Summer Internship Project Report (1) g6f6w

Summer Internship Project report On INDIRECT TAXES PROCEDURE AT SHRIRAM PISTONS AND RINGS LTD. Submitted towards the Partial Fulfillment of POST GRADUATE DIPLOMA IN MANAGEMENT ACADEMIC SESSION (2016-2018)

SUBMITTED BY: Saurabh Bhardwaj Roll No: BM-016207 UNDER THE GUIDANCE OF: Industry Guide Mr Navneet Aggarwal Asst Manager Shriram Pistons And Ring Ltd

Faculty Guide Mr Mayank Kumar Asst. Professor IMS GZB

STUDENT DECLARATION

I hereby declare that the project report titled “Importance of taxation in financial management” is an original work done by me under the guidance of Dr Mayank Kumar (assistant professor) and no part is taken from any other project or material published or otherwise submitted to any other college or institute.

Name: Saurabh Bhardwaj Roll No: BM-016207

ACKNOWLEDGEMENT

I would like to take this opportunity to express my gratitude to all the concerned people who have directly or indirectly contributed towards the completion of this project. I extend my sincere gratitude towards employees of Shriram Pistons & Rings Ltd, Ghaziabad, India for providing the opportunity and resources to work on this project.

I am extremely grateful to my Industry guide Mr Navneet Aggarwal and also my faculty guide Mr Mayank Kumar whose insight encouraged me to go beyond the scope of the project and this broadened my learning on this project.

I also want to show my gratitude to my parents and my friends whose insight helped me to complete this project.

PREFACE

The project has been carried out while working as a summer intern in Shriram Pistons & Rings Limited, Ghaziabad. No professional studies are considered complete without Training experience. Every individual who is doing management studies has to undergo this practical studies, one can’t consider himself/herself a fully eligible manager. The study has enabled me to enhance my knowledge & skills on different process adopted by SPRL. While conducting Training, the study have provided me Shriram Pistons & Rings Limited how to Provide solutions to the problems. How to conduct such type of project work & what method to be followed & necessary steps to be taken to gather useful information. As a whole, I have experienced that practical work is entirely different from the classroom learning. The working is far more different.

COMPANY PROFILE

Shriram pistons and rings ltd develops, manufactures and sells pistons, piston rings, pins and engine valves for oems. The company offers diesel and gasoline pistons and cast iron, steel and moly piston rings. The company also provide replacement parts to automotive workshops, repair shops and service stations. Shriram pistons and rings ltd products are used in automobile vehicles and gensets. The company was incorporated in 1963 and is based in delhi.

Shriram pistons and rings ltd manufactures and sell automotive components in india and internationally. Its products are used by enger vehicles, two/three wheeler, commercial vehicles, tractors and industrial engine manufacturers. Shriram pistons and rings ltd is a subsidiary of SPR international exports ltd.

BOARD OF DIRECTORS 

Mr. Pradeep Dinodia-chairman



Mr. Hari S. Bhartia



Mrs Meenakshi Dass



Mr. Ravinder Narain



Mr C.Y. Pal



Dr Alexander Sagel



Mr. M. sekimoto



Mr Inderdeep singh



Mr. Toru Suzuki



Mr. A.K. Taneja



Mr. R. Srinivasan



Mr. Luv D. Shriram- wholetime director



Dr. Peter Neu



Mr. N. Okano- alternate director

Principal Executives 

Mr. A.K. taneja



Mr. R. Srinivasan



Mr. Anil Gadi



Mr. V.K. Jayaswal



Mr. Devendra Mishra



Mr. Jenender Anand



Mr Naveeen Agarwal



Mr Arun Shukla



Mr Subrata Negoy

Advisors



Mr Rajiv Sethi



Mr. Rakesh Anand



Mr. P.S. Ladiwala

Technical Collaborators 

KS Kolbenschmidt Gmbh,



Riken Corporation, japan



Honda Foundry Co. Ltd, japan



Fuji Oozx Inc, japan

Bankers 

UCO Bank



State Bank of Hyderabad



Corporation Bank



Axis Bank Ltd



HDFC Bank Ltd



IDBI Bank Ltd



Citi Bank Ltd



HSBC Ltd

Shriram Pistons & Rings Limited manufactures and sells automotive components in India and internationally. The company offers pistons, piston pins, piston rings, and engine valves. Its products are used by enger vehicle, two/three wheeler, commercial vehicle, tractor, and industrial engine manufacturers. The company was incorporated in 1963 and is headquartered in New Delhi, India. Shriram Pistons & Rings Limited is a subsidiary of SPR International Auto Exports Ltd.

HR PHILOSOPHY

Personnel policies and systems are designed to be ive for the growth and stability of the organization, so that we meet the business objectives. Emphasis is laid on continuous training and development of all our employees, so that the Company maintains a competitive advantage in the market place. SPR is constantly striving to improve the quality of work force through training, development and multi-skilling. The workmen and supervisors / engineers are encouraged to participate in problem solving, using technologies and taking decisions to improve the quality of their work and workplace. There is need-based training program for everyone as per the job requirement of the individuals.

