Indirect Tax


 
 
Concept Explanation
 

Indirect Tax

Indirect Tax: Until recently, the following indirect taxes (a - f) were being levied by Central and State governments. Most of these have since been subsumed in a single indirect tax known as GST (Goods and Service tax)

(a) Sales Tax: When you buy any commodity, you have to pay its cost price plus the sales tax. The manufacturer then pays the tax to the Government. In India, this kind of tax was paid to both the state government (Sales Tax) and the central government (Central Sales Tax), The sales tax was levied only on the intra-sale of commodities (sale within one state). The central tax was levied for inter-state sales (sales within states).

(b) Service Tax (GST): When you avail services, you have to pay tax and this is called service tax. This tax was introduced in 1994 and was applicable on every type of services, except the negative list of services, and was applicable in all the states, except Jammu and Kashmir.

(c) Customs Duty and Octroi: This tax is levied on the goods imported into the country as well as the goods that are exported to any other foreign country. It is charged at the entry point of the country, like airport, docks, etc. The octroi tax is levied on goods that are transported from one municipality to another.

(d) Excise Duty: The excise tax or the central value added tax is levied on the goods that are produced within the country.

(e) Anti Dumping Duty : When goods are exported from one country to another at a price that is lower than the actual price of that commodity, then the government charges anti-dumping duty on it.

(f) Value Added Tax (VAT): Value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price; from that of the seller, it is a tax only on the value added to a product, material or service; and, from an accounting point of view, it is a tax only at the stage of manufacture or distribution of product, material or service.

(g) GST (Goods and Service tax): The Goods and Services Tax (GST) is a Value Added Tax (VAT) recently implemented in India. It replaces most of the indirect taxes levied on goods and services by the Indian central and state governments.

 
 
 


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