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RESEARCH REPORT
ON

³NEW INCOME TAX SLAB´


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Submitted To: - Submitted By:-
Mrs. Nisha Jindal Pankaj Bhardwaj
2009-2011
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The present work is an effort to throw some light on Ô!"c (c )c c c c( c c
(( c * The work would not have been possible to come to the present shape without
the able guidance, supervision and help to me by number of people.

With deep sense of gratitude, I acknowledge the encouragement and guidance received by my
institute guide 
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I convey my heartful affection to all those people who helped and supported me during the
course, for completion of my Project Report.

PANKAJ BHARDWAJ
PGDM-A (2009-11)
IInd Semesterc
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The topic of my study is:

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The objectives of my research are to determine the new income tax slab and how its affect the
common people, to identify , To identify why most of the common of people will not satisfied
this year income tax slab , to comparison this year income tax rate with the previous year budget
income tax rate.What are the changes in the income tax rate and during the inflation and
recession time how a common person suffer and mange his income by the new income tax rate.
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The population for the subject study is the Common people in the West Delhi. The sample size is
50Person, which isdrawn by using Non-probability sampling. The analysis is done by using
questionnaire, which is based on different depended, and independent variables.

I am using histogram and pie - charts to represents the actual analysis report by the
questionnaire.

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An  (c  ) is a tax levied on the income of individuals or business (corporations or other
legal entities). Various income tax systems exist, with varying degrees of tax incidence. Income
taxation can be progressive, proportional, or regressive. When the tax is levied on the income of
companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual
income taxes often tax the total income of the individual (with some deductions permitted),
while corporate income taxes often tax net income (the difference between gross receipts,
expenses, and additional write-offs). Various systems define income differently, and often allow
notional reductions of income (such as a reduction based on number of children supported).

The direct tax, which is paid by individual to the Central Government of India, is known as
Income Tax. It is imposed on our income and plays a vital role in the economic growth &
stability of our country. For years, the Government is generating revenue through this tax
system.

The word 'Tax' originated from the 'Taxation.' which mean 'Estimate.' Hence, 'Income Tax' mean
'Income Estimate,' which helps the government to know the actual economic strength of a
person. It is also a way to set up an economic standard for general people. It helps the
Government to know the distribution of money among country's people.

Income Tax has been in force in different forms since years. If we go through the history of
India, we get relevant information regarding the taxation system of India. In ancient history, it is
mentioned that at about such system which were imposed on the income, expenditure and other
subject. Even information of such is given Manu Smriti and Arthasatra, which confirms its
existence.
In modern India, Income Tax came into existence in 1860 with the implementation of first
Income Tax Act. After implementation of this Act, people became aware of the actual meaning
of Income Tax. This act was in force for first five years. After this, in 1865, second Act came
into force. There were major changes in this Act relative to the first. It proved itself as a good
factor for the growth of our economy. With this Act a new concept of Agriculture Income came
intoexistence.

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After this, different new Act was also implemented. The most important of them is the Income
Tax Act, 1961. According to ruling of Income Tax Act, 1961, any person whose salary from any
source of income is more than the maximum limit of unchangeable amount will be liable to pay
Income Tax. There is also a provision of deduction and exemptions in Income Tax, depending
upon the type of assesse, source of income, residential status and investment in saving schemes.
Income tax rates are a matter of change, which is declared by Ministry of Finance, Government
of India regularly, usually on annual basis.

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Under chapter 4 of Income Tax Act, 1961 (Section 14), income of a person is calculated under
various defined heads of income. The total income is first assessed under heads of income and
then it is charged for Income Tax as under rules of Income Tax Act. According to Section 14 of
Income Tax Act, 1961 there are following heads of income under which total income of a person
is calculated:

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What is Salary?
Income under heads of salary is defined as remuneration received by an individual for services
rendered by him to undertake a contract whether it is expressed or implied. According to Income
Tax Act there are following conditions where all such remuneration are chargeable to income
tax:
âc When due from the former employer or present employer in the previous year, whether
paid or not.
âc When paid or allowed in the previous year, by or on behalf of a former employer or
present employer, though not due or before it becomes due.
âc When arrears of salary is paid in the previous year by or on behalf of a former employer
or present employer, if not charged to tax in the period to which it relates.