MAIN PRODUCTS MANUFACTURED BY SHRIRAM PISTONS & RINGS LIMITED

1. PISTONS

A piston is a component of reciprocating engines, reciprocating pumps, gas compressors and pneumatic cylinders, among other similar mechanisms. It is the moving component that is contained by a cylinder and is made gas-tight by piston rings. In an engine, its purpose is to transfer force from expanding gas in the cylinder to the crankshaf via a piston rod and/or connecting rod. In a pump, the function is reversed and force is transferred from the crankshaft to the piston for the purpose of compressing or ejecting the fluid in the cylinder. In some engines, the piston also acts as a valve by covering and uncovering ports in the cylinder wall.

2. PISTONS RINGS

A piston ring is a split ring that fits into a groove on the outer diameter of a piston in a reciprocating engine such as an internal combustion engine or steam engine. The three main functions of piston rings in reciprocating engines are:

1. Sealing the combustion chamber so that there is minimal loss of gases to the crank case. 2. Improving heat transfer from the piston to the cylinder wall.

3. Maintain the proper quantity of the oil between the piston and the cylinder wall 4. Regulating engine oil consumption by scraping oil from the cylinder walls back to the sump. The gap in the piston ring compresses to a few thousandths of an inch when inside the cylinder bore. Piston rings are a major factor in identifying if an engine is two stroke or four stroke. Three piston rings suggest that it is a four stroke engine while two piston rings suggest that it is a two stroke engine. Most piston rings are made of a very hard and somewhat brittle cast iron.

3. PISTONS PINS

In internal combustion engines, the pin connects thepiston to the connecting rod and provides a bearing for the connecting rod to pivot upon as the piston moves. In very early engine designs (including those driven bysteam and also many very large stationary or marine engines), the gudgeon pin is located in a sliding crosshead that connects to the piston via a rod. A piston pin is a pivot or journal

4. ENGINE VALVES Every cylinder in an internal-combustion engine contains one intake valve and one exhaust valve. Both valves open and close internal ages in the cylinder head. The intake valve is the larger of the two valves. It controls the flow of fuel into the combustion chamber. A multi-valve engine design typically has three, four, or five valves per cylinder to achieve improved performance. Any four-stroke internal combustion engine needs at least two valves per cylinder: one for intake of air and fuel, and another for exhaust of combustion gases.

ENGINEERED FOR THE FUTURE  OVER 4 DECADES OF EXCELLENCE Shriram Pistons & Rings (SPR) has an exceptional lineage of the Shriram group, one of india’s oldest and most reputed industrial houses. SPR is recognized by all almost OEMs in India, and several OEMs in Europe, USA and Asia as a dependable partner for supply of Euro 3, 4 & Euro 5 pistons, Pins, Pistons Rings and engine Valves.  BETTING BIG ON TECHNOLOGY The company has capability of Design Develop, Validate & Manufacture finished goods for OEMs in India at its Tech Centre with 50+ Designs and Engineering Professionals trained by its technology partner in Concepts Design, FEA, Simulation, Rig Testings , Prototype Development, Engine testing & Analysis. This is supplemented with continuous technology

and application engineering manufacturing processes. This enables the company to provide end-to-end solutions to OEMs, that offers optimum performance and are cost competitive.  CENTRE OF MANUFACTURING EXCELLRENCE The company deploys most modern manufacturing equipment and processes, using stateof-the-art technology from our global leaders. SPR has evolved into a Centre of manufacturing excellence, employing over 5000 motivated and multi-skilled employees. The annual turnover is US$ 200 million. The company is the largest manufacturer of Pistons & Rings from India and the largest supplier of Engine valves to OEMs in India.  CUSTOMER FIRST “Total Customer Satisfaction through Quality Management and Continous Improvement” has been Shriram Pistons & Rings grow from strength to strength. Our products from an integral part of the portfolio of leading OEMs in India & Abroad including for Euro 4 & 5 Engines. Our client list reads like “Who’s who” of the automobiles industry and include Ashok Leyland, AVTECH, Baja, Cummins, DAIMLER, Ford, Greaves, Hero Motorcorp, HMT, Honda, Jaguar Land Rover, Kia, Kirloskar, Lombardini, Mahindra, Maruti Suzuki, New Hololand, Nissan, Renault, Simpsons & company, Suzuki, swaraj Engines, Swaraz Mazda, TAFE, TATA, Tata Cummins, TVS, Volvo-Eicher, VM Motori(FIAT), WABKO, Yamaha, and many more.  WE EXPORT TO STAY AHEAD Export is at the core SPR’s business strategy – Development and manufacture of latest technology products for OEMs in Europe, USA etc. challenges the enterprises to hone its manufacturing processes, technology and quality to global standards. This acts as a catalyst to transform the entire originations. Not surprisingly. SPR is the largest exporter of Pistons & Rings from India to discerning customers, including Ford, Honda, Kia, Renault WABCO and the company has the “Trading House” status from Government of India. SPR and USHA are also amongst the best recognized brand names in the after market abroad.

 THE UNMATCHED JOY OF TOGETHERNESS We walk hand-in-hand with global technological leaders, who share our commitments to product quality, performance and customers centricity. We have technical collaboration with Kolbenschmidt (KS) & Honda Foundary, Japan for Pistons, Riken Corporation, Japan for Rings and Fuji Oozx, Japan for engine valves.

