age)
(This category is abolished from this year and is thus is same as
that of General Category
|
Senior Citizens (Men and Women above 60 years of age), but below
80 years
|
Very Senior Citizens (Men and Women above 80 years of age)
|
|
Upto Rs.
2,50,000
|
Nil
|
Nil
|
Nil
|
Nil
|
|
Rs.
2,50,001 to Rs. 3,00,000
|
10% *
|
10% *
|
Nil
|
Nil
|
|
Rs.
3,00,001 to Rs. 5,00,000
|
10% *
|
10% *
|
10% *
|
Nil
|
|
Rs.
5,00,001 to Rs. 10,00,000
|
20%
|
20%
|
20%
|
20%
|
|
Above
Rs. 10,00,000
|
30% **
|
30% **
|
30% **
|
30%**
|
|
|
|
|
|
|
* A tax rebate of Rs 2,000 from tax
calculated will be available for people having an annual income upto Rs 5
lakh. However, this benefit of Rs2,000 tax credit will not be
available if you cross the income range of Rs 5 lakh. Thus we can say
that tax payable in 10% slab will be maximum Rs23,000 (taking into account Rs
2000 tax credit), but for people who fall in income range of Rs5 lakh and
above, the tax will be Rs25,000 + 20% tax on income above Rs 5 lakh;
The education cess to
continue at 3 percent.
The Corporate Tax Rate in India stands at 34 percent. Corporate Tax Rate in India averaged 33.61 percent from 2006 until 2014, reaching an all time high of 34 percent in 2014 and a record low of 32.44 percent in 2011. Corporate Tax Rate in India is reported by the Ministry of Finance, Government of India.
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|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
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In India,
the Corporate Income tax rate is a tax collected from companies. Its amount is
based on the net income companies obtain while exercising their business
activity, normally during one business year. The benchmark we use refers to the
highest rate for Corporate Income. Revenues from the Corporate Tax Rate are an
important source of income for the government of India. This page provides -
India Corporate Tax Rate - actual values, historical data, forecast, chart,
statistics, economic calendar and news. Content for - India Corporate Tax Rate
- was last refreshed on Thursday, February 12, 2015.
|
India
Taxes
|
Last
|
Previous
|
Highest
|
Lowest
|
Unit
|
||
|
34.00
|
33.99
|
38.95
|
32.44
|
percent
|
|||
|
33.99
|
33.99
|
33.99
|
30.00
|
percent
|
|||
|
12.36
|
12.36
|
12.50
|
12.36
|
percent
|
|||
|
24.00
|
24.00
|
24.00
|
24.00
|
percent
|
|||
|
12.00
|
12.00
|
12.00
|
12.00
|
percent
|
|||
|
12.00
|
12.00
|
12.00
|
12.00
|
percent
|
|||
|
|
|||||||
|
Corporate Tax
Rate
|
Reference
|
Previous
|
Highest
|
Lowest
|
Unit
|
|||
|
30.00
|
Jan/14
|
30.00
|
49.00
|
30.00
|
percent
|
|||
|
34.00
|
Jan/14
|
34.00
|
37.00
|
25.00
|
percent
|
|||
|
26.00
|
Jan/14
|
26.10
|
50.90
|
26.00
|
percent
|
|||
|
25.00
|
Jan/14
|
25.00
|
33.00
|
25.00
|
percent
|
|||
|
33.30
|
Jan/14
|
33.30
|
50.00
|
33.30
|
percent
|
|||
|
29.60
|
Jan/14
|
29.60
|
56.80
|
29.40
|
percent
|
|||
|
34.00
|
Jan/14
|
33.99
|
38.95
|
32.44
|
percent
|
|||
|
25.00
|
Jan/14
|
25.00
|
39.00
|
25.00
|
percent
|
|||
|
31.40
|
Jan/14
|
31.40
|
53.20
|
31.40
|
percent
|
|||
|
33.11
|
Apr/15
|
35.62
|
52.40
|
33.11
|
percent
|
|||
|
30.00
|
Jan/14
|
30.00
|
42.00
|
28.00
|
percent
|
|||
|
25.00
|
Jan/14
|
25.00
|
48.00
|
25.00
|
percent
|
|||
|
20.00
|
Jan/14
|
20.00
|
43.00
|
20.00
|
percent
|
|||
|
24.20
|
Jan/14
|
24.20
|
30.80
|
22.00
|
percent
|
|||
|
30.00
|
Jan/14
|
30.00
|
35.00
|
30.00
|
percent
|
|||
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