Indirect taxes are taxes collected by intermediaries in the supply chain but ultimately paid by consumers through higher prices. They contrast with direct taxes which are paid directly to the government by the person being taxed. Common indirect taxes include import duties, sales taxes, and carbon taxes. While they are a major source of government revenue, indirect taxes are often considered regressive since they place a higher relative burden on low-income individuals. They also lack transparency and can distort markets. However, they are generally convenient to administer and difficult to evade.
This document discusses the concept of indirect taxes. It defines indirect taxes as taxes whose burden can be shifted to others, in part or wholly, through higher prices. Examples given are excise duties, sales tax, service tax, customs duty, and taxes on transportation fares. The objectives of indirect taxes include revenue generation, reducing income inequality, social welfare programs, earning foreign exchange, and regional development. Key features outlined are burden shifting, taxation of commodities/services, and indirect determination of taxpayer ability. Advantages include convenience, disguise of tax effect, difficulty evading, broad tax base, and potential for forced savings. Disadvantages involve regressivity, high collection costs, inflationary effects, and lack of educative value
Direct taxes are paid directly to the government by taxpayers based on their income or assets. Indirect taxes are ultimately paid by consumers through higher prices of goods and services. Direct taxes are generally progressive, where higher incomes face higher tax rates, while indirect taxes are often regressive with the same tax rates regardless of income. Both direct and indirect taxes have advantages and disadvantages related to issues like tax evasion, prices, revenues, and economic impacts.
This document discusses various indirect taxes in India including central sales tax, value added tax, central excise duty, and customs duty. It defines key terms related to these taxes such as incidence and impact of direct vs indirect taxes. It also covers the classification of taxes, authorities that levy different taxes, taxable events, and calculation of taxes. The key highlights are that indirect taxes are imposed on goods and services while direct taxes are imposed on individuals, and indirect tax burden can be shifted to consumers.
The document discusses India's taxation system and the proposed Goods and Services Tax (GST). It describes the key features of direct and indirect taxes such as income tax, sales tax, and VAT. It then explains the proposed GST system, which will combine multiple indirect taxes into a single tax applicable to both goods and services. The GST is proposed as a dual GST with both central and state-level components. The complex structure and need for coordination between levels of government poses administrative challenges but is aimed at improving compliance and growth.
The document provides an overview of indirect taxation in India. It discusses that indirect taxes are levied on goods and services and include taxes like excise duty, customs duty, VAT, and service tax. It outlines the pre-GST indirect tax regime involving multiple central and state taxes that resulted in cascading of taxes. The key reform was the introduction of GST in 2017 which unified multiple taxes into a single tax applied to goods and services, aimed at removing the inefficiencies of the prior system. The document also discusses the constitutional framework for taxation in India and administration of indirect taxes.
This presentation is all about the basics of Value added Tax in rajasthan...and basically covers all the aspects as are related to VAT as per the White Paper Policy.
1. Indirect taxes are taxes that are paid indirectly by consumers when purchasing goods or services, with the impact being on one person and the incidence on another.
2. Examples of indirect taxes include excise duty, customs duty, sales tax, service tax, and octroi. These taxes can be shifted from the original payer to other persons.
3. While indirect taxes constitute a major source of government revenue, they are generally considered regressive as the tax burden does not vary based on ability to pay.
The document summarizes the key differences between direct and indirect taxes. Direct taxes include income tax and wealth tax that individuals pay directly to the government. Indirect taxes include sales tax and excise duties that are paid to the government by one entity but ultimately borne by consumers. While direct taxes allow for more control and progressivity based on income, indirect taxes are often seen as less psychologically resisted since costs are included in prices. Both types of taxes have advantages and disadvantages for taxpayers and governments.
This document discusses the concept of indirect taxes. It defines indirect taxes as taxes whose burden can be shifted to others, in part or wholly, through higher prices. Examples given are excise duties, sales tax, service tax, customs duty, and taxes on transportation fares. The objectives of indirect taxes include revenue generation, reducing income inequality, social welfare programs, earning foreign exchange, and regional development. Key features outlined are burden shifting, taxation of commodities/services, and indirect determination of taxpayer ability. Advantages include convenience, disguise of tax effect, difficulty evading, broad tax base, and potential for forced savings. Disadvantages involve regressivity, high collection costs, inflationary effects, and lack of educative value
Direct taxes are paid directly to the government by taxpayers based on their income or assets. Indirect taxes are ultimately paid by consumers through higher prices of goods and services. Direct taxes are generally progressive, where higher incomes face higher tax rates, while indirect taxes are often regressive with the same tax rates regardless of income. Both direct and indirect taxes have advantages and disadvantages related to issues like tax evasion, prices, revenues, and economic impacts.
This document discusses various indirect taxes in India including central sales tax, value added tax, central excise duty, and customs duty. It defines key terms related to these taxes such as incidence and impact of direct vs indirect taxes. It also covers the classification of taxes, authorities that levy different taxes, taxable events, and calculation of taxes. The key highlights are that indirect taxes are imposed on goods and services while direct taxes are imposed on individuals, and indirect tax burden can be shifted to consumers.