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Under section 17 of the Income Tax Act, 1961 there are following incomes, which come under
head of salary:

1.c Salary (including advance salary)


2.c Wages
3.c Fees
4.c Commissions
5.c Pensions
6.c Annuity
7.c Perquisite
8.c Gratuity
9.c Annual Bonus
10.cIncome From Provident Fund
11.cLeave Encashment
12.cAllowance
13.cAwards

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What is Heads of House Property


According to Chapter 4, Section 22 - 27 of Income Tax Act, 1961 there is a provision of income
under head of house property. In every section from 22-27 there are detail specification of house
property income. It is defined as income earned by a person through his house or land.

What Income Comes Under Head of House Property:


Annual value of building or land owned by assessee. There is a charge on the potential of
property to generate incomes not on the rent received. But if property is used for making profit in
business then it will be taxable not under this head but will be taxable under head of profit in
business/ profession.

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According to Income Tax Act, 1961 income under this head is defined as the income earned by
assessee as a profit or gain in his business or profession. Income under this head must follow
these conditions:

uc There must be a business/ profession


uc Business/ profession is being carried by assessee
uc Business/ profession have been carried out by assessee in assessment year for which
income tax is filling

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uc Profits and gains assessee from any business or profession during assessment year
uc Any payment or compensation due or received by a person for his services to
organization as a part of his business
uc Making profit in trade Income of professional or organization against services provided
by that professional/ organization
uc Profits on sale of a license granted under the Imports (Control) Order, 1955, (EXIM
control Act, 1947)
uc Cash received or due by any person against exports under government schemes
uc Any benefit whether it is not in cash coming from business/ profession
uc Any profit, salary, bonus or commission received by company partners

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What is Capital Gain:


According to Income Tax Act,1961 heads of capital gain is defined as gains derived on transfer
of capital asset. Capital Gain is the profit or gain of an assessee coming from the transfer of a
capital asset effected during the previous year or assessment year. "Capital Asset" and transfer
are predefined in income tax act.

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What is Capital Asset:


Under section 2(14) of the Income Tax Act,1961 Capital Assets is defined as property of any
kind held by assesse including property held for his business or profession. It includes all type
real property as well as all rights in property. It is also defined as gains on transfer of assets in
which there in no cost of acquisition like:

uc Goodwill of business generated by assessee


uc Tenacy rights
uc Stage carriage permits
uc Loom hours
uc Right to manufacture
uc Processing & production of any article or things

Assets Which Don't Come Under Heads of Capital Assets


According to Income Tax Act,1961 there are few assets which don't form a part of Capital
Assets, which are as follows:

uc Stock of goods and raw materials used by assessee for his business or profession
uc Those property which are movable like wearing apparel, furniture, automobile, phone,
household goods etc. Held by assessee. But Jewelry which is also an movable assets
comes under heads of Capital Assets
uc Agricultural property in India.But agriculture land coming under municipal limits (in area
having population more than 10,000) comes under Capital Assets. Agriculture lands
within 8KM from municipal limit also comes Capital Assets if it is notified by the central
government of India
uc Few Gold Bonds issued by government
uc Few special bonds issued by central government like Special Bearer Bonds, 1991

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aransfer of Capital Assets


Under Section 2(47) of The Income Tax Act,1961 transfer of capital assets is defined as:
âc Sale, exchange and relinquishment of assets
âc Extinguishment of any rights in capital assets
âc Acquisition of capital assets or rights
âc Conversion of capital asset by its owner as stock in trade of his business, it may be also a
term transfer
âc Transfer of immovable property under Section 53A of Transfer of Property Act, 1882
âc Any transaction by which an assessee become enable to act as a member of cooperative
society
âc Any transaction by which an assessee acquire shares in cooperative society

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Every type of income comes under a specified heads. But there are few incomes, which don't
come under any of following heads:c

âc Salary c
âc House Property c
âc Profit In Business/ Profession c
âc Capital Gains c

So under Section 56(2) of Income Tax Act,1962 all such income comes in this heads of income.
There are following incomes which are taxed under this heads
âc Income coming as a dividend paid by a company to an assessee
âc Income coming from winning in lottery, crossword puzzles, races, card games, gambling
or other such sports
âc Income coming as an amount received by assessee from his employer as a fund for
welfare of employee
âc Income as an interest on securities
âc Income coming by letting on hire machinery, plant, furniture, building or other goods
Income coming from insurance policy

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"Income Tax Return" is a term which is oftenly used when we talk about income tax. It is a way
by which we pay this tax. When total annual income of a person, including all sources, is more
than maximum unchargeable limitation (At present it is Rs. 1, 00,000/-) then that person is liable
to pay income tax.

