Tax Finance Wisdom

Tax payment has confused all people. There are a lot of people who don’t want to hear the word “tax” again. The payment of tax is just lot of worries for them. You may be one of them. If you are thinking to legally pay less tax to the government, there are many ways for you which can help you. If you follow them, you can save almost half of your taxes which you pay to the government. The three ways are described here which will help you in order to save tax. The ways are recommended by many tax professional tax preparers and tax managers. So read on for the extremely working tricks for saving your tax. Show less income: Tax is deducted based on your income. If your income is low, you have to pay less tax. If you show more income, you need to pay more tax. What you can do here is to showing less income and more loss. Low income will result in a less deduction of tax from your budget. Reducing your income will be effective on reducing the amount of tax to be paid. The amount of tax that you pay is dependent on the amount of your income. The reduce in income can be a large tax benefit for the small business owners. Stock more items after the end of this year and you’ll be free of tax of that stock. Advance tax payment There is an opportunity for you to save tax in advance. To get this opportunity, you have to pay your tax advance to the government. If you pay taxes in advance, the deduction of the amount of taxes can be increased. The payment of taxes in advance can save a good amount of tax. Some of the taxes that can be paid in advance are the real estate taxes and other fix investment taxes. The government has several tax saving schemes for the advance tax payers. You can get benefit in tax payment if you pay tax in advance. There are many individuals who pay taxes to the government in advance and get reduced tax payments. Get tax credits from the government Government values the advance and regular tax payers. It also offers various schemes that can be helpful for the tax payers to reduce their amount of tax. The schemes can also be useful if you are planning to pay your tax in advance. Hire a professional for your tax preparation: Well if you can’t complete your tax payment process, its better for you to hire a professional who prepare your tax documents better. Of cource, it will cost you but you can use the experience of the tax preparer for your tax payments. You can see a great reduce in the amount of tax to be paid when you receive a tax preparation service. A tax preparer will be a bridge between you and the government. He will solve all of your tax problems.

Since our household has forsaken certain tax – deductions , we are looking to gain some ground against the tax -man in a different way. We are developing a hobby into a home based business. My husband has discovered that woodworking brings …

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1. INTRODUCTION:

 

1.1           VAT Council of States, the body of State Finance Ministers and Standing Council of Commissioners have agreed that the VAT should be implemented all over India from 1-4-2001. However, subsequently, after taking into consideration the fact that the groundwork is still in progress, the date has been extended to 1-4-2002. One thing is certain that the word ‘VAT’ [Value Added Tax] is a symbol of Globalisation and Liberalisation, which is a universal phenomenon for the current age is bond to be implemented in India.

 

2.SUCCESSFUL TAX SYSTEM:

 

2.1           Among many other things, the successful tax system always tries to avoid cascading effect of the tax. The VAT, being Value Added Tax, it presupposes that, if the tax is levied on sale value, all the taxes paid while making purchases as well as all the taxes paid during the process of manufacture or import are to be refunded. The CREDIT method or INVOICE method of VAT system ensures that the taxes shown in the purchase bills are given the credit to the dealers. The uncontrolled incidence of tax always shrinks the industry and trade and keeps away from the developing process of the national economy. The tax system has to be neutral so far as its effect on the choice of inputs and outputs for the manufacturer and choice of the goods for a consumer is concerned.

 

2.2           At the same time multiplicity of the rates has to be removed in a model system of taxation. That’s why the Finance Ministers Committee has agreed to keep the number of rates to four. Widespread taxation encourages the vertical integration of industries and thus discourages small-scale ancillary industries. Heterogeneity in the structure of tax, that is having different taxes like Sales Tax, Turnover Tax, Surcharge, Additional Tax, makes the system so much complicated that either there is tendency towards evasion or it makes a way for clashes between the administration and the assesses.

 

3         STEPS TOWARDS VAT:

 

3.1             As pointed above VAT Council of States, and Standing Council of Commissioners have agreed that the VAT should be implemented from 1-4-2002. It was also agreed that there should be floor rates common to all the States. Though Maharastra State had introduced the floor rates from 1-1-2000.

 

But due to the pressure from people they were corrected on 13-1-2000 and 22-1-2000. However some fine-tuning of the classification has yet to be done giving another look at the grouping of the goods in to four-rate categories and floor-rates.

