INTRODUCTION TO

TAXATION LAWS
- Prof. Ashrita Prasad Kotha
# Understanding the WHAT, WHO, WHEN, WHY and HOW of
Taxation
 Basic rules to be observed
• Readings – compulsory to have read the circulated material
• Use of laptops and mobiles is not permitted during the
lectures / tutorials
• Attendance – respect the system
• Not allowed to enter and exit during the lecture
• Assessment: internal and external components (to be
announced shortly)
 Initial Thoughts on the Course and
Subject

• Mapping the landscape of taxation – what comes to

your mind when we talk of taxation / law of taxation?

• Which disciplines interact with taxation laws? How?

• What is the overview of the course we are going to

cover this term?
 Some quotes on tax
• ‘Nothing is certain but for death and taxes’
• ‘Income tax returns are the most imaginative fiction being
written today.’–Herman Wouk
• ‘They tax when you earn a dollar, they tax you when you save
it, they tax you when you invest it. If you earn a dividend,
they tax it again, and if you're stupid enough to die, they steal
up to half.’
― Grover Norquist, President of Americans for Tax Reform
• ‘He's spending a year dead for tax reasons.’
― Douglas Adams
 Basic Questions to be answered

• WHAT is taxation?
• WHO may tax?
• WHEN is tax levied?
• WHY is taxation imposed?
• HOW must tax policy be designed?
WHAT is taxation?
 WHAT is taxation?

• Compulsory levy
• Imposed by the concerned government
• By way of a legislation
• No element of a quid pro quo
 Practical Exercise: Spot the Taxes
• X, a recent law graduate landed his dream job of working in
a leading pharmaceutical company in India as an assistant
legal counsel. His monthly salary is Rs.1,00,000 and he is
entitled to a performance linked bonus during March each
year. After burning the midnight oil on many an occasion
and sacrificing quite a few weekends, his team managed to
close a crucial acquisition for the company. His hard work
was acknowledged by the boss who announced a year end
bonus of Rs.3,00,000.
• The deal was critical to the profits earned by the company
which posted profits of 1000 crores during the concerned
financial year.
• In the last week of March X realized that he had not availed
of his annual leave and thus, decided to take a week off to
travel. X now embarks on the process of making the bookings
for which he avails the services of a travel agent.
• Once X is back from his holiday, he is given the news by his
boss that as a consequence of the recent success post the
acquisition, the company is now looking at opportunities to
expand its operations overseas. X is now sent to Australia for
undertaking due diligence on a potential target company
located in Sydney. He ends up spending three months in the
project office in Sydney, going through a lot of documentation
after which, finally a due diligence report is prepared. X
returns to New Delhi and resumes work as usual while the
company is considering whether it should expand its
operations to Australia.
• From the money he saved during his stay in Australia, he
decides to buy shares of a leading blue chip company. Within
two months, as there is an increase in the price of the shares
he sells them off earning a return of Rs. 50,000 on his
investment.
WHO may tax?
 WHEN is tax levied?
• Is tax paid at periodic intervals?
Or
• Is tax paid on a daily basis?
WHY: Revenue augmentation or
plundering?
WHY: Tax as a tool to regulate
behavior
 WHY: Is tax to be used to reduce
inequities / achieve redistribution?
HOW must tax policy be designed?
HOW must tax policy be designed?