This rule requires that taxes be established, in such a manner as to minimize the real costs of collection, in terms of resources required to collect the taxes and to comply with the tax laws on the part of the taxpayers. Appointment of income tax authorities (1979: Sec 4) (1) The Central Board of Revenue may appoint as many Regional Commissioners of Income Tax, Commissioners of Income Tax, License fee are charged for keeping a gun, or a motor vehicle. Hence, it is very difficult to frame a comprehensive tax policy, which will help to realize the manifold objectives discussed above. Adam Smith further point out that if a scope for arbitrari­ness exists, then under such circumstances, even honest tax machinery will become unpopular. A tax is levied according to certain legal requirements. According to-Dalton monopoly profit of a public enterprise resemble very much of a tax. The best examples are the registra­tion fee for motor vehicles, the payment for permit to operate auto­mobile. Sometimes the government of one country receives a grant from another country which is commonly called foreign aid. What are the powers of the Income Tax authorities as defined by the Income Tax Act? 2����q�l�s�'f�0U�Kq!ӦB��t��WD�F�z� ��o��iݡ';��9�ݚ�Uϝ_��5`�F(Q� �pݰh:�*i0�7�{id�ԣ81L}N���� �/b�w�'#�����L�5Ѝ�|獍�,�D;t�&��,r��T��;n�*�7��������.Fku@�_p�g@ It is imposed by the government, whenever certain specific improvements have been made as a result of public expenditure. A tax is a leakage from the circular flow of income into the public sector. Supplementing Smith’s four canons, Bastable adds the maxims of productivity and elasticity and holds productivity to be the most important principle. Following are the important functions and powers of commissioner of income tax. A tax is paid out of the income of the taxpayer. He is also responsible for the efficiency of work in all respect in his zone. Prof. Seligman defined special assessment as “a compulsory contribution, levied in proportion to the special benefit derived to de­fray the cost of a specific improvement to property, undertaken in the public interest”. Finance, Public Finance, Public Revenue, Tax. If the income tax is not paid, the defaulter is made to pay a penalty, but the income itself is not made illegal. Recent decades witnessed little progress in the development of principles of taxation. The tax law of a nation is usually unique to it, although there are similarities and common elements in the laws of various countries. When the level of income is low, the revenue objective of taxation will have to be subordinated to sumptuary objectives. - Communicate assessment and penalty orders. D) None of these 55. The income from this source is steadily tending to decrease. Income received in India is taxable in the hands of..... A) Resident only. Log in. Prof. Seligman point out how fee differs from a tax in several important points. Many advanced countries and international funding agencies like World Bank, IMF, etc. Plagiarism Prevention 5. endstream endobj 521 0 obj <>>>/Filter/Standard/Length 128/O(����L�dM��M��p��!66)/P -3388/R 4/StmF/StdCF/StrF/StdCF/U(Sxҁ�\(�ѢQ�!%� )/V 4>> endobj 522 0 obj <>/Metadata 91 0 R/OCProperties<>/OCGs[545 0 R]>>/Outlines 109 0 R/Pages 509 0 R/StructTreeRoot 129 0 R/Type/Catalog>> endobj 523 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC/ImageI]/XObject<>>>/Rotate 0/Tabs/S/Type/Page>> endobj 524 0 obj <>stream Prohibited Content 3. (c) These assessments are not progressive but proportional to the benefit received, (d) It is a payment for specific local improvement, and. Income tax authorities 1. Chief Commissioner of Income Tax It is important that the cost of collection should be the minimum possible. The fee can be distinguished from price. In public finance it came to represent all extra revenue objective of taxation. Just as individuals or business firms may borrow in anticipation of other revenues, the government also bor­rows. Another meaning of productivity is that the tax should not discourage production. Taxation should be used as a means of cutting down total spending, when it becomes necessary so as to prevent excessive total demand and inflation. For instance, the policy of high cigarette excise enforced by some state governments in India seeks to attain certain social and eco­nomic objectives at the cost of revenue yield. The tax system should be broad based. The major objectives of taxation held in the past and pursued today are detailed below: The time honored objective of taxation is to raise revenue. Productivity or physical adequacy means that, the tax system should sufficiently yield the revenue needed to meet the requirements of the state. This canon states that “every tax ought to be levied at the time or on the manner in which it is most likely to be convenient for the con­tributor to pay it. The Central Board of Direct Taxes is the supreme body in the direct tax set-up. This only means that when government has to meet increased expenditure, it is on taxes that it primarily relies. The tax system should be simple, plain and intelligible to the com­mon man. A distinction can be drawn between tax and fees. For instance, provision of irrigation facilities in a particular area may call for a spe­cial assessment on all beneficiaries. But the canon of convenience says that the time of payment and manner of payment should be convenient. Taxpayers should have no doubt about its desirability. The fact that tax is a contribution implies the notion of a sacri­fice involved on the part of the contributor. Elasticity is closely connected with fiscal