 

3.2             Abolition of the tax-related incentives scheme is another step in the direction of bringing VAT in to operation. In fact the States have taken this opportunity to stop the incentives to be given in the name of Backward Area. This will not only raise the revenue of the States but will also put end to the war among the States in the form of harmful competition of reducing tax rates to give tax incentives.

 

3.3             Draft model of VAT legislation has been prepared by the National Institute of Public Finance and Policy. The circulation of papers on VAT will certainly be creating the atmosphere towards readiness to accept VAT.

 

4. EXPERIENCE OF VAT IN MAHARASTRA:

 

4.1                      During the period from 1-10-1995 to 31-3-1999 Maharastra had VAT in a limited sense. Initially the limit covering the dealers under VAT was Rs. one crore but was brought down on 1-7-1997 to Rs. 40 lacs. Though the additional tax and Turnover Tax was abolished, the rates were over all increased to cover those taxes [most of the goods taxable at 10% were taxed at 13%]. Some 12 industries and 100% export units were allowed the full set-off of the sale tax paid on inputs.

 

4.2                      It is said that the VAT was abolished from 1-4-1999 due to fall in the Sales Tax revenue. But the Economists do not agree to such reasoning. Since there was a general recession in the industry during 1996 to 1999, the govt could not have expected the increase in the tax revenue on implementation of VAT. In fact the fall in the tax revenue augmented by the set-off policy of giving refund to manufacturers manufacturing tax-free goods, 100% exporting Units, 12 preferred industries and reduction in the burden of taxes on inputs from 4% to 3% to all manufacturers. The decision to abolish Vat in Maharastra was thus a non-economic one, tinted with political surroundings.

 

5. CENTRAL SALES TAX:

 

5.1                       Central Sales Tax was introduced in India in 1957. Every one knows the chaos created by the different basis for levy of tax on interstate sales, like situs of sale, manufacture or consumption criteria etc. With a view to provide the levy and collection of taxes on interstate sales and to put restrictions on the goods declared as of special importance the Central Sales Tax was brought in. But the main and indirect object of the Central Sales Tax Act was to keep watch on the movement of goods sold in interstate sales and thereby regulate and monitor the interstate trade so as to avoid the evasion of taxes. That is why the rate of tax was only 1% in case of transactions between the registered dealers.

 

6. HAS CENTRAL SALES TAX OUTLIVED ITS UTILITY?:

 

6.1           The rate of Central Sales Tax is now increased to 4%. Thus instead of regulatory object of the Central Sales Tax Act, it has turned in to revenue earning tax. Because of higher rate of tax there is more evasion. The availability of bogus ‘C’ forms and misuse of ‘F’ forms by taking shelter of branch transfers or consignment sales, is the direct result of the higher rate of Central Sales Tax. The higher rate has also affected the national economy, as the goods produced in Indian state are costlier than the goods imported from foreign countries.

 

6.2           The levy of Central Sales Tax on the inputs has tendency to increase the cost of production. This also has a cascading effect because the finished goods of one state may be the raw materials for goods being manufactured in other state. Thus the final product has heavy tax burden because no state is willing to refund the tax burden levied by other state. This also results in unbalanced growth of industries without having any relation to the best-suited environment for the production of goods.

 

6.3           The incidence of Central Sales Tax is discriminating against the consuming states. The consumers of industrial backward states have to pay the Central Sales Tax on the goods purchased from other states. This tax is collected in the coffers of the developed states. Within the semi-federal feature of the Indian Constitution, it is socially unjustified to burden the poor people of the backward state with the tax going to the industrially developed state.

 

6.4           Obtaining ‘C’ or ‘D’ forms from any Sales Tax office is very difficult processes. In fact obtaing the ‘C’ form is itself a topic for separate and independent article. Misuse of ‘C’ forms has another story towards evasion of tax. Instead of smoothening the interstate trade, the ‘C’ form hampers the free flow of trade from one state to another.

 

6.5           The advantage of the situation like one that is available to the European Common Market is denied to Indian states because of Central Sales Tax. The Central Sales Tax does not allow the states to unite to form the common market that is essential in the wake of Globalisation and Liberalisation.

