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The term direct tax generally means a tax paid directly to the
government by the persons on whom it is imposed.
An indirect tax (such as sales tax, a specific tax [a tax per unit], value
added tax (VAT), or goods and services tax (GST)) is a tax collected by
an intermediary (such as a retail store) from the person who bears the
ultimate economic burden of the tax (such as the customer).
Types of Taxes
In India Tax is regulated and administered by
the Ministry of Finance under the
Government of India. Taxation is the
government's main source of revenue and
several types of taxes are applied to different
categories of the population.
The following is a brief description of some of
the taxes that are levied in India by the
government:
Income Tax: The Income Tax Act of 1961 stipulates that
any person who qualifies as an assessee and whose
gross income is more than the exemption limit is
required to pay Income Tax in accordance with the
rates indicated by the Finance Act.
Corporate Tax is the tax charged on the profits earned
by associations and companies by several jurisdictions.
The rate of Corporate Tax in India depends on whether
the profits have been passed on to the shareholders or
not.
Value Added Tax: This is the tax that a
manufacturer needs to pay while purchasing
raw materials and a trader needs to pay while
purchasing goods. VAT is eventually expected to
replace Sales Tax. All goods and services
provided by business individuals and companies
come under the ambit of VAT.
Capital Gains Tax: A Capital Gain can be
defined as an, any income generated by selling
a capital investment (business stocks,
paintings, houses, family business, farmhouse,
etc.). The 'gain' here is the difference between
the price originally paid for the investment
and money received upon selling it, and is
taxable.
Service Tax As per the Finance Act of 1994, all service providers in
India, except those in the state of Jammu and Kashmir, are required
to pay a Service Tax in India.
Fringe Benefit Tax: As per Section 115WB of the Finance Bill,
expenses incurred for employees, by an employer
(individual/company/local authority/trader) for purposes of
entertainment, gifts, telephone, clubbing, festivals etc., will be treated
as Fringe Benefits and will be taxed.
Sales Tax: a tax based on the cost of the item purchased and
collected directly from the buyer
Tax Planning is an application to reduce tax liability through the
finest use of all accessible allowances, exclusions, deductions,
exemptions, etc, to trim down income and/or capital profits.
Tax evasion
India is divided into various States and Union Territories and each
State and Union Territory has certain powers in respect of that
particular State.
Taxation under Constitution
In the basic scheme of taxation in India, it is
envisaged that
(a) Central Government will get tax revenue from
Income Tax (except on Agricultural Income),
Excise (except on alcoholic drinks) and Customs
(b) State Government will get tax revenue from
sales tax, excise on liquor and tax on Agricultural
Income
(c) Municipalities will get tax revenue from octroi
and house property tax.
Excise Duty is an indirect tax levied and collected
on the goods manufactured in India.
Customs duty is a kind of indirect tax which is
realized on goods of international trade. In
economic sense, it is also a kind of consumption
tax. Duties levied by the government in relation to
imported items are referred to as import duty.
In the same vein, duties realized on export
consignments is called export duty
Octroi (O. Fr. Octroyer, to grant, authorize) is a
local tax collected on various articles brought
into a district for consumption.
The Central sales tax Act 1956 was enacted by
the Parliament and received the assent of the
president on 21.12.1956.
Objectives of CST
To formulate principles regarding when a sale or
purchase of goods takes place:
In the course of inter state trade
In the course of import/export trade
It aims to find out determination of taxable
turnover
It aims to find out Registration of dealers
It implies how and when central sales tax is
imposed
Constitutes Of Sales Tax Act in India
According to S2 (g), a sale refers to any transfer of
property in goods by one person to another for cash or,
deferred payment or, for any other valuable
consideration. It also includes the following:
1. A sale or purchase of goods is said to take place when
the transfer of property in the existing goods or future
goods takes place for consideration of money.
2. The goods have been divided into different categories
and different rates of sales tax are charged for different
categories of goods.
3.In most of the cases related to the sales tax,
the tax on the sale or purchase of goods is at
single point.
4. Under the provisions of some state laws the
assesses are divided into several categories such
as manufacturer, dealer, selling agent etc. and
such as assess is required to obtain a
registration certificate to that effect
What are goods?
Goods, for the purposes of the Act, include
the following:
Materials.
Articles.
Commodities.
All kinds of movable property. (Movable
property is property, which is capable of being
lifted, carried, drawn, turned or conveyed or
in any way made to change place or position.
Sales Tax In India
Sales tax is levied on the sale of a commodity
which is produced or imported and sold for the
first time. If the product is sold subsequently
without being processed further, it is exempt
from sales tax.
Sales tax can be levied either by the Central or
State Government, Central Sales tax department.
Also, 4 per cent tax is generally levied on all inter-
State sales. State sales taxes that apply on sales
made within a State have rates that range from 4
to 15 per cent.
Sales tax is also charged on works contracts in
most States and the value of contracts subject
to tax and the tax rate vary from State to
State.
However, exports and services are exempt
from sales tax.
Sales tax is levied on the seller who recovers
it from the customer at the time of sale.
Sales Tax in India is that form of tax which is imposed
by the government on sale/purchase of a particular
commodity within the country.
It is imposed under Central Government (Central Sales
Tax) and the State Government (Sales Tax) Legislation.
Normally, each state has its own sales tax act and levies
the tax at various rates.
Apart from sales tax, certain states also impose extra
charges such as works contracts tax, turnover tax &
purchaser tax. Thus, sales tax plays a major role in
acting as a major generator of revenue for the various
State Governments.
The Central Sales Tax (CST) Act that comes under
the direction of Central Government takes into
consideration all the interstate sales of
commodities.
Hence, we see that sales tax is to be paid by every
dealer when he sells any commodity, during
inter-state trade or commerce, irrespective of the
fact that there may be no liability to pay tax on
such a sale of goods under the tax laws of the
appropriate state.
Municipal/Local Taxes
Octroi/entry tax: Certain municipal
jurisdictions levy an Octroi/entry tax on the
entry of goods
It is a tax on sale
Though it is a Central Tax But it is collected and retained by the
State from where movement of goods commences
Sale of goods shall be deemed to take place in the course of
inter-State trade or commerce, if
Occasions the movement of goods; or
Transfer of documents of title during movement of goods
A sale within the State, which is not an inter-State sale or export
or import, is a intra-State sale
Tax generally depends upon location of goods That is, state
where invoice is raised is immaterial
WHAT ARE THE CONDITIONS FOR CST
ACT TO BECOME APPLICABLE.
Sales Tax
TAX LEVIED
Last point sales tax.
M D W R C
TAX LEVIED.
Multi point sales tax.
M D W R C
TAX LEVIED