Indirect taxes India PDF Download – Economics

Indirect taxes India PDF Download – Economics

Indirect taxes India PDF Download - Economics

What is the Meaning of Indirect Taxes?

Indirect taxes India PDF Download – Economics

  • Indirect tax is a type of tax collected by the government from an intermediary such as manufacturer or retailer. The eventual burden of the tax falls on to consumers who buy goods and services from the intermediary, as the intermediary applies indirect taxes on the product in the form of Value Added Tax (VAT), service tax, sales tax etc.
  • Indirect taxes are called so because they are collected indirectly from consumers by the government through intermediaries, who are the first payers of the tax to the government. These taxes are different from direct taxes such as income tax which is collected directly from taxpayers. Indirect taxes include taxes such as sales tax, service, tax, VAT etc. whereas income tax, wealth tax, corporation tax etc. fall under the ambit of direct taxes.
  • Unlike direct taxes, indirect taxes are levied on goods and services rather than individuals. Individuals pay the taxes indirectly in the form of higher prices on their purchases. A retailer selling a product to you has already levied indirect taxes on the product, which is then passed on to the relevant tax-collection authorities.

Features of Indirect Taxes:Indirect taxes India PDF Download – Economics

  • Levied on goods and services sold by an intermediary to final consumers. Consumers than pay the tax in the form of higher price of items.
  • Broadly divided into categories such as sale of goods, imported/exported goods, offering of services and manufacture of goods.
  • Indirect taxes are levied on clearance of goods and services from the origin, instead of actual sale of the products to the customers. What this means is that the intermediary will pay excise duties irrespective of whether they could sell the good or service to consumers.
  • Indirect taxes fall under both the central and state governments according to specific type of indirect tax. For instance, VAT is levied by the state governments whereas CST is levied by the central government.

Indirect tax is a type of tax collected by the government from an intermediary such as manufacturer or retailer. The eventual burden of the tax falls on to consumers who buy goods and services from the intermediary.

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Some of indirect taxes are : Indirect taxes India PDF Download – Economics

Sales Tax:

  • Sales tax charged on the sales of movable goods. Sales can be broadly classified in three categories. (a) Inter-State Sale (b) Sale during import/export (c) Intra-State (i.e. within the State) sale. State Government can impose sales tax only on sale within the State.

Service Tax:

  • Tax paid on services like  telephone, tour operator, architect, interior decorator, advertising, beauty parlour, health centre, banking and financial service, event management, maintenance service, consultancy service is termed as service tax.
  • Current rate of interest on service tax is 15%. This tax is passed on to us by service provider.

Value Added Tax:

  • Value-added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005
  • VAT is levied on both the producer and consumer while a sales tax is levied on only the end consumer.
  • VAT is applied at the various stages of production while sales tax is applied on the total value of the purchase.
  • Maharashtra was the first state to implement VAT in India.
  • VAT is decided by State government
  • It can be range from one to 25 per cent.

Custom duty:

  • Custom Duty is a type of indirect tax charged on goods imported into India. It varied from 0 to 150 % in India.

Excise Duty:

  • An excise or excise duty is a type of tax charged on goods produced within the country. Basic excise duty in India is 12.5 %.

GST(Goods and services tax):

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  • GST will facilitate a uniform tax levied on goods and services across the country. Currently so many indirect taxes are imposed on one item in India like sales tax, Vat , excise duty on production of goods. GST will replace all the indirect taxes and levied only at the destination end, mean at the time of final delivery of goods or services.
  • Both states and centre have the power to legislate on GST.