 

6.6           The export trade of India is also affected by the levy of Central Sales Tax. The export is exempted from tax but the i
nputs required for the goods to be exported is not exempted. The penultimate sale of the goods to be exported is exempt, but the raw materials used for manufacture of the goods to be exported are not exempted. This results in increasing the cost of production which directly affects the export trade.

 

6.7           The penultimate sale in the course of export is exempt under Central Sales Tax Act. But to claim such exemption form ‘H’ has to be produced. It is very difficult for the dealers selling the goods to exporters to obtain ‘H’ form.

 

Ordinarily the exporters do not have a confirmed order in hand unless the samples as drawn from the bulk are and shown to the foreign buyers. More over the exporters are reluctant to give ‘H’ form as the details about the foreign importer, mode of dispatch and destination are to be mentioned in ‘H’ form.

 

7  VAT AND CENTRAL SALES TAX:

 

7.1           As discussed in para 6 above the Central Sales Tax needs to be abolished. If it cannot be abolished before 1-4-2002, that is before coming in to force the VAT, the provision to grant refund of the Central Sales Tax paid on the inputs must be made in the VAT. In Canada, the country on whose pattern the ensuing VAT is said to be drafted, there is no tax on the sales made in the course of interstate trade and commerce. Inter state sales are exempt from taxes. It will be also in consonance with the basic idea of VAT that it is a tax on the ‘value added’ and once the tax is levied on the higher value of the sale point, the credit for the all kinds of taxes paid on the purchases should be refunded.

 

8. SERVICE TAX:

 

8.1         For the first time in the year 1994 the Service Tax was introduced in India as an associate of Central Excise Act. The telephone service, non-life insurance and Stock Brokers were the first to be brought under the purview of the Service Tax. Since then the net of Service Tax is being widened and today about 41 services are on the list of taxable services. The rate of tax is uniform at 5% of the receipts for the value of taxable service provided by the service provider. The separate registration by the service provider is necessary, which is given by the Central Excise authorities. The Service Tax can be colleted from the clients and has to be paid quarterly to the govt. Failure to follow the procedure and late payment of taxes attract interest, penalty and punishment.

 

8.2         The trader or the manufacturer, who will be paying VAT, will ordinarily be paying the Service Tax on the expenses for following services that are directly utilized by him in the process of value addition.

 

i]   Telephone and Telegraph Charges, Fax charges, Property,Insurance, Courier charges;

 

ii]  Advertising expenses, Photography and Video shooting charges;

 

iii] Charges of Consulting Engineer, Architect, Interior decorator, Security agency;

 

iv]  Charges of Management Consultant, Chartered Accountant, Cost Accountant, Company Secretary,  Market Research Agency, Scientific or Technical  Consultant, Banking and Financial Institution charges, On-line Information Service charges;

 

v]   Custom House Agency charges, Shipping Line and Container charges, C & F Agency commission paid, Air Travel Agency charges, Automobile Service charges.

 

8.3         When all such charges going into the manufacturing or trading expenses bear the Service Tax burden of 5%, levy of VAT on the sale price comprising the said charges will have a cascading effect on the price structure of the commodities. Therefore in a perfect VAT system there is no place for the Service Tax. It has to vacate the place for VAT. If that is not possible, in the larger interest of economic growth, the refund of the Service Tax paid on all kinds of inputs must be given credit in full.

 

8.4         In Canada there is GST, which means Goods and Service Tax. It is about 7% and is collected by the Federal or Central Govt. States used to levy RST or VAT at 8%. Now there is only one tax system known as HST [Harmonised Sales Tax]. It is levied at 15%. It is comprehensive tax covering as much as possible at the bases. The tax on services is also included in HST.

 

9    CENTRAL EXCISE DUTY:

 

9.1         The levy of excise duty is undoubtedly claiming the substantial share in value addition process. The present scheme of Modvat is only restricted to the credit and refund of the excise duty paid on the raw material used in manufacture or process resulting in new commodities.

 

9.2         When VAT comes into existence, the levy of tax being on the sale price that is on the increased value, to avoid the ill effects of multi-taxation it is essential that the Central Excise Duty paid on the inputs is given credit or is refunded when the VAT is paid on the output.