CUSTOMERS OF SHRIRAM PISTONS DOMESTICS OEMS (ORIGINAL EQUIPMENTS MANUFACTURERS) 1. ENGER VEHICLES

 Ford  Honda cars  Mahindra & Mahindra  Maruti Suzuki  Nissan  Suzuki powertrain  Tata Motors

2. TWO/THREE WHEELERS  Bajaj Auto  Hero Motocorp  Honda Motorcycles & Scooters  Suzuki Motorcycle  TVS Motors  India Yamaha Motors

3. COMMERCIAL VEHICLES

 Ashok Leyland  Daimler India  Mahindra & Mahindra  SML Isuzu  Tata Motors  Tata Cummins  VE Commercial Vehicles

4. TRACTORS

 HMT  Mahindra & Mahindra  Mahindra Swaraj  New Holland  International Tractors  Tafe  Escorts

5. INDUSTRIAL ENGINES

 Cummins  Greaves  Honda

Siel

Power Products  Kerala Agro  Kirloskar  Lombardini  WABCO

GLOBAL OEMS (ORIENTED EQUIPMENT MANUFACTURERS)

SALES AND SERVICES

1. Jalandhar

(godowns)

2. Ghaziabad

(plants)

3. New delhi

(godowns, Head office, Regional sales office)

4. Gurgaon

(godowns)

5. Sahibabad

(godowns)

6. Pathredi

(plant)

7. Patna

(godown)

8. Ahmedabad

(godown)

9. Indore

(sales office, godown)

10. Kolkata

(Regional sales office, godown)

11. Pune

(Regional sales office, godown)

12. Hyderabad

(godown)

13. Bengalore

(Regional sales office, godown)

14. Chennai

(Regional sales office, godown)

15. Jaipur

(godown)

COMPETITORS OF SHRIRAM PISTONS

1. Federal Mogul Limited 2. Menon pistons limited

3. Banco produxts india limited.

MAJOR TRANSPORTER USED BY SPRL

1. Om logistics (All over India) 2. ABT travels/ AB logistics (only for NCR) 

Gurugram



Manesar



Alwar



Noida etc…. .

3. Prakash parcel (local places) 

Noida



Ghaziabad



Sahibabad etc… .

4. BSLX limited only for Tata Cummins Ltd., Jamshedpur. 5. Nominent transporter- This is the transport send by the customer themselves to pick up the products from the company.

CSR Policy



SPR’s Policy is to conduct its business responsibly, and improve the quality of life of people, especially in the society close to our area of operation, while creating long term value for all stake holders.



The above policy is applicable for all CSR projects/programmes undertaken by the company

The company has undertaken CSR projects and programmes listed in Schedule VII of the Companies Act, 2013 in the following areas: 

Education



Health Care



Sanitation



Environment



Rural development



Any other areas as approved by the CSR Committee/Board

CSR Budget



Every year, the company is required to spend atleast 2% of the average net profits made by the company during immediately preceding 3 financial years.



Projects aimed at persons from disadvantageous background or persons who are differently abled have priority.



Based on the recommendation by the CSR Committee to the Board every year, the Board considers and approves the CSR Plan for the year.



Any surplus arising out of CSR activities does not form part of business profits of the company and forms part of CSR corpus.



The company has spent Rs.56.6 Million during last 3 years on CSR Projects and Programmes as follows:-

Year

Amount (Rs./Million)

2014- 6.58

15 201516 201617



18.50

31.52

The main projects and programmes undertaken by the company are as follows:-

Education

1.

Adoption of one Senior Secondary Government Girls School and two Government Primary Schools

2.

Two Vocational Training Centres for women for their empowerment.

3.

Diploma Courses for 10th / 12th students enabling them to get employment.

Health Care

1.

Four charitable dispensaries and a Mobile Medical Van to provide medical care to the needy.

2.

Organising Health Care/Preventive/Yoga/Blood Donation Camps etc.

3.

Provision of drinking water by installing Hand Pumps and Water Coolers etc.

Environment

1.

Development of Park and other areas.

2.

Rain water harvesting

Sanitation

1.

Building of toilets

Implementation



A Central Deptt. has been created for implementing CSR activities across the company ed by adequate personnel at Plants.



The CSR activities are implemented in any of the following manner:-

o

Directly

o

Collaborating with various organisations, which are ed as a Trust or a Section 8 company or Society or NGO or any other entity specialising in CSR activity.

o

Collaborating with other companies or industry bodies like CII, FICCI, etc.

o

Contributing to various funds permitted under the Companies Act, 2013.



The CSR activities are carried out in a transparent and time bound manner.

Monitoring



After the CSR plan is approved by the Board, the CSR cell takes steps for implementation of the CSR activities.



The progress on implementation of CSR activities are reviewed by a Committee under the Chairmanship of Managing Director.



The CSR Committee reviews the progress on implementation of CSR activities on annual basis and submits progress report to the Board. CSR Awards Received



Bhamashah Samman given by Rajasthan Govt. for the years 2015 and 2016 for CSR projects/programmes undertaken in the field of education.



CSR Excellence Award 2017 given by Rajasthan Government for Industry, Innovation and Infrastructure.

TAXATION IN INDIA

Taxes are levied by governments on their citizens to generate income for undertaking projects to boost the economy of the country and to raise the standard of living of its citizens. The authority of the government to levy tax in India is derived from the Constitution of India, which allocates the power to levy taxes to the Central and State governments. All taxes levied within India need to be backed by an accompanying law ed by the Parliament or the State Legislature. Types of Taxes: Taxes are of two distinct types, direct and indirect taxes. The difference comes in the way these taxes are implemented. Some are paid directly by you, such as the dreaded income tax, wealth tax, corporate tax etc. while others are indirect taxes, such as the Value Added Tax, Central Sales Tax, Service Tax, Entry Tax etc. 1.

