Tax and Fee

 DIFFERENCE BETWEEN TAX AND FEE? 

                                         TAX

(1) Tax is the compulsory payment to the Government without getting any direct benefits.

(2) In regard to tax, there is not and must not always be, direct correlation between the tax and the service intended to be rendered.

(3) Tax is compulsory payment.

(4) In tax is imposed on a person he has to pay it otherwise he has to be penalized.

(5) Example of Tax:-

  Income Tax, Gift Tax, VAT, Wealth Tax etc.

 

                                            FEE

(1) Fee is the voluntary payment for getting service.

(2) In regard to fee, there is and must always be , correlation between the fee collected and service intended to be rendered.

(3) Fee is voluntary payment.

(4) On the other hand, fee is not paid if the person does not want to get the service.

(5) Fee payer can get direct benefit for paying fee.

(6) Example of Fee:- 

Stamp fee, driving license fee, Government registration Fee etc.

Fee and Honorarium

 DIFFERENCE BETWEEN FEE AND HONORARIUM? Question asked in HPFAS (2008, 2013, 2018)      

                                                 FEE

Fee is a recurring or non-recurring payment to a Government Servant as remuneration for service done by him for a private person or body or for a public body including a body administering a Local Fund from a source other than the Consolidated Fund of India / Consolidated Fund of State / Consolidated Fund of Union Territory whether made directly or indirectly through the intermediary of Government and does not includes:-

(a) Unearned income such as income from property, dividends and interest on securities.

(b) Income from literary, cultural, artistic, scientific or technological effort.

(1) If the source of payment is not the Consolidated Fund of India/ Consolidated Fund of State/ Consolidated Fund of Union Territory, the payment is classified as fee.

(2) Unless specially exempted by Government in cases where the fee exceed Rs. 5000  Rs. Five Thousand Rupees Only (Form the Year 2021) in a Financial Year, One Third (1/3rd) of such fees in excess of Rs. 5000 shall be credited to the Consolidated fund of India or of the state to which his pay and allowances are charged, subject to the condition that the balance amount retained by him does not fall short of Rs. 5000. 

 

 

                                        HONORARIUM

Honorarium is a recurring or non-recurring payment granted to a Government servant from the Consolidated Fund of India/ Consolidated Fund of State/ Consolidated Fund of Union Territory as remuneration for a special work of an occasional or intermittent character.

(1) If the source of Consolidated Fund of India/ Consolidated Fund of State/ Consolidated Fund of Union Territory the payment is classified as Honorarium.

(2) Amount of Honorarium sanctioned can be retained in full by the employee and no portion need be credited to Government.

Diffence between Compensatory Allowance and Subsistence Allowance?

Diffence between Compensatory Allowance and Subsistence Allowance? Question Asked in HPFAS 2008

COMPENSATORY ALLOWANCE:-

(1) Compensatory Allowance is an allowance granted to a Government Servant to meet personal expenditure necessitated by the special circumstances in which duty is performed.

(2) Grant of compensatory allowance should be so regulated that the allowance is not on the whole a source of profit to the recipient.

(3) Example of Compensatory Allowance:- Daily Allowance, Tough Location Allowance, Special (Duty) Allowance, Project Allowance, Hard Area Allowance and Risk Allowance.

SUBSISTENCE ALLOWANCE:-

(1) Subsistence Allowance is a monthly allowance granted to a government servant when he is under suspension and is based on the pay drawn by him immediately before suspension.

(2) Subsistence Allowance determined on the basis of basic pay, pay level of the post or fixed.

(3) Entitlement of the Subsistence Allowance to Government servant shall be 50% of Basic Pay.

For Example; If Basic Pay is Rs. 10000 + DA @ Rs. 10%

Then Subsistence Allowance will be Basic Pay Rs. 5000 +DA  Rs.500 = Rs. 5500

Define Re-appropriation, Finance Commission, Public Account, Outcome Budgeting, Expenditure Control?

 What is Re-appropriation? Question asked in HPFAS (2008)

Ans. Re-appropriation means the transfer of funds from one Primary unit of appropriation to another such unit.

