Relief Tax – Tax Attorney

Tax relief may be defined as exemption from certain types of taxes such as income tax, service tax and capital gains taxes. It can be obtained mainly through tax deductions at source, that is to say, if the taxable income of a certain individual is reduced through certain “allowable deductions.” These allowable deductions can take the form of contribution to pension funds and may also accommodate provisions for capital gains losses and business losses.

Tax relief may be defined as exemption from certain types of taxes such as income tax, service tax and capital gains taxes. It can be obtained mainly through tax deductions at source, that is to say, if the taxable income of a certain individual is reduced through certain “allowable deductions.” These allowable deductions can take the form of contribution to pension funds and may also accommodate provisions for capital gains losses and business losses.

Tax deductions at source allows individuals to pay taxes on a much lower amount of taxable income which also implies lower net taxes thus providing a certain “relief” from the amount of taxes previously incurred.

Tax relief schemes are also offered by national governments to encourage individuals to contribute towards certain funds in times of emergency. For example, according to Circular No. 6 of 2004 of the Central Board of Direct Taxes (CBDT) under the Department of Revenue of the Ministry of Finance of the Government of India, 100% tax relief was offered for contributions (on salaries obtained in the financial year 2004) made to the Prime Minister’s National Relief Fund set up for the victims of the deadly Tsunami occurred on Dec 26, 2004. For contributions to the Chief Minister’s Relief Fund, 100% was offered only in the event that the fund is the only of its kind set up in the state and is administered in such a manner specified by the state government and is under the direct supervision of the Chief Secretary or the Ministry of Finance of the State Government. As for receipt for the contribution, it was notified that it will be in the name of the employee even if the contribution was made through an employer. These contributions would, in turn, be taken into account by the employer to calculate the amount of tax deductions at source.

Regarding more recent developments in the Indian context, the government with the Finance Ministry in a pre- Budget (2007-08) interactive session with various export promotion groups indicated that major tax exemptions would be offered on exports of textiles, readymade garments, gems, leather and jewellery. Reacting to the demand of the chairmen of many export promotion councils to rationalize the levies and also reduce the Central Sales Tax (CST) from its present level of 4% which erode the competitiveness of Indian exports in the global market, it was announced on the part of the central government that the production techniques should be improved with the upgradation of technologies which would in a way help to reduce the manufacturing cost of the various commodities when produced in a large scale. Other examples from India include the proposed income-TR for the merger of the Indian Airlines with Air India put forwarded by the Civil Aviation Ministry.

The American consciousness of the free market economy and the encouragement given to people to create, work-hard and take risks has resulted in the continued prosperity of the country over the past century. Now the present government attempts to make the economy more inclusive for the average middle-class American with access to higher standards of living and improved medical healthcare. Greatest tax cuts for the lowest income families have been proposed with rationalizing the tax structure.

This schemes also include offering tax deductions to non-itemized charitable contributions that constitute the majority of the population. The government has also announced various measures which will guarantee the typical American family with two children a tax relief of at least $1600. Marginal tax rate cuts are also anvil to recover an economy which is currently slowing down with deep fall occurring in 2000 when the economic growth rate fell to 1.4% on an annual basis.

Many tax credits are offered on research and development activities in many countries across the world to promote research in various fields of study and also provide incentives for technological innovation which could really benefit the country in terms of better productivity. The Research and Development (R&D) tax credits announced by Her Majesty Revenue and Customs (HMRC), UK, aims to offer this for investment in innovation and also reduce a company’s tax bill or to offer cash sums for small and medium-sized companies. It works by allowing companies deduct up to 150% of qualifying expenditure on R&D activities when calculating their profits for tax purposes.

Tax reliefs while offering incentives for contributions for charitable causes also offer deduction in the tax bills for households as well as big companies.