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Indirect Tax - Basic Concepts
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- 1Define Tax.Pecuniary burden laid upon individuals or property owners in order to support the Government, a payment exacted by legislative authority. A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority".
In simple words, tax is nothing but money that people have to pay to the Govt. which is used to provide public services. - 2Features of Indirect Taxes.1. Important source of revenue
2. Tax on commodities and services
3. Shifting of burden
4. No perception of direct pinch
5. Wider tax base
6. Inflationary
7. Regressive in nature
8. Promotes social welfare - 3Constitution of IndiaSupreme law of India. Consists of a Preamble, 22 parts containing 444 Articles and 12 Schedules.
Power to levy and collect taxes, whether direct or indirect, emerges from the Constitution. - 4Article 265Prohibits arbitrary collection of tax. It states that "no tax shall be levied or collected except by authority of law".
The term "authority of law" means that tax proposed to be levied must be within the legislative competence of the Legislature imposing the tax. - 5Article 245Said Article provides as under:
(i) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the legislature of a State may make laws for the whole or any part of the State.
(ii) No law made by the Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation. - 6Article 246It gives the respective authority to Union and State Governments for levying tax.
- 7Seventh Schedule to Article 246It conmtains three lists which enumerate the matters under which the ?Union abd the State Governments have the authority to make laws.
List I - Union List
List II - State List
List III - Concurrent List - 8List I - Union ListIt contains the matters in respect of which the Parliament has the exclusive right to make laws.
- 9List II - State ListIt contains the matters in respect of which the State Legislature has the exclusive right to make laws.
- 10List III - Concurrent ListIt contains the matters in respect of which both the Parliament & State Legislature have power to make laws.
- 11Income TaxList II - Entry 82
Taxes on income other than agricultural income - 12Customs DutiesList II - Entry 83
Duties of customs excluding export duties - 13Central Excise DutiesList II - Entry 84
Duties of excise on tobacco and other goods manufactured or produced in India EXCEPT alcoholic liquors for human consumption; opium, Indian hemp and other narcotic drugs and narcotics, but INCLUDING medicinal and toilet preparations containing alcohol or opium/Indian hemp/narcotic drugs/narcotics. - 14Wealth TaxList II - Entry 86
Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies - 15Central Sales TaxList II - Entry 92A
Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of Inter-State trade or commerce - 16Service TaxList II - Entry 97
Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists - 17Entry 92CList II - Tax on services
[Amendment passed by the Parliament on 15.01.2004, but not yet made effective] - 18State Level VATList III - Entry 54
Taxes on the sale or purchase of goods (EXCLUDING newspapers) EXCEPT tax on Inter-State sale or purchase - 19State Excise DutiesList III - Entry 51
Duties of excise on alcoholic liquors for human consumption; opium, Indian hemp and other narcotic drugs and narcotics, but EXCLUDING medicinal and toilet preparations containing alcohol or opium/Indian hemp/narcotic drugs/narcotics. - 20Excise Duty [Central Value Added Tax (CENVAT)] Central Excise Act, 1944 Central Excise Tariff Act, 1985A tax on the manufacture of production of goods in India imposed by the Central Government.
Basic General Rate: 12% - 21Customs Duty Customs Act, 1962 Customs Tariff Act, 1975A duty imposed by the CG on goods imported into/exported out of India.
Basic General Rate: 10% + Additional duty of customs (CVD) equivalent to the excise duty levied on like goods produced in India (12%) + Special additional duty of customs @ 4% - 22Service Tax Chapter V and VA of the Finance Act, 1994A tax imposed by the CG on the services (EXCEPT the services covered in the negative list of services and exempted services).
Rate: 12% - 23Central Sales Tax Central Sales Tax Act, 1956A tax on the Inter-State sales of goods, imposed by the CG BUT appropriated by the originating State.
Rate: 2% - 24Value Added Tax VAT Acts of the respective State GovernmentsA tax on the Intra-State sales of goods, imposed by the SGs.
Rate generally at 5% and 12.5%/13.5% - 25Department of Revenue of the Ministry of Finance/Central Board of Revenue Act, 1963DRMF exercises control in respect of matters relating to all the direct and indirect taxes through two Statutory Boards, namely, CBDT and CBEC, which were constituted under the CBRA, 1963.
- 26CBEC - Administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Service Tax CommissioneratesDeals with the tasks of:
* Formulation of policy concerning levy and collection of customs and central excise duties and service tax
* Prevention of smuggling
* Administration of matters relating to customs, central excise, narcotics to the extent under CBEC's purview and service tax - 27Administration of State Level Indirect TaxesAdministered by Commercial Tax Departments of the respective States
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- CA - IPCC IPCC - Indirect Tax Karteikarten am Indirect Tax - Basic Concepts, erstellt von Mansi Bohra am 08/02/2015.
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