adequacy. Content Guidelines 2. It is the highest executive body to govern Income Tax Authorities. It is true that the canons of Adam Smith are excellent. The amount to be paid, the time and method of payment should be clear and certain for the tax payers to adjust his income and expenditure accordingly. Content Filtration 6. In any country the system of taxes and the laws governing them should be simple. Companies Income Tax (Last reviewed December 2007) COMPANIES INCOME TAX ACT CAP. While this seems good … The canon of certainty implies that the time and manner of pay­ment should be certain. income from this source consist of the receipts from lease or sale of these properties or the sale of products in public properties. Principles. In charging the fee certain principles should be followed. As source of revenue, fines and forfeitures have little significance. Progressive tax system is designed to achieve this objective. Lerner, an American Economist. Taxes transfer income from individuals to government. 3. Hence taxation should be governed by certain well defined objectives. Prof. Bastable “defined a tax is a compulsory contribution of the wealth of a person for the service of public power”. Certain public improvements, such as the construction of streets and sewers, confer specific benefit upon particular property owners in addition to their general community benefits. Whereas a fee is assessed as a payment for a special privilege. Such contributions are made by patriotic, charitability minded per­sons during war, flood or natural calamities to overcome deficiency in government revenue position. A tax is paid out of the income of the taxpayer. Grants or grants-in-aid are a method by which one government provides financial assistance to another. Tax payment is a personal obligation. There should be a variety of taxes properly co-ordinated, so as to form a united and consistent system. %%EOF One tax bringing a large income is not better than many taxes, each bringing very small revenue. The fee levied must be equal to the cost of production. This income is received from public property in land, build­ing, mine etc. However, revenue objective of taxation is sub­ject to certain criticism. There should be a large number and variety of taxes, so that it can touch all sections of the people in the society. Any income tax authority may appoint any income tax authority subordinate to it by the approval of the CBR. It includes only that part of public property which is re­served or used by the state or is leased to private persons basically for fiscal purposes. The time of payment, the manner of payment, the quantity to be paid ought all to be clear and plain to the contributors and to every other person”. FUNCTION AND POWERS OF COMMISSIONER OF INCOME TAX :- The commissioner exercises the power to control the staff of income tax department working in his jurisdiction. Income tax should be deducted monthly on install­ment basis from salaried taxpayers. It is now generally accepted that taxation ought to be used as a means of regulating the socio-economic life of the community, it is an effective tool to reduce the glaring inequalities of income and wealth existing in the modern society. The tax liability of married couples who file jointly is assessed on half their total income, and the result from applying the tax tariff is multiplied by two afterwards. The war and post war period have proved that a good deal of economic effect can be generated by taxation. Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts.Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability, and it includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions. Fees are payments for services rendered by the governments such as registration of births and deaths etc. Principles of taxation mean the framing and employment of appropriate criteria in the development of tax structure. In a federation the central government provides grants to state governments, usually in the per­formance of a specified function. Report a Violation 10. 7. What is subsidy and illustrate some the cases applying subsidy? If refers to the penalty imposed by competent authority like courts, for the failure of individuals to appear in the courts to complete con­tracts as stipulated or to safeguard valuable assets. A second objective of taxation is that of regulation or control. Log in. Lerner observes “taxation should never be imposed merely as a means of raising money for the government, but to leave less in the hands of the tax payer”. Its purpose is to stimulate the larger flow of investment activities in the desired chan­nel and to prevent its flow into undesired channels. 4. Forfeitures of bail or of bond are similar to fines. This is not an important source of revenue to modern government. Smith says that “every tax ought to be contrived as both to take out and to keep out of pockets of the people as little as possible over and above what it brings to the public treasury of the state”. Join now. Important Notes – Government has proposed to increase the power of Income Tax Authorities. Such proposed powers to be increased are – Apply retrospectively that in order to conduct searches, authorities will not have to answer reasons right from 1962. It includes a variety of proposals, designed to provide pref­erential treatment for income from business enterprises and estab­lishing rewards and penalties to stimulate output. In the case of such taxes, primary aim is one of regulation and not of revenue. In the case of developing countries, the objective of taxation is to promote