Direct Taxes

2.

Indirect Taxes

But, besides these two conventional taxes, there are also other taxes that have been brought into effect by the Central Government to serve a particular agenda. ‘Other taxes’ are levied on both direct and indirect taxes such as the recently introduced Swachh Bharat Cess tax, Krishi Kalyan Cess tax, and infrastructure Cess tax among others. 1) Direct Tax: Direct tax, as stated earlier, are taxes that are paid directly by you. These taxes are levied directly on an entity or an individual and cannot be transferred onto anyone else. One of the bodies that overlooks these direct taxes is the Central Board of Direct Taxes (CBDT) which is a part of the Department of Revenue. It has, to help it with its duties, the of various acts that govern various aspects of direct taxes.

1. Income Tax: This is one of the most well-known and least understood taxes. It is the tax that is levied on your earning in a financial year. There are many facets to income tax, such as the tax slabs, taxable income, tax deducted at source (TDS), reduction of taxable income, etc. The tax is applicable to both individuals and companies. For individuals, the tax that they have to pay depends on which tax bracket they fall in. This bracket or slab determines the tax to be paid based on the annual income of the assessee and ranges from no tax to 30% tax for the high income groups.

The government has fixed different taxes slabs for varied groups of individuals, namely general taxpayers, senior citizens (people aged between 60 to 80, and very senior citizens (people aged above 80). New Income Tax Slab Rates for FY 2017-18 (AY 2018-19)

Income Tax Slab

Tax Rate

Income up to Rs. 2,50,000*

No Tax

Income from Rs. 2,50,000 – Rs. 5,00,000

5%

Income from Rs. 5,00,000 – 10,00,000

20%

Income more than Rs. 10,00,000

30%

Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs. 1 crore.

Cess: 3% on total of income tax + surcharge.

* Income upto Rs. 2,50,000 is exempt from tax if you are less than 60 years old. Income tax slab for individual tax payers & HUF (60 years old or more but less than 80 years old) (both men & women) Income Tax Slab

Tax Rate

Income up to Rs. 3,00,000*

No Tax

Income from Rs. 3,00,000 – Rs. 5,00,000

5%

Income from Rs. 5,00,000 – 10,00,000

20%

Income more than Rs. 10,00,000

30%

Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.

* Income up to Rs. 3,00,000 is exempt from tax if you are more than 60 years but less than 80 years of age.

Income tax slab for super senior citizens (80 years old or more) (both men & women) Income Tax Slab

Tax Rate

Income up to Rs. 2,50,000*

No Tax

Income up to Rs. 5,00,000*

No Tax

Income from Rs. 5,00,000 – 10,00,000

20%

Income more than Rs. 10,00,000

30%

Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.

*Income up to Rs. 5,00,000 is exempt from tax if you are more than 80 years old. Below, you will find a few tables that list out Income Tax Slab Rates for FY 2016-17 (AY 2017-18) These income tax slab rates are also applicable for :FY 2015-16 (AY 2016-17) FY 2014-15 (AY 2015-16) .

Income Tax Slab for General Taxpayers :

Income Tax Slab

Tax Rate

0 – 3,00,000

No TAX

3,00,001 - 5,00,000

5% tax

5,00,001 - 10,00, 000

20% tax

Above 10,00,000

30% tax

Income Tax Slab for Senior Citizens (Ages between 60 to 80 years) :

Income Tax Slab

Tax Rate

0 - 3,00,000

No tax

3,00,001 - 5,00,000

10% tax

5,00,001 - 10,00, 000

20% tax

Above 10,00,000

30% tax



Income Tax Slab for Super Senior Citizens (Ages Above 80 years) :

Income Tax Slab

Tax Rate

0 - 5,00,000

Nil

5,00,001 - 10,00, 000

20% tax

Above 10,00,000

30% tax

Capital Gains Tax:

This is a tax that is payable whenever you receive a sizable amount of money. It could be from an investment or from the sale of a property. It is usually of two types, short term capital

gains from investments held for less than 36 months and long term capital gains from investments held for longer than 36 months. The tax applicable for each is also very different since the tax on short term gains is calculated based in the income bracket that you fall in and the tax on long term gains is 20%. The interest thing about this tax is that the gain doesn’t always have to be in the form of money. It could also be an exchange in kind in which case the value of the exchange will be considered for taxation.

 Securities Transaction Tax:

It’s no secret that if you know how to trade properly on the stock market, and trade in securities, you stand to make a substantial amount of money. This too is a source of income but it has its own tax which is known as the Securities Transaction Tax . How this tax is levied is by adding the tax to the price of the share. This means that every time you buy or sell shares, you pay this tax. All securities traded on the Indian stock exchange have this tax attached to them.

4. Perquisite Tax:

Perquisites are all the perks or privileges that employers may extend to employees. These privileges may include a house provided by the company or a car for your use, given to you by the company. These perks are not just limited to big compensation like cars and houses, they can even include things like compensation for fuel or phone bills. How this tax is levied is by figuring out how that perk has been acquired by the company or used by the employee. In the case of cars, it may be so that a car provided by the company and used for both personal and official purposes is eligible for tax whereas a car used only for official purposes is not.