Under section 139(1) of the Income Tax Act, there are additional six conditions, which forces a
person to file his income tax return. These conditions are:-

1.c Owner of a Motor vehicle


2.c Owner of immovable property
3.c Person who does foreign-travel
4.c Subscribers of a telephone
5.c Holder of a credit card
6.c Incurs expenses on himself

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Taxable Annual Income Slab (In Rs.) Tax Rate (In %)

0 - 1,60,000 Nil

1,60,001 - 5,00,000 10%

5,00,001 - 8,00,000 20%

More than 8,00,000 30%

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Taxable Annual Income Slab (In Rs.) Tax Rate (In %)

0 - 1,90,000 Nil

1,90,001 - 5,00,000 10%

5,00,001 - 8,00,000 20%

More than 8,00,000 30%


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Taxable Annual Income Slab (In Rs.) Tax Rate (In %)

0 - 2,40,000 Nil

2,40,001 - 5,00,000 10%

5,00,001 ± 8,00,000 20%

More than 8,00,000 30%

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uc From now, onwards there will be only 2 pages in the IT filing form for individuals.
uc More cases can now be appealed against.
uc Rs. 20,000 tax exemption will be provided for investments in certain investment bonds.
This is in addition to the already allowed exemption (Rs.1,00,000) in certain saving
instruments.

uc Tax Exemptionwill be given for contribution to the Central Government Health Scheme
(CGHS).
uc New fields have been added to the e-TDS/TCS form. These new fields are Ministry
name; PAO / DDO code; PAO / DDO registration no.; State name; and Name of the
utility used for return preparation.


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Income Tax Rates/Slab for Assessment Year 2010-11 (F Y 2009-10) Rates (%)

Up to 1,60,000 NIL
Up to 1,90,000 (for women)
Up to 2,40,000 (for resident individual of 65 years or above)
1,60,001 ± 3,00,000 10%

3,00,001 ± 5,00,000 20%

5,00,001 upwards 30%

*A surcharge of 10 per cent of the total tax liability


is applicable where the total income exceeds Rs 1,000,000.
ote : -
uc Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is
any.
uc A marginal relief may be provided to ensure that the additional IT payable, including
surcharge, on excess of income over Rs 1,000,000 is limited to an amount by which the
income is more than this mentioned amount.
uc Agricultural income is exempt from income-tax.

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âc To highlights and understand the new income tax slab (2010-2011)


âc To comparison the current income tax slab with the previous year income tax slab.
âc To study the impact on the common people.

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âc Research design is the basic plan, which guides the researchers in the collection and
analysis of data required for practicing the research product. In fact the research design is
the conceptual structure with which research is conducted. It consist the blue print for the
collection, measurement and analysis of the data that was followed completing the study
to ensure that study is relevant to the problem and will follow the predetermined and set
data.
âc The main data feature of ³Research Design´ is that it specifies population to be studied.
The main them of the chapter is to know the source of the data the researcher has
collected. Data are raw facts of observation, typically about physical phenomenon. Thus
data are usually subjected to value added process where
1. It from is aggregated, manipulated and organized
2. Its contents are analyzed and evaluated
3. It is placed in a proper context for human user

Therefore, information is processed data placed in a context gives value for the reader. It is a
basis for analyzing and interpreting, which helps in making note of findings, conclusions and
also helps to give suggestions so data should accurate, correct and clear. If it is inaccurate and
not in proper order the whole output gets affected and it may lead to confusion.

 
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The research design selected for this research is descriptive research design

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Collection of the data for the study can be drawn from following methods for study.

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After determining the objectives of study and research design, the next important step is
data is step collection method. The information has to be collected from the retailers. During the
process of the study the data is collected from the target segment that is customers, dealers and
distributors with help of a structured well designed questionnaire.
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uc Primary data:- Questionnaire and Interview
uc Secondary data :- Websites, magazines, and journal

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âc Sample size ± 50 Person from different income level.
âc Sampling method: - Non Probability Sampling

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âc The People did not have enough time to spare for the survey.c
âc Feedback from the respondents may be biased.c
âc Cost constraint: Survey is little costly.
âc Sample Size: the intended sample size is only 50, which may not give a true picture.
âc The selected respondents are from DELHI and NCR.
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Q1. Have you know the New Income tax Slab?

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Inference:-
The above diagram represent, the 47 people aware the new income tax rates and 3 person not
much of knowledge the exact rates of income tax rates.

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Q2. In Which Sector are you working?

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Inference

The above Pie Chart represents the various people employee and work in different sector. In
Private, sector 32 people, Public sector 13 and business 5 people.