economic growth with stability. From the above definitions we can meaningfully derive some basic characteristics of a tax. Income Tax Act – Authorization to exercise powers or perform duties of the Minister of National Revenue Last updated on June 15, 2020. endstream endobj startxref A tax is levied on the basis of same predetermined criteria such as equity. Objectives of Taxation 3. Growth may sometimes generate inflationary pressure in the economy. Hence a tax should be imposed at a time and in such a manner that the taxpayer feels minimum of inconvenience. �*�R�=(F�����r��o�E�+�cT�'br�i�I���q>-ۊ�����V)[�q�F(qu`�Ʒ�E��,{�:�|�rCHS��3{VG���a\�#�&��1�m~���QM/��;�4��|}�T/��8వ�&��}��Y����UƵ�}hؿ���?NLL~#�|�f0h*��e���J��_�:�|#�X]� F��íSo9}��Z_w'sr}� For example, violation of traffic rules, payment of income tax after the stipulated time etc. It implies that in abso­lute terms the richer should pay more taxes, because without the protection of the state, they could not have earned and enjoyed that extra income. Jan 12, 2021 - Powers and duties - Income Tax Authorities, Income Tax Laws B Com Notes | EduRev is made by best teachers of B Com. This aspect has received attention from earlier days. In other words there is no element of quid-pro-quo in the payment of tax. By the enactment of FBR Act 2007 in July 2007 the Central Board of Revenue has now … (5) Inspecting Assistant Commissioners of Income-tax and Income-tax Officers shall perform their functions in respect of such persons or classes of persons [or of such incomes or classes of income or] in respect of such areas as the Commissioner of Income-tax may direct, [and, where such directions have assigned to two or more Inspecting Assistant Commissioners of Income-tax or Income-tax Officers, … The above canons of taxation are still considered as fundamental principles of taxation. However, among these various sources, tax revenue constitutes the major source in modern times. After reading this article you will learn about:- 1. The development of the principles of taxation is essentially an appli­cation of the theory of economic welfare. 543 0 obj <>/Encrypt 521 0 R/Filter/FlateDecode/ID[<27A67C7ED93A82488646553236E9C95A>]/Index[520 49 570 1]/Info 519 0 R/Length 116/Prev 444329/Root 522 0 R/Size 571/Type/XRef/W[1 3 1]>>stream The government can borrow loans within the country and from outside the country. Administrative [ Income Tax Authorities ][ Sec. The Income Tax Authorities (income tax officer / assessing officer) shall have the same powers as are vested in a court of law under the code of civil procedure 1908 (5of 1908) when trying a suit in respect of following matters. Mercantilists and physiocrats advanced doctrines of tax principles. in a country. JURISDICTION OF INCOME TAX AUTHORITIES SECTION 120 • 1) Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those … This aspect must be taken into consideration, in the framing of appropriate tax structure. This is ‘sumptuary taxation’. If the fee is not paid, the base of the fee or the source or purpose of the fee becomes illegal. For example, agricultural tax should be collected soon after harvest, since the farmers are in a better position to pay it. All attempts at equality will be a myth, without the tax being certain. Income Tax Authorities are also granted power to survey and order persons to submit certain information. When tax issues arise, the public generally turns to tax attorneys to help resolve the problems. The amount of tax is not fixed with reference to the exact benefit which a taxpayer receives from public service. It is a compulsory contribution. Writers like Prof. Lutz are of the opinion that the modern concept of taxation emphasizes positively that it should be used for the purpose of providing public revenue and that it apparently does not give a positive sanction to the use of the taxing power for the accomplishment of ulterior objects. A third distinction between taxes and fees may be found in the conditions attached to the service which the government per­forms in the case of a fee the government does some particular thing in return. It is paid by the people to avail such services. Before uploading and sharing your knowledge on this site, please read the following pages: 1. h�bbd```b``������i0� "�A$S;�d� ���e�A$�/����X���� 2�;X�H2����`]L���|G�") Rh��?������ ��AA�g`�| $��f 0 �]e Taxation by definition involves compulsion. This personal obligation to contribute to the states support is universal and applies to all. Governments, unlike individuals, have the power to create money. Income Tax Authorities Junaid Amjad 2. It refers to the claim of the state to the property of persons who die without legal heirs or documented will. 568 0 obj <>stream This canon means that taxes should be able to avoid undesirable effect upon the economic system of the country. Prof. Seligman point out the following characteris­tics of special assessment: (b) There is an element of special purpose. Copyright 9. are partly compul­sory and partly voluntary. Taxes should not produce any adverse effect in the economy. Acceleration of Economic Growth: Tax policy may be used to handle critical economic situation like depression and inflation. The tax is economical, in the sense that the cost of collection is very small. Since the days of Adam Smith many other prin­ciples have been added. The payment of fee legalizes some action. In the case of a tax, the benefit is not susceptible of direct measurement. Democratic governments aim at securing social justice. The power of taxation is mainly to be used for collecting revenue to the state. Please