CHIEF EDITOR S DESK Sound tax policies of a nation are an indication of strong governance and sustainable development. This fact is reflected from the historical perspective also. All the successful rulers known for being good administrators had also put in place an excellent revenue collection system be it the Mauryas, Guptas, Iltutmish or Akbar. Their name to fame was not just because of their potential supremacy but also because of the taxation policies they pursued.
TAXES CAN BE BROADLY CLASSIFIED INTO TWO CATEGORIES: Direct Tax Indirect Tax The government body that oversees the payment of direct taxes is called Central Board of Direct Taxes (CBDT) The CBDT is a part of the Department of Revenue
WHICH OF THE FOLLOWING IS CORRECT REGARDING CBDT? 1. The CBDT Chairperson is ex-officio special secretary and is under the direct charge of the revenue secretary of India. 2. He has a fixed tenure of 3 years A. Only 1 is true B. Only 2 is true C. Both are true D. Both are false answer - A
DIRECT TAX Income Tax Capital Gains Tax - This tax is payable when you receive a fairly large amount of money from an investment or through a property sale, whatever be it. Securities Transaction Tax - Every time you buy a share, on the Indian Stock Exchange you're also paying the tax on it. Perquisite Tax - If the office vehicle is used for both official and personal reason could be taxed but if it's only used for official purposes, no taxes are levied on it.
DIRECT TAX Corporate Tax - This is the income tax levied on the revenue earned by a company. The international companies have different tax rates compared to the domestic companies.
INDIRECT TAX Indirect taxes aren't directly payable to the Government by the consumer. They are collected and paid to the government by the middle man i.e. the person who provides the service or sells the product. These taxes are added to the price of the product thus making it costlier. Some of the most common examples of indirect taxes are Value Added Tax (VAT) and Sales Tax.
SOME OF THE EXAMPLES OF INDIRECT TAXES Sales Tax: This is the tax that is levied or imposed on the sale of the product. The tax is imposed on the product seller who transfers it to the end consumer. The sales tax is included in the price of the item sold.
SOME OF THE EXAMPLES OF INDIRECT TAXES Service Tax: Like Sales Tax is added to the selling price of goods, Service Tax amount is added to the services provided. The Service Tax is applicable only to companies that provide services. It is collected on a monthly or quarterly basis depending upon how the service is provided.
SOME OF THE EXAMPLES OF INDIRECT TAXES Value Added Tax: This tax is levied or imposed throughout all the stages of the supply chain viz. the manufacturer, the distributor, wholesaler, retailer all the way to the consumer. However, it is not applicable on food items, essential drugs or exported items. VAT is only applicable on food items that are prepared in the restaurant as they add value before serving it to you. So make sure that you are not charged VAT on packaged food items or water bottles. Under state government
SOME OF THE EXAMPLES OF INDIRECT TAXES Custom Duty & Octroi: Custom Duty is the tax levied on goods that need to be imported from another country by land, sea and or air. It doesn't matter if you purchase the said item in a different country and then bring it to India. The taxes will still be imposed. While the Custom Duty makes sure that the products entering India are properly taxed, similarly the Octroi makes sure that goods leaving the state borders are appropriately taxed. The Octroi charges are maintained by the state government.
Excise Duty: This is the tax that is levied on all goods that are manufactured in India. It is also called the Central Value Added Tax or CENVAT. The tax is collected by the government from the manufacturers or from those who receive and consequently distribute the manufactured goods
OTHERS Entertainment Tax Education Cess/Surcharge Swachh Bharat Cess Krishi Kalyan Cess
WHAT IS GST? Goods and Services Tax (GST) is an indirect tax GST or Goods and Service Tax is the comprehensive tax that is brought into effect in order to replace all the other indirect taxes (mentioned above) imposed by the state and central government. It is levied on manufacture, sale and use of the goods and services.
HOW GST WILL WORK IN INDIA GST, once implemented will club all of these separate State and Central taxes into Central GST and State GST, thus erasing the borders between states and making India a common market place.
TAXES CURRENTLY LEVIED AND COLLECTED BY THE CENTRE a. Central Excise duty b. Duties of Excise (Medicinal and Toilet Preparations) c. Additional Duties of Excise (Goods of Special Importance) d. Additional Duties of Excise (Textiles and Textile Products) e. Additional Duties of Customs (commonly known as CVD) f. Special Additional Duty of Customs (SAD) g. Service Tax h. Central Surcharges and Cesses so far as they relate to supply of goods and services.