5. Corporate Tax:

Corporate tax is the income tax that is paid by companies from the revenue they earn. This tax also comes with a slab of its own that decides how much tax the company has to pay. For example a domestic company, which has a revenue of less than Rs. 1 crore per annum, won’t have to pay this tax but one that has a revenue of more than Rs. 1 crore per annum will have to pay this tax. It is also referred to as a surcharge and is different for different revenue brackets. It is also different for international companies where the corporate tax may be 41.2% if the company has a revenue of less than Rs. 10 million and so on.

There are four different types of corporate tax. They are:



Minimum Alternative Tax:

Minimum Alternative Tax, or MAT, is basically a way for the Income Tax Department to get companies to pay a minimum tax, which currently stands at 18.5%. This form of tax was brought into effect through the introduction of Section 115JA of the Income Tax Act. However, companies involved in infrastructure and power sectors are exempt from paying MAT. Once a company pays the MAT, it can carry the payment forward and set-off (adjust) against regular tax payable during the subsequent five-year period subject to certain conditions.



Fringe Benefit Tax:

Fringe Benefit Tax, or FBT, was a tax which applied to almost every fringe benefit an employer provided to their employees. In this tax, a number of aspects were covered. Some of them include: 1.

Employer’s expense on travel (LTA), employee welfare, accommodation, and entertainment.

2.

Any regular commute or commute related expense provided by an employer.

3.

Employer’s contribution to a certified retirement fund.

4.

Employer Stock Option Plans (ESOPs).

FBT was started under the Indian government’s stewardship from April 1, 2005. However, the tax was later scrapped in 2009 by the-then Finance Minister Pranab Mukherjee during the 2009 Union Budget session.



Dividend Distribution Tax:

Dividend Distribution Tax was introduced after the end of 2007’s Union Budget. It is basically a tax levied on companies based on the dividend they pay to their investors. This tax is applicable on the gross or net income an investor receives from their investment. Currently, the DDT rate stands at 15%.



Banking Cash Transaction Tax:

Banking Cash Transaction Tax is yet another form of tax that has been abandoned by the Indian government. This form of taxation was operation from 2005-2009 until the then FM Pranab Mukherjee nullified the tax. This tax suggested that every bank transaction (debit or credit) would be taxed at a rate of 0.1%. Indirect Tax:

By definition, indirect taxes are those taxes that are levied on goods or services. They differ from direct taxes because they are not levied on a person who pays them directly to the government, they are instead levied on products and are collected by an intermediary, the person selling the product. The most common examples of indirect tax Indirect tax can be VAT (Value Added Tax), Taxes on Imported Goods, Sales Tax, etc. These taxes are levied by adding them to the price of the service or product which tends to push the cost of the product up. Examples of Indirect Taxes: These are some of the common indirect taxes that you pay.

1.

Sales Tax:

As the name suggests, sales tax is a tax that is levied on the sale of a product. This product can be something that was produced in India or imported and can even cover services rendered. This tax is levied on the seller of the product who then transfers it onto the person who buys said product with the sales tax added to the price of the product. The limitation of this tax is that it can be levied only ones for a particular product, which means that if the product is sold a second time, sales tax cannot be applied to it. Basically, all the states in the country follow their own Sales Tax Act and charge a percentage indigenous to themselves. Besides this, a few states also levy other additional charges like turnover tax, purchase tax, works transaction tax, and the like. This is also the reason why sales tax is one of the largest revenue generators for various state governments. Also, this tax is levied under both central and state legislations.

2.

Service Tax:

Like sales tax is added to the price of goods sold in India, so is service tax added to services provided in India. In the reading of the budget 2015, it was announced that the service tax will be raised from 12.36% to 14%. It is not applicable on goods but on companies that provide services and is collected every month or once every quarter based on how the services are provided. If the establishment is an individual service provider then the service tax is paid only once the customer pays the bills however, for companies the service tax is payable the moment the invoice is raised, irrespective of the customer paying the bill. An important thing to is that since the service at a restaurant is a combination of the food, the waiter and the premises themselves, it is difficult to pin point what qualifies for service tax. To remove any ambiguity, in this regard, it has been announced that the service tax in restaurants will be levied only on 40% of the total bill.

2a. GST - Goods and Service Tax:

The Goods and Services Tax (GST) is the largest reform in India’s indirect tax structure since the market started opening up about 25 years ago. The GST is a consumption-based tax, as it is applicable where consumption takes place. The GST is levied on value-added goods and services at each stage of consumption in the supply chain. The GST payable on the procurement of goods and services can be set off against the GST payable on the supply of goods and services, the merchant will pay the applicable GST rate but can claim it back through the tax credit mechanism.

3.

Value Added Tax:

VAT, also known as commercial tax is not applicable on commodities that are zero rated (eg. food and essential drugs) or those that fall under exports. This tax is levied at all the stages of the supply chain, right from the manufacturers, dealers and distributors to the end . The value added tax is a tax that is levied at the discretion of the state government and not all states implemented it when it was first announced. The tax is levied on various goods sold in the state and the amount of the tax is decided by the state itself. For example in Gujrat the government split all the good into various categories called schedules. There are 3 schedules and each schedule has its own VAT percentage. For Schedule 3 the VAT is 1%, for schedule 2 the VAT is 5% and so on. Goods that have not been classified into any category have a VAT of 15%.

4.