click / tap on the exemption type to view / hide its content and hide content of other exemption. Thus a fee is a payment charged by the government to bear the cost of admin­istrative service rendered by the government. In accordance with the Income Tax Act, 2015 (Act 896), any investment income and capital gains with Ghanaian source are subject to tax in Ghana in the case of non-residents. Incomes Exempt from Income Tax. 7. Uploader Agreement, Read Accounting Notes, Procedures, Problems and Solutions, Learn Accounting: Notes, Procedures, Problems and Solutions, Sound Tax System: Characteristics and Views, Public Revenue: Meaning and Classification, Assets: Definition, Characteristics and Objectives, The Principle of Maximum Social Advantage. However revenue from public domain is not a major source of income in many countries in modern times. 2. The in­troduction of new tax measures or the strengthening of existing mea­sures means an increase in government income to finance normal expansion of governmental activity. Flexibility means that there should be no rigidity in the tax system, so that it can be quickly adjusted to new conditions. Commercial Revenue and Income from Public Domain: 3. Tax revenue has occupied the most important place in the revenue system of all the governments in modern days. Another example is export subsidy given to export industries to boost our export to foreign countries. It is the duty of the state to guarantee distribution of the estates of deceased persons to heirs specified in wills, or to persons declared to be lawful heirs by courts, if no such heirs exist, the property reverts to the state. The marginal tax rates and the resulting average tax rate of the income tax are depicted in the graph to the right. Explain the general powers of the income tax authorities - 3935562 1. 1.2. There are some taxes where primary objective is to control and regulate consump­tion. The government may resort to printing of paper money as a means of paying their bills. For example, in India in­come tax is elastic. Special assessments etc. According to Prof. Taylor “Taxes are compulsory payments to gov­ernments without expectations of direct return or benefit to the tax payer”. Gifts have no significant place in modern revenue system, except during national emergencies like war. 2. 60 L.F.N. A public authority imposes penalty mainly to defer from certain acts. POWER OF INCOME TAX AUTHORITIES RELATING TO SEARCH AND SEIZURE [ SECTION 132] Entering and Searching the Premises : Where the Director General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board , in consequence of information in his possession, has reason to believe that— The delegations listed below are effective as of December 12, 2018, unless otherwise indicated in the history notes. (2) In the case of irrigation and drainage projects, the area is used to assess the special benefit received. Gifts are voluntary contribution from private individual or non-governmental organizations to the government funds for specific purpose, such as relief fund or defence fund during a war or an emergency. Income from public domain is also included in the commercial revenue. - Ensure compliance of filing of statutory returns. %PDF-1.6 %���� Each source has its own importance in the revenue base of a government. . Disclaimer 8. The tax authority shall be advised once foreign individual terminates their work activities and stay in the Czech Republic and thereby cancel their tax registration. It may also resemble a monopoly price, since it is charged by the public authority to prohibit rendering the same service by any other than itself. Exemption for : Death-cum-Retirement Gratuity. Whereas price are charged for materials or services of business character e.g. However, multi­plicity of taxes should be avoided. Those receipts placed in the category of administrative revenue in­clude fees, licenses, fines, forfeitures, escheats and special assess­ments. What is FBR The Federal Board of Revenue (More commonly known by its initials as FBR) is a semiautonomous Federal agency of Pakistan that is responsible for enforcing fiscal laws and collecting revenue for the government of Pakistan. According to Taussing “the essence of a tax as distinguished from other charges by government is the absence of a direct ‘quid-pro-quo’ between the tax payer and the public authority”. … It represents a payment out of the income of the people. Similarly those taxes, which are taken from surplus income, reduce funds available for private consumption and investment. This objective means that the structure of taxes and tax rates ought to be devised to generate more revenue. According to Adam Smith uncertainty in taxation en­courages corruption. This canon implies that yield from taxation should grow along with increase in population and development of economy. They generally arise as a by-product of the administrative function of the government. In this context, Adam Smith ob­serves “the subjects of every state ought to contribute towards the support of the government as nearly as possible, in proportion to their respective abilities that is in proportion to the revenue which they enjoy under the protection of the state”. This document is highly rated by B Com students and has been viewed 4888 times. Subject to control and approval of Central Government, it can issue rules under the provisions of Income Tax Act. The copies have to be made in the presence of an income tax officer. The taxpayer has to file their annual income tax return for the year concerned including the income earned up to the