Question

What is the meaning of Taxation as define in the unit?

List and explain at least 3 objectives of Taxation?

What is the difference between Progressive Tax System and Regressive Tax System?

List and 10 criteria of a Good Tax System?

Describe the 3 objectives of tax policy?

What is the meaning of Residence, Domicile and non-residence?

List at least 3 rules that are used to determine residence of an individual?

From a tax point of view what is the meaning of:

Sole Trader

An employee

A Partnership

A corporation

10. List and explain at least 3 powers of the Inland Revenue Department?

11. Employment income is comprised of?

12. List all the sources of income of an individual as noted in unit 3?

13. Define the following as per definitions given in unit 3?

Emolument

Non-emolument

Employer

Chargeable Income

Allowable Deductions

Personal allowance/Income Tax Threshold

Tax Credit

Capital Gain Tax

(Note post a new post)

Answer 1

Meaning of Taxation- It is the process of imposing charges by the central and state Government on the general public and corporate so as to meet their expenditures. Taxes are of many types. Government earns income from taxation.

Three objectives of taxation- Are as following:

1. Government receives money through taxation and utilizes this money for public well being, infrastructure, facilities and investment.
2. Tax is imposed so that Government can increase its spending on economy and economy can grow and boost, when economy will grow, production will increase and it will give employment to public.
3. Taxation is done for price stability in the country. Tax is imposed so that people have less money for spending and inflation will be controlled in this way.

Difference between Progressive Tax System and Regressive Tax System-

Progressive tax system is a system that charges high percentage of tax from high income group people and less percentage of tax from lower income group people while Regressive tax system is just opposite, this system charges high tax from lower income group and less tax from higher income group people. U.S income tax is a progressive taxation system.

10 criteria of a Good Tax System- Are as following:

1. There should be equality and neutrality in tax system.
2. Tax system should be efficient.
3. Tax should be based on ability of people to pay it.
4. Tax should be certain, it should not be arbitrary.
5. Taxation should be simple that can be easily understood.
6. Government should utilize the amount of tax on the well being of economy and country.
7. Taxation system should achieve the fiscal objectives.
8. There should be ease in paying tax so the paying mode should be friendly and easy.
9. There should not be only one tax of high percentage but the smaller percentage tax on different levels.
10. Tax system should be able to generate revenue for Government.

3 objectives of tax policy- Are as following:

1. Tax policy should be made by taking into consideration the different income class people. On the basis of income, tax slabs and percentage should be decided.
2. Whatever the tax amount, Government collect, it should be used for the benefit of public.
3. There should be equality in the tax policy, those who earn equal income should pay same tax.