Custom duty & Octroi:

When you purchase anything that needs to be imported from another country, a charge is applied on it and that is the customs duty. It applies to all the products that come in via land, sea or air. Even if you bring in products bought in another country to India, a customs duty can be levied on it. The purpose of the customs duty is to ensure that all the goods entering the country are taxed and paid for. Just as customs duty ensures that goods for other countries are taxed, octroi is meant to ensure that goods crossing state borders within India are taxed appropriately. It is levied by the state government and functions in much the same way as customs duty does.

5.

Excise Duty:

This is a tax that is levied on all the goods manufactured or produced in India. It is different from customs duty because it is applicable only on things produced in India and is also known as the Central Value Added Tax or CENVAT. This tax is collected by the government from the manufacturer of the goods. It can also be collected from those entities that receive manufactured goods and employ people to transport the goods from the manufacturer to themselves. The Central Excise Rule set by the central government provide suggest that every person that produces or manufactures any 'excisable goods', or who stores such goods in a warehouse, will have to pay the duty applicable on such goods in. Under this rule no excisable goods, on which any duty is payable, will be allowed to move without payment of duty from any place, where they are produced or manufactured.

Other Taxes:.

While direct and indirect taxes are the two main types of taxes, there are also these small cess taxes that are also seen in the country. Although, they aren’t major revenue generators and are not considered to be as such, these taxes help the government fund several initiatives that concentrate on the improving the basic infrastructure and maintain general well being of the country. The taxes in this category are primarily referred to as a cess, which are taxes levied by the government and the funds generated through this are used for specific purposes as per the Finance Minister’s discretions.

Examples of Other taxes:

Below are some of the examples of other taxes that are seen most commonly in India.

1.

Professional Tax:

Professional Tax, or employment tax, is another form of tax levied only by state governments in India. According to professional tax norms, individuals earning income or practicing a profession such as a doctor, lawyer, chartered ant, or company secretary etc. are required to pay this tax. However, not all states levy professional tax and the rate differs across all the states that levy the tax.

2.

Property Tax - Municipal Tax:

Also known as Property Tax or Real Estate Tax, this is one of the taxes levied by local municipal bodies of every city. These taxes are levied in order to provide and maintain the for basic civic services. All owners of residential or commercial properties are subject to Municipal Tax.

3.

Entertainment Tax:

Entertainment Tax is yet another type of tax commonly seen in India. It is levied by the government on feature films, television series, exhibitions, amusement, and recreational parlours. This tax is collected taking into a business entity’s gross collection collected from earnings based on commercial shows, film festival earnings, and audience participation.

4.

Stamp Duty, Registration Fees, Transfer Tax:

Stamp duty, registration fees, and transfer taxes are collect as a supplement of property tax. For instance, when an individual purchases a property, they also have to pay for the cost of stamps (stamp duty), registration fees (fee charged by local registrar to legalize a property transaction), and transfer tax (tax paid to transfer the ownership of a commodity.

5.

Education Cess/Surcharge:

Education cess is a tax in India primarily introduced to help cover the cost of governmentsponsored educational programs. This tax is collected independently of other taxes and is applicable to all Indian citizens, corporations, and other people living in the country. The effective rate of education cess currently stands at 2% of an individual’s income.

6.

Gift Tax:

When an individual receives a gift from another person. It is considered to be a part of their income generated through “other sources” and the relevant tax is levied. This tax is applicable if the gift amount is more than Rs. 50,000 in a year.

7.

Wealth Tax:

Wealth Tax was another tax levied by the government, which was charged based on the net wealth of the assessee. Wealth tax is chargeable with respect to the net wealth of a property. Net wealth is equal to all the assets an individual owns minus the cost of acquiring them (any loan taken to acquire them). Wealth tax is no longer operational as it was abolished during the Union Budget of 2015. The wealth tax, governed by the Wealth Tax Act, allows the government to impose a tax on the net wealth of a person, an HUF or a company. This tax is set to be abolished in 2016 but until then the tax levied on the net wealth is about 1% of the wealth that exceeds Rs. 30 lakhs. There are exceptions to this tax which are organisations that don’t have to pay wealth tax. These organisations could be trusts, partnership firms, social clubs, political parties, etc.

8.

Toll Tax & Road Tax:

Toll tax is a tax you often pay to use any form of infrastructure developed by the government, example roads and bridges. The tax amount levied is rather negligible which is used for maintenance and basic upkeep of a particular project.

9.

Swachh Bharat Cess:

This is a cess imposed by the government of India and was started from 15 November 2015. This tax is applicable on all taxable services and the cess currently stands at 0.5%. Swachh Bharat cess is levied over and above the 14% service tax that is prevalent in the present times. One thing worth noting here is that this cess is not applicable on services that are fully exempt of service tax or those services covered under the negative list of services. It is collected by the Consolidate Fund of India and will be used to funding and promoting any government campaigns concerning the Swachh Bharat initiatives. This tax, however, is independent of service tax and is charged as a separate line item in invoices.

10.

Krishi Kalyan Cess:

This is yet another cess brought about by the government of India since the June of 2016. It is basically introduced in order to extend welfare to all the farmers and to the improvement of agricultural facilities in the country. Like Swachh Bharat cess, this tax is also applicable on all taxable services with an effective rate of 0.5% and is charged over and above the service tax and Swachh Bharat cess.

11.