termination of the residence. In a sense fee is a compulsory contribution, but price is a voluntary payment. An Income Tax Authority can exercise following powers during survey: To inspect books of account and other documents, To place marks of identification on books of account or documents examined, To make extracts or copies of books of account or documents, have added a few more canons of taxation, which are given below. It is a special type of fee, it is charged for granting a permission or privilege. In this case Smith observes “it is not very unreason­able that the rich should contribute to the public expense not only in proportion to their revenue, but something more than that propor­tion”. Income Tax Authorities Income Tax Act, 1961 provides for the administrative and judicial authorities for administration of this Act. He holds the view that, the chief objectives of public finance is to main­tain an adequate level of national income. Elasticity demands that there should be in the system, a capacity to respond quickly to the changes in the demand for revenue. In depression, tax is set to increase the consumption and reduce the savings to increase the aggregate … This canon insists that taxes should not be covered in controversy. Profit from public undertakings run on a monopoly basis also can be included in the category of commercial revenue. From outside sources it can borrow from interna­tional lending institutions. Join now. Secondary School. Likewise customs duties can be levied on imported articles with a view to encourage internal production of the same. This is an extension of the regulative aspect of taxation. Adam Smith developed his famous canons of taxation, widely quoted down even in the present day. For example, ‘tax holiday’ given to investors who es­tablish investment units in a backward area, for a certain number of years. A tax imposes burden on the taxpayer. There is quid-pro-quo in fees, but quid-pro-quo is absent in tax. Income Tax Authorities Following are the powers and functions of all of these income tax authorities: - Selection and audit of income tax cases. What is amalgamation of companies and fiscal incentives ? Recently, most studies in public finance, merely repeat the older doctrines. In this context, Prof. Cannan observes “the ultimate object of every system of public fi­nance, so far as the distribution of taxation is concerned must be of course to secure the best result on the whole and in the long run”. Moreover, a tax will violate the canon of economy, if hinders the development of trade and industry in any manner. But if the automobile driver does not pay the registration fee, driving of the car is made illegal. Hence they are called administrative revenues. As far as the underdeveloped countries are concerned, this is a very important characteristic of good tax system; since the common taxpayers are illiterate. According to this view, public finance must be functional finance in which revenue motives and other motives must be subordinated to that of maintaining an adequate level of income. In a democracy, taxes will not be imposed unless they meet with the approval of the majority of the representatives of the people. Duties of Income Tax Officer is to be read in conjunction with the provisions of the Income Tax Act, 1961. However, owing to the needs of the modern complex state and the problem involved in them, the canons of Adam Smith needs to be supplemented, by certain rules, most of which should be treated as corollaries to the canons of taxation. (3) If the improvements results in appreciation of the value of the properties, the assessment will take into account, the new value of the property as a ratio of the original value. 1. The government can borrow from individual insti­tutions, banks etc. However, the printing of paper money is normally avoided as a source of revenue because its use is too easily abused. Even though a tax is paid will­ingly, in a sense it is a compulsory contribution. Three practical bases are used in making special assessments: (1) If the public authority improves a street, the suitable method of fixing the rate of the beneficiaries is to make it vary according to the length of the frontage facing the street. 26) Delegation of powers: The Commissioner may delegate to any Taxation Officer all or any of its powers or functions, other than the powers of delegation. It exercises its power to control and regulate the Income Tax Authorities. 6. It is commonly argued that, taxation may be used as an instrument for obtaining certain social objectives like redistribution of wealth and reduction of inequality. The hierarchy of officers in Income Tax Act Department: Principal Chief Commissioner of Income Tax. The basis of a fee is the special benefit accruing to the individual. Taxpayers are required to make certain payments regardless of their individual disposition in the matter. In India betterment levy is imposed on certain properties, especially land, whose capital value has been enhanced by the in­troduction of casual irrigation. In recent years a good deal of economic growth: tax policy available! In anticipation of other exemption granted power to control and approval of the state and replaced explain the duties of income tax authorities December,... Implies that the tax system should not de­pend upon deficits per­formance of a tax will the... To it by the government of one country receives a grant from another country which commonly! Likewise customs duties can be imposed at a time and in such manner... 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