Taxes

Direct Tax (Directly imposed on individual)

Indirect Tax (these are collected by intermediatery from the person who actually bears the ultimate economic burden (consumer))

Individual Person (Poll Tax/Head Tax)

Property Tax (Owner Ship Tax)

Sales Tax (tax collected for selling each unit)

Specific Tax (specific amountt for each unit)

(VAT) It is value added tax for each stage

GST It is consumption tax

Real Property (Immovable Property) Eg: Buildings, Machinery, Wells, Dams, Ponds, Mines, Roads etc

Personal Property Types: Tangible personal property, Intangible personal property

Tangible Personal Property (Private & Movable Property) Eg: Furniture, Clothing, Jewels, Art, Writings, House Hold Goods, title documents that are transferable to others such as motor vehicle

In Tangible Personal Property (Property that cant be moved, touched or felt) Types: Negotiable Instrucments, Securities, service (economy) & Intangible assests

Negotiable Instruments Eg: Promissory note, Bill of action, Cheque/DD

Securities Types: Debts (bank notes, bonds), Equity Shares, Derivative Contracts (Forward, Future, options & swap)

Service Here buyer does not hold ownership of the property

Intangible assest, Legal: Trade Secrets, copy rights, patents & trade mark Competitive: Knowledge activities, collaboration activities & Structural activities

Difference between sales tax and value added tax

Example 1: Without any tax Manufacturer buys raw material at Re 1 Manufacturer sells goods to dealer at Rs 1.20 (Profit Margin = 0.2 Re) Dealer sells goods to end user at Rs 1.50 (Profit Margin = 0.3 Re)

Example 2: With 10% sales tax Manufacturer buys raw material at Re 1 Manufacturer sells goods to dealer at Rs 1.20 (Profit Margin = 0.2 Re) Dealer sells goods to end user at Rs 1.65 (1.50+10%tax of Re .15) (Profit margin = 0.3 Re and tax amount to be payed to govt = Re 0.15)

Example 3: With 10% VAT Manufacturer buys raw material at Rs 1.10 (Original cost = Re 1 + tax = Re 0.10) Manfacturer sells goods to dealer at Rs 1.32 (selling cost = Rs 1.20 + tax Re 0.12) (Profit margin = Re 1.32 Re 0.02 Re 1.10 = Re 0.2 and tax to be payed = Re 0.12 Re 0.10 = Re 0.02) Dealer sells goods to end user at Rs 1.65 (selling cost = Rs 1.50 + tax Re 0.15) (profit margin = Re 1.65 Re 0.15 Re 1.32 = Re 0.3 and tax to be payed = Re 0.15 Re 0.12 = 0.03)

General Formula for calculating VAT = Selling Price (Cost Price + other taxable inputs)

Difference between Direct tax and Indirect Tax

Direct Tax Economic View: It is imposed on specific group of people/Organization. Eg: income tax collected from employee Legal View: It applies to poll tax and property tax. Direct tax applies on a person and he cant transfer the burden to some other. Indirect Tax It is collected from merchants and not from consumers who actually pays the tax. Eg: Sales tax, Service Tax It applies to sales tax, service tax, VAT, GST (Goods and service Tax),Excise duty and custom duty. It is transferable.