 

10  CONCLUSION:

 

Since VAT will be comprehensive tax levied on the sale price, to avoid its ill effects on the growth of the economy, the abolition of Central Sales Tax and Service Tax must be given a serious thought. If its abolition is not possible then, to be in conformity with the optimal tax theory, it is very essential that all kinds of taxes paid on the inputs must be given credit or be refunded. In this article, the taxes levied by the Central Acts are only considered. What is true of Taxes under Central Acts is also true of the other taxes levied by the States, like Works Contract Tax, Lease Tax, Luxury Tax, Motor Sprit Tax etc. But that will be another story.

Nearly half the members of a powerful House subcommittee in control of Pentagon spending are under scrutiny by ethics investigators in Congress, who have trained their lens on the relationships between seven panel members and an … Hey congress, get it from the banking industry or Wall Street through heavy taxation on bonuses.

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He proposes a full-blown consumption tax , all right, but then makes it voluntary. This is similar to what GOP presidential hopeful Fred Thompson talked about in the 2007-2008 primaries.

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If you are feeling the stress of the upcoming April 15 income tax deadline, you have another option – you can file a tax extension and delay your income tax deadline to October 15.

The IRS is willing to grant you the six month income tax extension without you having to come up with an excuse to extend. In fact, the IRS doesn’t even ask why you need to extend. As long as you properly submit your extension request by providing accurate information, the IRS will grant you the six month extension automatically.

The fastest way to file an extension is to file it online through a website run by an approved IRS e-file provider like FileLater.com. FileLater.com makes the process easy. You’ll be asked for your contact information and then taken through a few simple questions to determine if you want to make a tax payment along with your extension. The whole process takes less than 10 minutes. A day later you’ll have an email back with the status of your extension. It’s that simple.

Another benefit to using FileLater.com is that they will help you ensure the information you submit is accurate, and they’ll help you submit multiple times (for no additional fee) if you for some reason get a rejection from the IRS.

FileLater.com will also provide you with an online calculator to help you determine if you should make a payment with your tax extension. If you decide to make a payment, you’ll be able to either mail a check directly to the IRS or pay via direct debit from your bank to the IRS as part of your tax extension e-file.

It is important to note that filing a tax extension does not grant you extra time to pay the IRS if you expect to owe the IRS additional tax dollars beyond any current W2 withholdings or estimated tax payments you’ve already made for the 2007 tax year. If you owe the IRS when you file your return and don’t pay when you file your extension, you may be subject to penalties and interest payments.

So, do yourself or your tax preparer a favor and file a tax extension. The deadline to file your income tax extension with the IRS is midnight on April 15. If you are for some reason rejected, you’ll have until April 20 to correct any errors and complete your extension.

IRS tax debt

If you happened to be one of the unfortunate individuals to owe tax debt from your past years, or you have paid your taxes for the current year, and still expect to owe further taxes to the IRS in the form of IRS debt, it’s possible for you to find a solution to redeem your taxes. The actual solution lies in not ignoring to pay your debt. Even though the IRS can collect the taxes up to ten years, it possesses many other powerful options to recover, and chances are it will. If you have outstanding IRS tax debt, the best possible solution is to utilize your savings, or alternatively borrow some funds to clear the debt. By paying your entire outstanding dues, it’s possible to save upon the penalties and fines, which are likely to be levied in case you decide to avail more time and clear your taxes over a period of time. If one borrows against some asset value such as your home, it’s quite possible the interest incurred might be tax deductible. It’s also possible to avail tax relief if you can represent your case properly to the IRS.

Tax attorney services

Since last few years, tax attorneys, and the services offered by them have been in high demand, especially since the tax season is approaching soon. Many taxpayers are likely to need tax help. While selecting your representative to deal with your IRS issues and concerns, it is quite important to retain somebody who can represent you to the best of his or her abilities, and not have conflicts while representing your case to the IRS. Even though the tax attorneys can be quite knowledgeable, properly trained, and have the ability to handle your issues, it is found that they can lack in aggressiveness when it comes to representing you to the IRS. The thing is most agencies like to maintain good terms with the tax authorities, since their entire business is dependent upon special tax clients, helping out tax debtors in availing IRS debt help, and good market reputation. It’s sad that IRS often takes advantage of some timid and docile tax attorneys because it knows that firm prefer to keep a positive image, and IRS can well damage the reputation through propaganda.

