CLASS: 3RD YEAR, 6TH SEMESTER

NAME: SANJEEV YADAV

ROLL NO.: 1716
DATE: 23RD APRIL 2020
SUBJECT: LAW OF TAXATION
 UNIT-1 (QUES 1)
RESIDENTIAL STATUS FOR INCOME TAX
Residential Status for Income Tax – Individuals & Residents
It is important for Income Tax Department to determine the residential status of a tax
paying individual or company. It becomes particularly relevant during the tax filing season.
In fact, this is one of the factors based on which a person’s taxability is decided. Let us
explore the residential status and taxability in detail.
Meaning and importance of residential status
The taxability of an individual in India depends upon his residential status in India for
any particular financial year. The term residential status has been coined under the income
tax laws of India and must not be confused with an individual’s citizenship in India. An
individual may be a citizen of India but may end up being a non-resident for a particular year.
Similarly, a foreign citizen may end up being a resident of India for income tax purposes for a
particular year.
Also to note that the residential status of different types of persons viz an individual, a
firm, a company etc is determined differently. In this article, we have discussed about how
the residential status of an individual taxpayer can be determined for any particular financial
year
How to determine residential status?
For the purpose of income tax in India, the income tax laws in India classifies taxable
persons as:
I. A resident
II. A resident not ordinarily resident (RNOR)
III. A non-resident (NR)
The taxability differs for each of the above categories of taxpayers. Before we get into
taxability, let us first understand how a taxpayer becomes a resident, an RNOR or an NR.

Basic Conditions ROR RNOR NR

Your cumulative stay in India during the relevant financial year is YES YES YES
182 days or more; Or your cumulative stay in India is 60 days or
more during the financial year and 365 days or more during the 4
previous financial years.
 Additional Conditions ROR RNOR NR
His/her cumulative stay in India is 730 days or more during the 7 YES YES NO
financial years immediately preceding the current financial year
He/she was a resident in India in at least 2 out of 10 previous YES NO YES
financial years immediately preceding the current financial year.

