1. Write a note on the following:
a. Tax holidays
Answer : A tax holiday is a temporary reduction or elimination of a tax. Programs may be referred to as tax abatements, tax subsidies, tax holidays, or tax reduction programs. Governments usually create tax holidays as incentives for business investment. Tax holidays have been granted by governments at national, sub-national, and local levels, and have included income, property, sales, VAT, and other taxes. Some tax holidays are extra statutory concessions, where governing bodies grant reduction in tax not necessarily authorized within the law. In developing countries, governments sometimes reduce or eliminate corporate taxes for the purpose of attracting Foreign Direct Investment or stimulating growth in selected industries.
Tax holiday stimulate community revitalization, retain City residents, attract homeowners to the City, and to reduce development costs for homeownership and rental projects. The program provides a benefit for residents who improve their homes and encourages home shoppers to buy in the City. The tax abatement benefits stay with the property the entire length of the abatement and will transfer to any new property owner within that period.
A tax holiday may be given in respect of particular activities,[1] in particular areas with a view to develop that area of business,[2] or to particular taxpayers.[3]
Sales tax holidays in the United States
In New York, a state-wide sales tax holiday was first enacted by the New York Legislature in 1996 and enabled the first tax-free week in January 1997. Local governments in New York were given the option of whether or not to participate.[4] Since then, the initiative has been adopted by thirteen states. It commonly takes place as a form of tax-free weekend lasting Friday through Sunday, usually during a major shopping period for necessities, such as just before school starts. During that period, sales tax is not collected on selected items, such as clothing and school supplies. The items subject to the sales tax exemption may also be restricted by price (for example, clothing up to $100), but consumers are free to buy unlimited quantity of items.
As with other sales taxes, visiting residents of non-participating states who purchase tax-free goods (holiday or not) may still have to pay “use tax” on their goods that they take home.
b. SEZ
Q2. Comment on incomes which are exempted from the tax.
Q3. Enumerate the differences between tax planning and tax evasion.
Q4. What are the key steps to calculate the tax liability of an individual.
Q5. Explain the basic rules of deductions.
Q6. Explain the capital gains exempt from tax.
