Ed Indirect Taxes - 1

8/6/2019 Ed Indirect Taxes - 1

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Amity Business School

Amity Business SchoolMBA (HR), Semester IIEconomic and Business Legislation

Monica Suri


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DIRECT AND INDIRECT TAXES:

Direct Tax is the tax, which is paid directlyby people to the government, whileindirect tax is paid indirectly by people tothe government through registered

government representatives.


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Income Tax is paid directly to thegovernment therefore it is a direct tax.

While excise duty, sales tax, customs dutyis paid by people to the manufacturer who

pays it to the government, therefore it is anindirect tax.


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CENTRAL EXCISE :

Central Excise is an indirect tax; which is levied andcollected on the goods/commodities manufactured inIndia.

This indirect taxation is administered through anenactment of the Central Government viz., the CentralExcise Act, 1944 and other connected rules.

The rates at which the excise duty is to be collected arestipulated in the Central Excise Tariff Act, 1985.


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Dutiability:

As per section 3 of Central Excise Act (CEA) excise duty

is levied only if the following all conditions are satisfied: - There should be goods.

Goods must be moveable

Goods are marketable

Goods are mentioned in the Central Excise TariffAct

Goods are manufactured in India.


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Chargeability of Excise Duty:

Excise duty is levied on production of

goods but the liability of excise duty arisesonly on removal of goods from the place ofstorage, i.e., ex factory or warehouse.

As Excise duty is levied at the time of removal of goods. Hence the date of itsactual production is not relevant.


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Duty payment:Excise Duty is payable on monthly basis

by 5th of the next month in which duty

payment becomes due, i.e., the month inwhich goods are cleared from the factory.

Small Scale Industry (SSI) is required topay the duty by 15th of the next month.


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Goods and Services Tax Act

GST is the combination of Goods tax like VAT,

CST, Excise & service tax. GST is coming toIndia to uniform the rates of VAT, CST & Centralexcise

- GST will be divided in two parts with the main

ID number such as CGST(Central Goods &service tax) and SGST( state goods and servicetax)


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2- In CGST the different central taxes will sumsuch as

(a) Central Excise

(b) Service Tax(c)Additional Custom Duty (CVD)

(d) Special Additional Duty of Custom-4%(SAD)

(e)Additional Excise Duties

(f) Cess

(g) Surcharges


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In SGST the different State Tax will sum as

(a) VAT/Sales Tax

(b) Luxury Tax

(c) Entertainment Tax

(d) State Cess

(e) State Surcharges

(f) Entry Tax

(g) Tax on gambling, lottery


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There will be one GST which will the

combination of CGST+SGST and

applicable on all interstate transaction and

the tax applicable on value addition. Input

input tax credit will be available to both

importing and exporting states dealers


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CENTRAL SALES TAX:Central Sales Tax Act,1956 (CST Act) provides for levy,

collection and distribution of taxes on sales of goods in

the course ofinter-state trade or commerce.

Inter State Sale (Section 3)

Sale is Inter-State when:

(a) sale occasions movement of goods from one State toanother or

(b) is effected by a transfer of documents of title to the

goods during their movement from one State to another.


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Transactions which are not sales:

i. Charge/ mortgage/ hypothecation/ pledge

ii. Job work/ processingiii. Consignment/ branch transfer/ depot transfer

iv. Barter or exchange

v. Free Gift


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Person liable to pay CST:The Act specifies that every dealer who in the course of inter

State trade or commerce sells the goods shall be liable to

pay tax under the Act. Thus, liability is on the dealer who

'sells' the goods [Section 8(1)].

Registered Dealer:

A 'register dealer' means a dealer who is registered under

CST Act. [section 2(f)]. Section 9A specifies that only a

registered dealer can collect taxes in respect of sales made

by him in Inter State Trade.


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Form C:

The purchasing dealer can issue C form to theseller and purchase goods at concessional rate.

Submission of C form is mandatory and unless Cform is submitted, concessional rate of sales tax willnot apply.

The blank C form has to be obtained by purchasing

dealer from Sales Tax authority in the State wherepurchasing dealer is registered.

The existing concessional rate of CST paid is2% after submission of FORM C


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Customs Act, 1962:

Customs Act is used to :

(a) regulate imports and exports(b) protect Indian industry from

dumping

(c) collect revenue of customs duty.


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Dutiable goods:Goods become liable to import duty or export duty whenthere is import into, or export from India'.

Taxable Event:

In case of Imports:The import of the goods commences when they enterinto territorial waters but taxable event occurs whengoods cross customs barrier.

In case of Exports:Export is complete only when goods cross territorialwaters of India.

* Territorial waters of India extend upto 12 nautical miles

from the baseline on the coast of India.


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Methods of Valuation:The methods of valuation for customs are

as follows -

Transaction Value of Imported goods Transaction Value of Identical Goods

Transaction Value of SimilarGoods


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Types of Custom Duties:i. Basic Custom Duty

ii. Additional Duty or Countervailing Duty

iii. Anti-dumping Duty

iv. Safeguard Dutyv. National Calamity Contingent Duty (NCCD of

customs)

vi. Export Duty

EXISTING BASIC DUTY IS 8 % ( depending onitems) of the basic assessable value and above

that excise, vat would be imposed.

Documents

Ed Indirect Taxes - 1