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Q3. What is your income or salary?









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Inference

Above Histogram represents the various annual salaries of respondent¶s people. Most of the lies
in the 160000-300000 where government charges 10% as an income tax. These persons not
satisfied with the current income tax rate because he paid same amount of tax as he paid last
year. Financial minister said that, this budget is for ³ ( (* but he don't know mostly
common man annual salaries is between 1.6 lacs to 3 lacs. How he can say its ³ ( (c
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Q4. . What do you think the new income tax slab is beneficial for all?

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Inference

The above histogram represents, the most of the respondents are not satisfied with the new
income tax rate.

Reason for dissatisfaction

uc Same income rates , no changes


uc No savings
uc No profitability
uc More focus on upper class people

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Q5. How much do you save because of new Income tax Slab?

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Inference

The above histogram represents, the saving of the person going to reduce day by day. Most of
the respondents annual saving areless than 10000 because of inflation. Cost of goods and service
increase day by day.

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Q6. According to you what should be the income tax rate for each income group level?

Income level Tax Rate


Below 1.6, 1.9 & 2.4 lakh NIL
1.6, 1.9 & 2.4 lakh to 3 lakh 5% to 8%
3 lakh to 5 lakh 10%
5 lakh to 8 lakh 15%
Above 8 lakh 25%

Inference,

The income level of 1.6, 1.9 & 2.4 lakh to 3 lakh, 64% person wants to change the tax rate. In
addition, other does not want to change the income tax rate because who belongs to income level
between 3 lakh to 5 lakh their income tax rate reduced 20% to 10%.

According to common person, during the recession and inflation every person saving power goes
down. The above table is the accurate income tax rate as per the views of the common people.c

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uc According to questionnaire, there is very less done for a middle class salaried
male/female. With the recession still not recovered completely the jolt of taxes are still a
burden for less salaried employees. Mr. Pranab Mukherjee has not given a thought to
middle class individuals, which will end up paying the tds more than the previous year.
Hiking the petrol/diesel prices automatically effects on commodities too since everything
is interdependent on transport.

uc By not raising, the threshold limit of Rs1.60 lakh FM has proved that he cares only for
rich people. He has given tremendous benefit to people whose taxable income is more
than Rs3lakh.

uc Most of the people whose income is more than 3 lacs he or she pays only 10% tax instead
of 20% income tax.

uc Savings of the Common people Decrease due to recession, inflation, and now new
income tax rates.

uc As a result, this Budget for Rich people not for ³c c,. c%c
%%!c % '* cThis Budget is a good Example which Showing that Rich
People become more Rich and poor People become More Poor.

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According to my opinion, Common people are fighting the recession and inflation. Now there is
another enemy force come in the life of common people through the budget announced by the
finance minister. The new income tax rates are not upto the mark as a common person viewpoint.
According to my viewpoint, the finance minister should be considered the following points while
prepare the budget and new income tax rates.
uc The finance minister should be care of both the people rich as well as common people.
uc The Government wants Increase the Tax burden on common people so it should reduce
the prices on consumable products, which is daily need of common people.
uc The new income tax rate should be described as follows:-

Income Tax Rates Rates (%)

Up to 1,60,000 NIL
Up to 1,90,000 (for women)
Up to 2,40,000 (for resident individual of 65 years or above)
1,60,001 ± 3,00,000 5%

3,00,001 ± 5,00,000 10%

5,00,001 ± 8,00,000 15%

Upwards 8,00,000 25%

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uc These are the suggestion in my point of viewc

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AGE: -«««««««««««««««««««««««««««««««««««..

OCCUPATION:- ««««««««««««««««««««««««««««««...

Q1. Have you know the Income tax slab?

Yes No

Q2. In Which Sector are you working?

Private Public Business

Q3. What is your income or salary?

160001 ± 300000 300001 ± 500000 500000 - 800000 Above 800000

Q4How much do you save because of new Income tax Slab?

Less than 1000010000-30000 30001 or more

Q5. What do you think the new income tax slab is beneficial for all?

Yes No

Give reason if yes or no «««««««««««««««««««««««««««

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«««««««««««««««««««««««««««««««««««««.

«««««««««««««««««««««««««««««««««««««..

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Q6 According to you what should be the income tax rate for each income level of group?

Income level Tax Rate


Below 1.6, 1.9 & 2.4 lakh
Above 1.6, 1.9 & 2.4 lakh to 3 lakh
3 lakh to 5 lakh
5 lakh to 8 lakh

THANKING YOU FOR YOUR INFORMATION

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