 

Define Finance Commission? Question asked in HPFAS (2008)

Ans. Finance commission is constituted by the President under Article 280 of the constitution, mainly to give its recommendation on distribution of tax revenues between Union and States and amongst the States themselves. Two distinctive features of the commission work involve redressing the vertical imbalances between the taxation powers and expenditure responsibilities of the Centre and the States respectively and equalization of all public services across the states.

 

Define Public Account? Question asked in HPFAS (2008, 2011)

Ans. Public Account" means the Public Account of the State Government in which all public moneys other than those which form a part of the Consolidated Fund of the State, received by or on behalf of the State are credited and from which disbursements are made in accordance with the specified instructions.

 

What is Outcome Budgeting? Question asked in HPFAS (2011)

Ans. An outcome budgeting or outcome-based budgeting (OBB) is a method of budgeting that measures the progress of each department and ministry and what they have done with its allocated budget. It is the practice of developing budgets based on the relationship between funding and expected results.

(i) It is a process of budgeting done at micro levels that sets measurable physical targets to be allocated on every planned project under various ministries.

(ii) The outcome budget becomes a means to establish a linkage between the fund spent by a Government and the outcome that follows.

(iii) It works as the progress card on what various ministries and departments have done within a particular years.

(iv) It measures qualitative and quantitative aspects of the budget.

(v) It makes the budget more accountable and transparent.

What is Expenditure Control? Question asked in HPFAS (2011)

Ans. Expenditure control means power of the various authorities to incur expenditure within prescribed limit for the purpose for which fund have been provided. Objective of the expenditure control is to ensure that public sources are spent as intended within authorized limits and following sound financial management principle.

Before incurring any expenditure the spending authority shall ensure that:-

(i) The expenditure does not exceed the budget allocation.

(ii) The expenditure is incurred for the purpose for which fund have been provided.

(iii) The expenditure is in the public interest.

 

Define Vote of Credit, Contingency Fund, Finance Bill, Appropriation Bill, Book Transfer, Controlling Officer, Disbursing Officer?

 Define Vote of Credit? Question asked in HPFAS (2004)

Ans. Vote of credit is the financial grant given to the executive from the resources of India to meet urgent financial requirements whose details can not be shared ordinarily in budget.

 

Define Contingency Fund? Question asked in HPFAS (2006)

Ans. Contingency Fund means the contingency fund of the State established under the Himachal Pradesh Contingency Fund Act, 1971 (Act 9 of 1971) and maintained under clause (2) of Article 267 of the Constitution of India.

 

Define Finance Bill? Question asked in HPFAS (2006)

Ans. Finance Bill is a money bill, the Government seeks to levy new taxes, make alterations in the current tax structure or make proposals from the continuance of the present tax structure for a certain period beyond what was originally approved by the Parliament. The Parliament approved this bill for one fiscal year. Post getting approved, the Finance bill becomes the Finance Act.

 

What is Appropriation Bill? Question asked in HPFAS (2006)

Ans. An appropriation bill is a bill that authorizes the Government to withdraw funds from the Consolidated Fund of India for use during the financial year.

(i) As per Article 114 of the constitution, the Government can withdraw money from the consolidated fund only after receiving approval from the Parliament.

(ii) The amount withdrawn is used to meet the current expenditure during the financial year.

  

What is Book Transfer? Question asked in HPFAS (2006)

Ans. Book Transfer means the process whereby financial transactions which do not involve the giving or receiving of cash or of stock material, are brought to account. Such transactions represent liabilities and assets brought to accounts either by way of settlement or otherwise but they may also represent corrections and amendments made in cash, stock or book transfer transactions previously taken into account;

Define Controlling Officer? Question asked in HPFAS (2006)

Ans. Controlling Officer means Head of the Department or any other officer entrusted by a department with the responsibility of controlling the incurring of expenditure and/ or collection of revenue.

Define Disbursing Officer? Question asked in HPFAS (2006)

Ans. Disbursing Officer means Head of the Department, Head of office and also any other officer designated by Head of the Department, to draw bills and make payments on behalf of the State Government.