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Canon of Taxation

Canon of Taxation By canons of taxation, we simply mean the characteristics or qualities which a good tax system should possess. It refers to the guiding rules and principle to make tax collection system effective and functional. In fact, canons of taxation are related to the administrative part of a tax as it is related to the rate, amount, method and collection of a tax. Canons of Taxation are broadly classified into two heads as: A) Adam Smith’s canons of taxation B) Additional canons of Taxation A) Adam Smith’s canons of taxation: In his famous book ‘Wealth of Nation’, Adam Smith presented 4 canons of taxation which are also commonly referred to as the Main Canons of Taxation. They are as follows: 1)   Canon of equality or equity: By equality is meant equality of sacrifice. Accordingly, Canon of equality states t that the burden of taxation must be distributed equally or equitably in relation to the ability of the tax payers Hence, to ensure canons of equality, taxes ...
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Introduction to Income Tax Act, 1961

Introduction to Income Tax Act, 1961 Introduction: Tax is a payment made by individual and organization to the government. Government needs money for financing of defense, development such as construction of roads, dams, power projects, railways, health services etc.. Funds for all these requirements are collected by way of taxes. Taxes are the major source of revenue of any state. The role of the government is not just to maintain law and order but also to provide the above to the citizens. In India all the taxes are divided into two parts i.e. Direct & Indirect Tax. Wealth Tax, Income Tax, Gift Tax, Corporate Tax are included in direct taxes. Service Tax, Central Excise, Custom duty, Sales Tax, VAT are the indirect taxes. In the year 2017 GST has replaced all these indirect taxes. Out of the above taxes excluding VAT all the taxes are collected by central government. VAT is an important source of income in the hands of state government. Structure of Taxation in India: 1. ...

Basics of Cost Accounting - 9: Allocation, Apportionment and Reapportionment of Overheads

 Allocation, Apportionment and Reapportionment of Overheads           The objective of Cost Accounting is classifying costs and recording an appropriate allocation of expenditure for the determination of the costs of products or services, and for the presentation of suitably arranged data for the purpose of control and guidance of management A) Allocation of Overheads When items of cost are identifiable directly with some products or departments such costs are charged to cost centres. This process is known as cost allocation. It is the charging of discrete, identifiable items of cost to cost centres or cost units.  It is complete distribution of an item of overhead to the departments or products on logical or equitable basis is called allocation.  Where a cost can be clearly identified with a cost centre or cost unit, then it can be allocated to that particular cost centre or unit.  Allocation is the process by which cost items are charg...

Basics of Cost Accounting - 8: Overheads

Overheads                        Costs may be classified into direct of indirect cost:           Direct cost can be conveniently traced into or identified with the product manufactures. Direct costs which are also called “Prime Cost” or “Basic Cost which represent, the cost which can be easily and directly identified with the cost centers or cost units.  But indirect cost represents the costs which are not directly identifiable with the cost centers with the cost centers. These indirect cost are called "Overhead Expenses” Meaning: Overheads is the aggregate of indirect material cost, indirect labour cost and indirect expenses which cannot be conveniently identified with and directly allocated to a particular cost center or cost object in an economically feasible way. It is also known as indirect cost or burden or on cost.  Overheads = Indirect Material + Indirect Wa...

Steps in Assessing Personal and Financial Goals || MBA - Sem 2 || Personal Financial Planning

Steps in Assessing Personal and Financial Goals 1. Self Reflection and Goal Identification: Begin by reflecting on personal values, aspirations, and life priorities. Identify what truly matters to you and envision the kind of life you want to lead. Based on this self-reflection, define specific financial goals that align with your values and contribute to your overall life satisfaction. 2. Specificity and Realism: Make your goals specific and realistic. Instead of vague objectives like "saving money" or "investing," specify the exact amount you want to save or the targeted returns on your investments. Realistic goals are more achievable and provide a clear roadmap for financial planning. 3. Prioritization: Prioritize your goals based on their importance and urgency. Some goals may be short-term, such as building an emergency fund, while others may be long-term, such as purchasing a home or funding retirement. Establishing priorities helps in allocating resources eff...

Need for Personal Financial Planning || MBA - Sem 2 || Personal Financial Planning

 Need for Personal Financial Planning 1. Seeing the Future with Clear Vision: Personal financial planning provides individuals with a clear vision of their financial future. By setting specific financial goals and creating a roadmap to achieve them, individuals gain a sense of direction and purpose. 2. Ensure Financial Discipline: Financial planning promotes discipline in managing personal finances. Through budgeting, expense tracking, and adherence to a financial plan, individuals are better equipped to control spending and save for their goals. 3. Giving the Person a Direction: Financial planning offers a structured direction for individuals to follow in managing their money. It outlines steps to take, financial milestones to achieve, and timelines for reaching specific objectives. 4. Improves a Person’s Financial Decision Making: A well-thought-out financial plan helps individuals make informed decisions. By considering their current financial situation, future goals, and risk t...