If an individual satisfies condition (a), (b) and (c), then he/she qualify as ROR
If an individual satisfies condition (a), (b) or (c), then he/she qualify as RNOR
If an individual does not satisfy condition (a), then he/she qualify as NR. Hence, condition (b)
and (c) are not applicable.
• Resident and Ordinarily Resident (ROR)
An individual qualifies as a ROR in India if he/she fulfils the following basic
conditions:
His/her cumulative stay in India during the relevant financial year is 182 days or
more; Or his/her cumulative stay in India is 60 days or more during the financial year and
365 days or more during the 4 previous financial years.
The taxpayer must also satisfy the following additional conditions in order to be
treated as ROR in India in the relevant financial year
1. His/her cumulative stay in India is 730 days or more during the 7 financial years
immediately preceding the current financial year and;
2. He/she was a resident in India in at least 2 out of 10 previous financial years
immediately preceding the current financial year.
If either of condition (a) or (b) are not met, then individual does not qualify as ROR.
• Resident but Not Ordinarily Resident (RNOR)
The individual qualifies as RNOR in India if he/she meets the following basic
conditions:
His/her cumulative stay in India during the financial year is 182 days or more; or
his/her cumulative stay in India is 60 days or more during the financial year and 365 days or
more during the 4 previous financial years.
However, the taxpayer will be treated as RNOR in India during the financial year only
if he/she satisfies one of the additional conditions mentioned below:
1. His/her cumulative stay in India is 730 days or more during the 7 financial years
immediately preceding the current financial year or;
2. He/she was a resident in India at least 2 out of 10 previous financial years immediately
preceding the current financial year
• Non-Resident (NR)
The individual qualifies as NR in India if he/she meets all the following conditions:
A. His/her cumulative stay in India during the financial year is less than 181 days and
B. His/her cumulative stay in India does not exceed 60 days or more during the financial
year
C. His/her cumulative stay in India exceeds 60 days or more during the financial year but
does not exceed 365 days or more during the 4 previous financial years.
 UNIT-2
CENTRAL GOODS AND SERVICES TAX ACT, 2017
Introduction
The full form of CGST under GST law is Central Goods and Service Tax. It is called
as CGST Act 2017. The CGST act has been enacted to make a provision for levy and
collection of tax on intra-state supply of goods or services or both by the Central Government
and the matters connected therewith or incidental thereto.
Origin and Commencement of CGST Act
• CGST Act extends to whole of India excluding the states of Jammu andKashmir.
• Jammu and Kashmir will need to approve levy of GST in its State assembly, on account of
its special powers on taxation under the Constitution. Once this is done, GST shall be
introduced in the State.
• The CGST Act shall come into force from a date which will be notified by the Central
Government in Official Gazette, i.e. from the appointed date.
• Different provisions may be made applicable from different dates as may be notified.
Objective of CGST Act 2017
Under erstwhile taxation laws, Central Government levied taxes on, manufacture of
certain goods in the form of Central Excise duty, provision of certain services in the form of
service tax, inter-State sale of goods in the form of Central Sales tax.
Similarly, the State Governments levied taxes on retail sales in the form of value
added tax, entry of goods in the State in the form of entry tax, luxury tax and purchase tax,
etc. Accordingly, there is multiplicity of taxes which are being levied on the same supply
chain.
Difficulties faced under erstwhile taxation laws shall be listed as below:
• cascading of taxes as taxes levied by the Central Government are not available as set off
against the taxes being levied by the State Governments;
• certain taxes levied by State Governments are not allowed as set off for payment of other
taxes being levied by them ;
• the variety of Value Added Tax Laws in the country with disparate tax rates and dissimilar
tax practices divides the country into separate economic spheres; and
• the creation of tariff and non-tariff barriers such as octroi, entry tax, check posts, etc.,
hinder the free flow of trade throughout the country. Besides that, the large number of
 taxes results in high cost of compliance for the taxpayers in the form of number of returns,
payments, etc.
In view of the aforesaid difficulties, all the above mentioned taxes are subsumed in a
single tax called the goods and services tax which will be levied on supplies which includes
goods and services at each stage of supply chain starting from manufacture or import and till
the last retail level.
Salient Features of CGST Act 2017
The Central Goods and Services Tax Act, 2017, inter alia, will provide for the
following, namely:—
1. to levy tax on all intra-State supplies of goods or services or both except supply of
alcoholic liquor for human consumption at a rate to be notified, not exceeding twenty
per cent. as recommended by the Goods and Services Tax Council (the Council);
2. to broad base the input tax credit by making it available in respect of taxes paid on any
supply of goods or services or both used or intended to be used in the course or
furtherance of business;
3. to impose obligation on electronic commerce operators to collect tax at source, at such
rate not exceeding one per cent. of net value of taxable supplies, out of payments to
suppliers supplying goods or services through their portals;
4. to provide for self-assessment of the taxes payable by the registered person;
5. to provide for conduct of audit of registered persons in order to verify compliance with
the provisions of the Act;
6. to provide for recovery of arrears of tax using various modes including detaining and
sale of goods, movable and immovable property of defaulting taxable person;
7. to provide for powers of inspection, search, seizure and arrest to the officers;
8. to establish the Goods and Services Tax Appellate Tribunal by the Central Government
for hearing appeals against the orders passed by the Appellate Authority or the
Revisional Authority;
9. to make provision for penalties for contravention of the provisions of the proposed
Legislation;
10. to provide for an anti-profiteering clause in order to ensure that business passes on the
benefit of reduced tax incidence on goods or services or both to the consumers; and
11. to provide for elaborate transitional provisions for smooth transition of existing
taxpayers to goods and services tax regime.
 The Notes on clauses to Bill explain in detail the various provisions contained in the
CGST Act, 2017

Taxonomy of CGST Act

The CGST Act, 2017 comprises of 174 Sections in 21 Chapters and three Schedules
on supplies without consideration, treatment of activities as to goods or services and activities
which shall be considered as neither goods nor services. These Schedules are as under:

Schedule I Activities to be treated as supply even if made without consideration

Schedule II Activities to be treated as supply of goods or supply of services
Schedule III Activities or transactions which shall be treated neither as a supply of
goods nor a supply of services
CGST Act will extend to whole of India excluding the states of Jammu and Kashmir.
Jammu and Kashmir will need to approve levy of GST in its State assembly, on account of its
special powers on taxation under article 370 of the Constitution. Once this is done, GST shall
be introduced in the State.
The CGST Act shall come into force from a date which will be notified by the Central
Government in Official Gazette, i.e. from the appointed date. Different provisions may be
made applicable from different dates as may be notified.
 UNIT-3 (QUES 5 (A))
ASSESSEE
Introduction
An assessee is any individual who is liable to pay taxes to the government against any
kind of income earned or any losses incurred by him for a particular assessment year. Each
and every person who has been taxed in the previous years for income earned by him is
treated as an Assessee under the Income Tax Act, 1961.
An Assessee may be any individual liable to pay taxes for himself or to pay tax on
behalf of somebody else. The Income Tax Act, 1961 has classified Assessee in different
categories. An Assessee may either be a normal Assessee, a Representative Assessee, a
Deemed Assessee or an Assessee in Default.
• Normal Assessee:
A normal Assessee is an individual who is liable to pay taxes for the income earned
by him for a particular financial year. Each and every Individual who has paid taxes in
preceding years against the income earned or losses incurred by him is liable to make
payments to the government in the form of tax.
 Representative Assessee:
Many times, it so happens that an individual is liable to pay taxes for income or losses
incurred not only by him, but also for income or losses incurred by a third party. Such an
individual is known as Representative Assessee. Basically, he acts as a representative for
people who themselves are not in a position to file and pay their taxes themselves.
• Deemed Assessee:
Deemed Assessee is an individual who is put in a position to pay taxes for some other
person by the legal authorities. Generally, the individuals who are treated as Deemed
Assesses are:
1. The executors or the legal heir of the property of a deceased person, who in written has
passed on his property to the executor, is treated as a Deemed Assessee.
2. The eldest son or any other legal heir of a deceased individual (who has expired
without writing his will) is treated as a Deemed Assessee.
3. The guardian of a minor, a lunatic or an idiot is treated as a Deemed Assessee.
4. The agent of a Non-Resident Indian (having Income Sources in India) is treated as a
deemed Assessee.
• Assessee-in-default:
An Assessee-in-default is an individual who has failed to fulfill his legal duty of
paying tax to the government. An employer is deemed to be an Assessee in default if he fails
to submit the TDS deducted by him to the government. An employer is supposed to disburse
salary to his employees after deducting TDS from their salary and submit the same to the
government. However, if he fails to do so then he is treated as an Assessee-in-default.
 UNIT-3 (QUES 5 (B))
ADVANCE PAYMENT OF TAX
Introduction
Advance tax refers to paying a part of your taxes before the end of the financial
year. Also called ‘pay-as-you-earn’ scheme, advance tax is the income tax payable if your
tax liability is more than Rs 10,000 in a financial year. It should be paid in the year in
which the income is received.
Rather than receiving all tax payments at the end of the year, advance tax receipts
help the government get a constant flow of income throughout the year so that expenses
can be met. For instance, if your advance tax liability for the financial year 2017-18 has
exceeded Rs 10,000, you are expected to pay it in FY17-18 itself.
Who should file it?  
If you are a salaried employee, you need not pay advance tax as your employer
deducts it at source, known as TDS (tax deducted at source). Advance tax is applicable
when an individual has sources of income other than his salary.  While employers apply
TDS on salaries, advance tax is paid on income that is not subject to TDS. Professionals
(self-employed) and businessmen will have to pay taxes in advance as, given their business
income, the liability can be huge. The same implies for companies and corporates.
For example, for FY 2018-19 and FY 2019-20, the due dates for advance tax (for both
individuals and corporates) are:
 On or before June 15 – 15 percent of estimated advance tax;
 On or before September 15 – 45 percent of total estimated advance tax;
 On or before December 15 – 75 percent of total estimated advance tax; and,
 On or before March 15 – 100 percent of total estimated advance tax.
For taxpayers showing business income and opting for the Presumptive Taxation
Scheme (Section 44AD and 44ADA, Income-tax Act, 1961), it is:
 On or before March 15 – 100 percent of estimated advance tax.
If the total tax paid exceeds the actual tax liability – computed when filing the final
tax returns at the end of the year – the excess amount is refundable.
The advanced income tax is calculated in the same manner as normal income tax and
the same tax slabs apply to respective taxpayers. However, the method of filing advance
income tax is different.