STATE TAXES THAT WOULD BE SUBSUMED UNDER THE GST ARE: a. State VAT b. Central Sales Tax c. Luxury Tax d. Entry Tax (all forms) e. Entertainment and Amusement Tax (except when levied by the local bodies) f. Taxes on advertisements g. Purchase Tax h. Taxes on lotteries, betting and gambling i. State Surcharges and Cesses so far as they relate to supply of goods and services.
WHICH OF THE FOLLOWING STATE TAXES ARE NOT INCLUDED IN GST? 1) State Value Added Tax 2) Luxury tax 3) Taxes on lottery, betting and gambling a. 1, 2 b. 1, 3 c. All of the above d. None of the above Answer - D
Goods for other states during manufacturing can be bought at cheaper rates. The final price of products will be much cheaper due to reduction in multiple taxes (Tax Cascading)
CASCADING EFFECT Action Cost Tax 10% Total Buys raw materials 100 10 110 VAT(state tax) Manufacturing+40 150 15 165 -Excise Wholesaler+30 195 19.50 214.50 -VAT Retail + 20 234.50 23.45 257.95 - CST Total 190 67.95 257.95
GST ACROSS THE GLOBE About 160 countries in the world already have a unified GST or VAT in place France kickstarted this back in 1954. Almost all of the European countries have GST. USA happens to be one of the world powers without a GST, as it provides a high level of autonomy to the states when it comes to taxation.
Goods and Service Tax is imposed by the government as a sort of Value Added Tax on the goods you buy or services that you enjoy. Pre-GST, the taxes imposed by the state include Sales Tax, Value Added Tax, Octroi, Stamp Duty, Entertainment Tax, Toll Tax etc. The Central government levies Customs Duty, Income Tax, Excise Duty, Central Sales Tax while the Property Tax is imposed by local authorities.
ADVANTAGES OF GST The GST being a federal law prevents the states have their own taxation laws on goods and services. Makes the taxation system easier to understand and cost effective in terms of implementation. Tax evasion at various stages will be eliminated as tax offsets can be collected only if taxes have been paid originally. You will also be able to buy raw materials or constituent materials for production only from those who have paid taxes, in order to claim benefits.
DISADVANTAGES GST is not good news for all sectors, though. In the current system, many products are exempted from taxation. The GST proposes to have minimal exemption list. Currently, higher taxes are levied on fewer items, but with GST, lower taxes will be levied on almost all items.
GST has eliminated all the above-mentioned taxes. After July 1 excise, octroi, sales tax, CENVAT, Service tax, turnover tax, etc. are not applicable. Now all these taxes fall under GST.
GST WILL NOT CAUSE INFLATION IN INDIA About 160 countries in the world already have a unified GST or VAT in place France kickstarted this back in 1954. Almost all of the European countries have GST. USA happens to be one of the world powers without a GST, as it provides a high level of autonomy to the states when it comes to taxation.
WHAT IS SGST/CGST/IGST? For e.g.: Rajesh, a dealer in Maharashtra sold goods to Anand in Maharashtra worth Rs. 10,000. The GST rate is 18% comprising of CGST rate of 9% and SGST rate of 9%, in such case the dealer collects Rs. 1800 and Rs. 900 will go to the central government and Rs. 900 will go to the Maharashtra government.
tax Rates Products 0% Milk Kajal Eggs Educations Services Curd Health Services Lassi Children s Drawing & Colouring Books Unpacked Foodgrains Unbranded Atta Unpacked Paneer Unbranded Maida Gur Besan Unbranded Natural Honey Prasad Fresh Vegetables Palmyra Jaggery Salt 5% Sugar Packed Paneer Tea Coal Edible Oils Raisin Domestic LPG Roasted Coffee Beans PDS Kerosene Skimmed Milk Powder Cashew Nuts Footwear (< Rs.500) Milk Food for Babies Apparels (< Rs.1000) Fabric Coir Mats, Matting & Floor Covering Spices Agarbatti Coal Mishti/Mithai (Indian Sweets) Life-saving drugs Coffee (except instant)
12% Butter, Computers Ghee Processed food Almonds Mobiles Fruit Juice Preparations of Vegetables, Fruits, Nuts or other parts of Plants including Pickle Murabba, Chutney, Jam, Jelly Packed Coconut Water Umbrella 18% Hair Oil Capital goods Toothpaste Industrial Intermediaries Soap Ice-cream Pasta Toiletries Corn Flakes Computers Soups Printers
28%Small cars (+1% or 3% cess) High-end motorcycles (+15% cess) Consumer durables such as AC and fridge Beedis are NOT included here Luxury & sin items like BMWs, cigarettes and aerated drinks (+15% cess)