Question

Question One: Compare:

In a work interview for the position of Tax Accountant, the general manager of the company asked you to explain the difference between individual income tax and business income tax.

Required:

Compare briefly between the individual income tax and business income tax as it is shown in the table below.

	Individual Income Tax	Business Income Tax
Tax Type:
Tax Rate:
Allowance Received: (Personal/ Family)
Loss Deductions: (Yes/No)
Agriculture Income: (Taxed/Not Taxed)

Answer 1

Tax Type :

Individual income tax is a personal tax whereas business income tax is more of a corporate tax. The former is levied on the earnings of an individual while the other is levied on the whole business itself which comprises of number of individuals. Individual income tax is therefore levied on a living being, on a real person, unlike business income tax which is in many cases levied on a unreal entity which came into existence due to separate legal entity concept.

Tax Rate :

Individual income tax comes in slab whereas business income tax sometime comes in a flat rate.

Allowance Received :

Individual income tax allows personal allowances (medical, conveyance, education, transport, accomodation) to set off from the income where business income tax doesn't allow the same since it is levied on a separate legal entity apart from the individual's personal existence as a propreitor.

Loss Deductions :

Loss deductions are allowed to be carried forward in both the tax frameworks.

Agriculture Income :

Agriculture income is exempt in the individual income tax regime however it is taxable in business tax regime if the primary business in agriculture owing to basic exemption limit in most of the countries.

Regards :

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