It’s generally believed that it’s expensive to retain a good tax attorney to avail IRS debt relief. At a first glance, the client might feel that the tax laws are simple to understand and straight forward. So they often feel they can communicate directly with the IRS and avail an acceptable situation. This could turn out to be a mistake, since IRS rules can be interpreted in many different ways, and IRS is an expert in that. So it’s recommended not to take any chances, and have an effective arbitration by employing the services of an experienced tax attorney to get effective tax debt settlement.

Citizens for Responsibility and Ethics in Washington (”CREW”), Melanie. Sloan and Anne Weismann bring this complaint before the Federal Election Commission. (”FEC”) seeking an immediate investigation and enforcement action against Edward St

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Welcome to yet another tax season.

With a matter of days remaining until the April 15 IRS income tax deadline, the stress level of Americans is on the rise. Prepare yourself for more angry drivers on the freeways, impatient customers in the lines of local coffee shops and grocery stores, and friends who don’t quite treat you like the friends they were only weeks ago.

Looking for a way to cut down on the April tax time blues? There’s a little known secret called an IRS tax extension (the technical term is an IRS Form 4868 – Application for Automatic Extension of Time To File U.S. Individual Income Tax Return), and a company called FileLater who can help. Of 130M United States federal income tax filers, about 10M filed for automated extensions last year, so you won’t be alone. And the IRS doesn’t ask (or care) why you file for an extension.

Almost every tax-paying American is automatically eligible to file an IRS tax extension, and it can be easy to do. In about 5 minutes, you can go to File Later’s website, answer a handful of relatively simple questions, and have your tax extension e-filed to the IRS for you. In a couple of days, you’ll get an email with IRS confirmation that your new tax deadline is October 15.

To file a tax extension online you’ll need to provide some basic personal information, and an estimate of your tax liability. Don’t have a clue if you owe or if you’ll be getting a refund? Don’t worry, the better tax extension filing services like FileLater will provide you with a simple calculator to make determining your tax liability easy.

If you’re in the minority of tax filers who will owe money to the IRS (rather than getting a refund) the IRS will still want their money by April 15 or you could be hit with a late payment penalty. Filing a tax extension will give you the extra 6 months to file your tax return, but it doesn’t give you extra time to pay the IRS. That means you either have to mail a check postmarked by April 15 to the IRS or provide bank information online for an automatic withdrawal. If you expect to get a refund, then there’s nothing to consider.

The deadline for filing your income tax extension is April 15. A simple 5 minutes with File Later can give you an additional 6 months to file your taxes, and your stressed out CPA or tax professional will love you for it.

The savings of tax is the dream that everyone wants to achieve. Almost each country in the world has the income tax system. Many taxation professionals are there who are providing tax related services to the millions of tax payers. The savings of tax is the topic of discussion since a long time. This article will explore the tricks to save the tax. In this article, you will find simple tricks that can be useful to you in the process of the tax payment. The tax saving is in your hand. If you wish, you can easily save tax. Yes, you can save your valuable money to be paid to the government in a form of tax. There are mainly there methods of tax savings: Reducing Income, increasing tax deduction, and being qualified for the tax credits. If you can all of the three, you can easily save the tax money

Reducing income

The tax is applied on the income and deducted amount of tax is dependent on the amount of the income. If your income is more, you have to pay more tax to the government. The low income can result in low tax deduction. There are several ways to save tax. If you runs a small business, you can wait till the new year if you are about to stock more items. If you are an employee in a company, the government itself gives less income tax offers to you. The offers depend upon the type of your job.

Increasing tax deductions:

If you pay taxes in advance, the deduction of the amount of taxes can be increased. The payment of taxes in advance can save a good amount of tax. The real estate taxes and other fix taxes can be easily paid in advance. The increase in the tax deduction can be a great way of saving of tax. There are many people who pay taxes in advance and enjoy the tax credits from the government.

Getting the tax credits:

The tax credits are given to the regular and timely tax payers. Various governments have various schemes on the credits given to the tax payers. You can get tax benefits according to the laws of your government. The advance payment of the fix taxes such as house tax can be a useful trick to earn tax credits from the government.

 

The process of tax payment is probably the most complicated process on the earth. If you have right guidelines, you can easily save tax and make more money. The tax savings tips given here may not be applied to everyone. The tips are useful for you to reduce your taxes. There are many people who don’t know about the real ways to reduce the income tax. This article may have helped them a lot.