Infrastructure Cess :

Infrastructure cess is another tax brought into effect from the 1st of June 2016. Under this tax, a cess of 1% is applicable on petrol/LPG/CNG-driven motor vehicles which are 4 meters or less in length and 1200cc or less in engine capacity. In case the diesel motor vehicles which don’t exceed the 4 metre length and have engines with capacities less than 1500cc, a tax of 2.5% is to be paid. For big sedans and SUVs, the cess stands at 4% of the overall cost of the vehicle.

12.

Entry Tax:

Entry tax is a tax levied in select states across the country like Uttarakhand, Madhya Pradesh, Gujarat, Assam, and Delhi. Under this, all items entering the state ordered via ecommerce establishments are taxed. The rate for this tax varies between 5.5% to 10%. These are all the types and kinds of taxes that are present in India’s current economic scenario. The funds collected from these methods don’t just fuel the country’s revenues but also provides the much-needed impetus to help the lower classes prosper.

Benefits of Taxes:

Even though most people are always at odds with the idea of taxation, there are some advantages to taxes, the least of which is that it provides the government the resources it needs for economic development. Some of the other benefits of taxes are: 

It encourages savings and investments because if a person invests in certain instruments, then the amount invested is reduced from their taxable income thus bringing down the tax they have to pay. This investment is subject to certain limits that are detailed in the IT Act.



Paying taxes means that you have to file your tax returns which in turn means that when you apply for a home loan for that home loan, it’s easier to get it because one of the things many banks require is proof that you have been filing taxes regularly.

PROBLEM OBJECTIVE

The present study at shriram pistons and rings ltd. Meerut road Ghaziabad has been undertaken to evaluate the taxation system followed by the company by establishing the following objectives which answer the followings:



To understand the service tax policy followed by the company.



To understand the value added tax policy followed by the company.



To understand central sales tax policy followed by the company.



To understand the tax deducted at source followed by the company.

RESEARCH METHODOLOGY

During my tenure at shriram pistons and rings ltd. I have learned various procedures and techniques followed by the company. I have also learned the role of taxation in day to day working of shriram pistons and rings ltd.

Research Design

The research design is the conceptual structure within which research is conducted. As such the design includes an outline of what the researcher will do from writing the hypothesis and its operational implications to be final analysis of data. There are two main research are used for the collection of the data. Descriptive and Exploratory research is used in the collection of information.

Sample Design

The total strength of shriram pistons and rings ltd. In the s department is 22. This includes manager, asst. manager, senior executive, head of the department. Only those employees were considered for the purpose of study that had been working on different types of taxes in the company. This research was done with the executive employees of the organisation.

1. Sample unit the sample has been collected from shriram pistons and rings ltd.

2. Sample size The sample has been collected from the employees of shriram pistons and rings ltd. s department, working on indirect taxes in the department.

3. Sampling technique I have worked in the documentation of service tax and Value added tax vouchers and also researched about the application of both the type of indirect taxes from the employees working on the concerned taxes.

Collection of Data

Data for the completion of this study was collected both from primary and secondary sources. Primarily, data was collected while working with the documentation of service tax and value added tax vouchers. Secondary data was collected from internet, service tax bills, sales tax bills, balance sheet.

FINDINGS

VALUE ADDED TAX

VAT is a kind of tax levied on sale of goods when these commodities are ultimately sold to the consumer. VAT is an integral part of the GDP of any country.

While VAT is levied on Taxable Turnover of sale of goods and paid by Dealer (ed Person) to the government, the actual tax is levied from customers or end s who purchase these. Thus, it is an indirect form of tax which is paid to the government by Consumer but via Dealers. VAT is a multi-stage tax which is levied at each point of sale of goods which involves sale/purchase. Any person earning an annual turnover of more than Rs.5 lacs by taxable turnover of sale of goods is liable to in VAT.

Features of Value Added Tax in India:



VAT minimizes Cascading effect of taxation. (Tax on Tax which was prevalent in earlier Trade Tax System)



VAT is levied at each point of sale and hence makes the taxation process easier and more transparent



VAT reduces chances of tax evasion and fosters compliance



Encourages transparency in sale of goods and services at the tiniest level

VAT was introduced in uttar Pradesh on 1st January 2008, delhi in 1st april 2005 and 1st april 2003 in rajasthan.

PAYMENT OF VAT AT SPRL:  

Computation of tax liability: Reconciliation of sale, purchase and tax liability with books of s: The company follows ing Standard-10 which states that the transaction should be recorded when the payment is made but according to the VAT act the transaction should be recorded when the invoice is raised, so the company reconciles their according



to the VAT act.. Payment of tax liability: The company first adjusts the tax liability with the VAT paid by the company. If after this adjustment the liability is left then the company adjust the

liability with the CST paid. If the liability is still left then the remaining amount is 

deposited the concerned department. Filing of VAT return: The company files VAT return by filling the prescribed form i.e. form-24. The company has the turnover of more than 1 crore so the company has to file monthly VAT return, the company has to file the return latest by 20th of the succeeding month.

STATE LEVEL FORMS (FORMS UNDER VAT)

Form -38: form-38 is the road permit which SPRL issues when the company purchases the goods. 

Form E: there are some of the goods on which no tax is collected by the company on the sale of the goods as per the order of commissioner, the goods are sold by the



company against form-E. Form D: the company also purchases some non-VAT goods from the government organisations, these goods are purchased by the company against form D. for example the company purchases high speed diesel from IOCL against form-D.

