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Business » Taxation System India » inDirect Tax |
InDirect Tax |
An indirect tax, or goods and services tax (GST)) is a tax collected by an intermediary from the person who bears the ultimate economic burden of the tax. The agent later files a tax return and forwards the tax proceeds to government with the return. The term indirect tax is contrasted with a direct tax that is collected directly by government from the persons on which it is imposed.
Custom Duties
Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. Import of goods means bringing into India of goods from a place outside India. India includes the territorial waters of India which enlarge upto 12 nautical miles into the sea to the coast of India. Export of goods means taking goods out of India to a place outside India.
Excise Duty
Excise duty is an indirect tax levied on those goods which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the goods and services are manufactured. It is a tax on manufacturing, which is paid by a manufacturer, who passes its frequency on to the customers.
Sales Tax:
It is an indirect tax levied by the government at the point of sale on retail goods and services. Sales tax is collected by the retailer, which finally forwarded to the state of India. Sales tax is regarded as one of the vital sources of revenue to the states of India. In India, each state has its own sales tax act.
Service Tax:-
Service Tax is a form of indirect tax imposed on specified services called "taxable services". Service tax cannot be levied on any service which is not included in the list of taxable services. Over the past few years, service tax been expanded to cover new services. The objective behind levying service tax is to decrease the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. The intention of the government is to slowly increase the list of taxable services until most services fall within the scope of service tax. For the purpose of levying service tax, the value of any taxable service should be the gross amount charged by the service provider for the service rendered by him.
Value Added Tax
Value added tax (VAT) is similar to a sales tax. It is a tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, ultimately passed on to the consumer. VAT is the indirect tax on the consumption of the goods and services, paid by its original producers upon the change in goods or upon the transfer of the goods to its ultimate consumers. It is based on the value of the goods, added by the transferor. It is the tax in relation to the difference of the value added by the transferor and not just a profit.
VAT is payable on the goods and services as they form a part of national GDP. It means every seller of services and goods provider charges the tax after availing the input tax credit. It is the form of collecting sales tax under which tax is collected in each stage on the value added of the goods. In practice, the dealer charges the tax on the full price of the goods, sold to the consumer and at every end of the tax period reduces the tax collected on sale and tax charged to him by the dealers from whom he purchased the goods and deposits such amount of tax in government treasury.
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