Awesome Study Guide For Direct and Indirect tax

Introduction:

What is Tax?

Very simply explained:  Money that is charged by the government upon an individual for or an organization to the income they make, the goods they buy or the services and transactions they utilize is termed as a tax.

Only an authority is authorized to collect tax in India that too with legal backing, so in simple language unless there is a law stating that certain amount of money needs to be collected for certain purpose no one can demand it from you.

Why do I have to pay Taxes?

Taxes are charged for the services that the government provides to us, the more we earn the more we pay and vice-versa. Your fire fighters, your policemen and administrators all earn because of the taxes you pay but it is not as simple as that. In developing countries the taxes collected by citizens are utilized for providing healthcare facilities, employment facilities and other civil services but in the case of countries like India our taxes are used for a lot of purposes. So the eradication of illiteracy, poverty and repayment of loans taken from the world bank too fall on the list of places where our tax money is utilized.

The word tax is very common and the end of March which is also the end of a financial year is when everyone freaks out to ensure that they pay the taxes on time and in most cases try and find loop holes to save their tax money. We have heard a lot about terms like indirect tax, direct tax, service tax, professional tax, etc and even though we do have a rough idea about all of these the details of why we pat these taxes and how should we pay them is what we learn in the subject Direct and Indirect Taxes in BMS.

Difference between Direct and Indirect taxation:

Why do we classify taxes as direct and indirect? It is because we can determine with ease who will bear the burden of those taxes. Now a direct tax is when the liability to pay the tax and the burden of paying the tax falls on the same person and cannot be transferred to another person; income tax, wealth tax and corporate tax are all examples of direct tax.

Indirect tax is when the liability of a tax is on one person and it falls on another person, for example sales tax, excise duty, custom duty, etc.

Why should I Study this subject?

We should study this subject so that we know when we are charged for taxes and why are we charged for taxes. The knowledge of our finances must be clear to us, no one on the pretext of saving our money should be able to fool us into paying a lot more than we are supposed to.

Also as students of BMS if we opt for finance as a career option it is a must that we know taxation for the benefit of our professional life, it is a must to study this subject.

Is the subject Difficult?

Yes, it has 75% practical sums and 25% theory so it is very difficult if you expect to study it at the last minute and pass with flying colors. If you practice the sums as much as required then it will surely become very easy to deal with.

Is it a Boring subject?

Practical subjects can never be boring because they always manage to keep you on your toes and practice a lot. Taxation can be a very interesting subject provided you have a good professor and you actually understand what you are doing.

Do I need to join a Coaching Class for this subject?

Yes, you do need to join a coaching class if you do not have a good taxation faculty in college. Self study without a good professor will make it very difficult for you to pass in this subject.

What is the Syllabus for this subject?

The subject is divided into 4 units that are as follows:

Direct Tax

Unit I : Basic Terms (S: 2,3 and 4)

Unit II : Heads of Income (S: 14; 14A)

Unit III : Indirect Tax – Service Tax

Unit IV : Topic – Direct Tax

Incidence of Levy of Tax

Payment of Tax and Recovery

You can get the complete syllabus and list of reference books right Here —Direct & Indirect Taxes Syllabus and Reference Books !

Where can I get Notes for this subject?

Direct and Indirect Taxes

How do I Study for this subject?

4 Golden rules to study taxation:

1. Mug up the Section numbers and the definitions.
2. Practice a lot of sums
3. Do not ignore theory because with the knowledge of theory the understanding of practical sums will not be possible.
4. Rule out silly mistakes

All the best for Taxation 🙂