Input tax credit: Input tax credit is the credit availed by manufacturer on payment of VAT on inputs used in the manufacture of products. Similarly, a Trader is entitled to avail input tax credit if he use purchased goods for resale. All dealers are liable for output tax on taxable sales done in the process of his business. For example if a dealer purchase a good for Rs 50 and pays Rs 5 as VAT and sells the good for Rs 100 and collects Rs 10 as VAT then the dealer is liable to pay 10-5= Rs 5 only to the government.

Compliances to be followed to claim input tax credit:



The purchase should be local i.e. the buyer and the seller should be of the same state. If the sale is interstate the input tax credit cannot be claimed.



The Item purchased should be related to manufacturing process.



The purchase should be from ed dealer (so that we can obtain Tax Invoice)

SPRL procedure for claiming Input Tax Credit: 

The invoice issued should be original and not duplicate or counterfoil.



The TIN number of both buyer and seller should be mentioned clearly on the invoice with the address of both buyer and seller.



The invoice should be pre-authenticated.



The serial number and book number of the invoice should be clearly mentioned on the invoice.



Tax should be separately shown on the invoice.

Input tax credit of capital goods: the input tax credit of capital goods of a particular year is claimed in three equal instalments in the succeeding 3 years in the month of april.

For example the ITC for the financial year 2016-17 will be claimed as follows: 

April’17-

1st instalment



April’18-

2nd instalment



April’19-

3rd instalment

Input tax credit for revenue goods: The input tax credit of revenue goods is claimed within the same tax period in the subsequent month.

CENTRAL SALES TAX

The Central Sales Tax (CST) is a levy of tax on sales, which are effected in the course of inter-State trade or commerce. According to the Constitution of India, no State can levy sales tax on any sales or purchase of goods that takes place in the course of interstate trade or commerce. The central sales tax is collected by the state government but it is deposited by the state government to the central government.

CST returns are also filed by the company. The company files the CST return online by filling the prescribed form i.e. form-1. The CST return is to be filed by the 20 th of the month succeeding the month for which the return is to be filed.

CENTRAL LEVEL FORMS:  Form –C: This form is issued by the company when the company does interstate purchase of goods. This form is beneficial as the company has to pay only 2% tax for the purchase against Form-C. If the company does not issue this form then the company has to pay full amount of tax as prescribed in the act.  Form-F: this form is issued by the company when the company is not selling the goods to the outside party but the company is doing stock transfer from one state to another.  Form-H: This form is issued by the company when the company sells the goods to outside party who exports the goods in present form.  Form-I:

SERVICE TAX

There are two types of taxes lieved by the government:

Direct taxes



Indirect taxes

Direct taxes are those taxes, the burden of which can be shifted to others .i.e. the liability of paying the tax can shifted to some other person. Indirect taxes are those, the burden of which can be shifted to others. i.e. the liability of paying the tax can be shifted to some other person. Service tax is also a type of indirect tax that is lieved by the state government. The firm or a company having the turnover from service of more than 10 lakhs has a mandate to be ed and take a service tax registration number.

The person having the service tax registration number collects tax under 3 heads:

Service tax – 14%



Swach bharat cess – 0.5%



Krishi kalyan cess – 0.5%

The service tax is lieved according to nature of the work being done. If the work is a pure labour job the tax is lieved in a different way and if the work is a mixed job i.e. providing material and the service both are provide then the tax is lieved in a different way. 

In case of pure labour job:-

Basic amount*15% .i.e if the job work is of Rs 100 then the service tax will be of 100*15% i.e Rs 15



In case of mixed job:- in case of mixed job there are two types of work 1. Original work- the work of setting up of something new. In this case the material provided will be more than the job work done. So the service tax calculations will be as follows:-

Basic amount*40%*15% .i.e. if the total work is done of Rs 100 Then the service tax would be 100*40%*15% .i.e. Rs 6.

2. repairing work – the work of repairing something already set up. In this the material provided will be less than the job work done. So the service tax calculation will be as follows:basic amount*70%*15% .i.e. if the total work is done of Rs 100, then the service tac would be 100*70%*15% .i.e. Rs10.5. the payment of the service tax amount collected is done in 2 ways 

forward charge



reverse charge

forward charge is the condition in which the responsibility of making payment to the government is of the service provider. In case of reverse charge the responsibility of making payment to the government is of the service receiver. There are two cases in reverse charge. Full reverse charge in which responsibility of the full amount is of the service receiver. Partial reverse charge in which the responsibility is partially of the service provider and partially of the service receiver. In case of reverse charge the payment of service tax is not treated as the cost to the company. The amount of service tax paid is deducted from the excise duty that the company has to pay.

There are three ing entries which need to be ed in case of reverse reverse charge . 1. expense A/C dr service tax recoverle A/C dr to party A/C 2. party A/C dr to excise payable to sales

3. excise payable A/C dr to service tax recoverable A/C

Some of the Compliances that need to be followed for service tax are:

service tax is to be paid by the 6th of the month immediately following the month in which service is deemed to be provided.



In reverse charge the tax will be collected on the date on which payment is made to the service provider, if payment is made within 3 months of the date of issue of the invoice.



If payment is not made within 3 months, tax collection will be done on the date immediately following the period of 3 months.



In case of one person company with turnover less than 50 lakhs , individual, proprietary firm, partnership firm, limited liability partnership, hindu undivided family, service tax is paid quarterly within 5 days od the end of the quarter.



In the month of march or quarter of march, the payment is to be done by 31st March.