The document discusses India's taxation system and the proposed Goods and Services Tax (GST). It describes the key features of direct and indirect taxes such as income tax, sales tax, and VAT. It then explains the proposed GST system, which will combine multiple indirect taxes into a single tax applicable to both goods and services. The GST is proposed as a dual GST with both central and state-level components. The complex structure and need for coordination between levels of government poses administrative challenges but is aimed at improving compliance and growth.
The document provides an overview of indirect taxation in India. It discusses that indirect taxes are levied on goods and services and include taxes like excise duty, customs duty, VAT, and service tax. It outlines the pre-GST indirect tax regime involving multiple central and state taxes that resulted in cascading of taxes. The key reform was the introduction of GST in 2017 which unified multiple taxes into a single tax applied to goods and services, aimed at removing the inefficiencies of the prior system. The document also discusses the constitutional framework for taxation in India and administration of indirect taxes.
This presentation is all about the basics of Value added Tax in rajasthan...and basically covers all the aspects as are related to VAT as per the White Paper Policy.
1. Indirect taxes are taxes that are paid indirectly by consumers when purchasing goods or services, with the impact being on one person and the incidence on another.
2. Examples of indirect taxes include excise duty, customs duty, sales tax, service tax, and octroi. These taxes can be shifted from the original payer to other persons.
3. While indirect taxes constitute a major source of government revenue, they are generally considered regressive as the tax burden does not vary based on ability to pay.
The document summarizes the key differences between direct and indirect taxes. Direct taxes include income tax and wealth tax that individuals pay directly to the government. Indirect taxes include sales tax and excise duties that are paid to the government by one entity but ultimately borne by consumers. While direct taxes allow for more control and progressivity based on income, indirect taxes are often seen as less psychologically resisted since costs are included in prices. Both types of taxes have advantages and disadvantages for taxpayers and governments.
taxes are income of government. india is a developing country, therefore taxes is important source of income to indian government. the majority of taxes which are mostly collected by the government is included in this presentation.
The document discusses the various income tax authorities in India according to the Income Tax Act. It outlines the central authorities like the Central Board of Direct Taxes (CBDT) which is responsible for tax policy and administration. Below the CBDT are various officers like Directors General, Commissioners, Deputy/Assistant Commissioners, and Income Tax Officers who have powers to assess taxes, conduct searches and seizures, and investigate tax evasion. Their roles, appointment processes, and jurisdictions are explained. Key powers of authorities like the CBDT, Commissioners and Income Tax Officers are also summarized.
GST (Goods and Services Tax) is a comprehensive indirect tax that will combine multiple taxes and levies into a single tax to be applied at every stage of supply of goods and services in India. It aims to overcome the cascading effect of taxes and provide seamless tax credits across the entire supply chain. The GST model proposed for India is a dual GST where both the central and state governments will simultaneously levy GST across the country.
This document distinguishes between direct and indirect taxes. Direct taxes include income tax, corporation tax, capital gains tax, and capital transfer tax, which are paid by individuals and businesses directly. Indirect taxes are levied on the consumption of goods and services, through taxes like customs duty, excise duty, stamp duty, and sales/consumption taxes that are paid by manufacturers and importers and passed on to consumers. Examples are provided of calculating income tax, capital gains tax, customs duties, and excise taxes to illustrate how these different types of direct and indirect taxes are applied.
This document discusses the laws related to central excise duty in India. It outlines the Central Excise Act of 1994, Central Excise Tariff Act of 1985, and Central Excise Rules of 1944 as the basic laws governing the levy and collection of central excise duties. It also describes the conditions for goods to be subject to central excise duty, which are that the goods must be movable, marketable, excisable as defined in the Tariff Act, and manufactured/produced in India. Finally, it discusses the different bases for valuation of excise duty, including specific duty, tariff duty, maximum retail price, and ad valorem basis, with ad valorem being the most common
This document discusses tax evasion in the Philippines. It defines tax evasion as the criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country. Finally, it discusses what counts as tax evasion and common types of tax evasion such as tax fraud, abusive tax schemes, and employment tax fraud.
This document provides an overview of customs valuation and procedures in India. It discusses how the transaction value is the primary basis for valuing imported and exported goods according to Section 14(1) of relevant regulations. It also outlines how tariff values may be set by the Central Board of Excise and Customs (CBEC) for certain goods. The document then reviews exchange rate determination practices and relevant dates for rates/values. Finally, it summarizes import procedures such as filing bills of entry and export procedures like obtaining let export orders and filing shipping bills.
This document provides an introduction to basic concepts in India's income tax law. It defines what a tax is, explaining direct and indirect taxes. Taxes are levied by the government to fund expenses like defense, education, healthcare and infrastructure. The income tax law in India consists of the Income Tax Act, annual Finance Acts, Income Tax Rules, circulars/notifications, and legal decisions from courts. Income tax is levied on a person's total income in the previous year as classified under various heads like salaries, house property, business/profession, capital gains, and other sources. Deductions are applied to arrive at the total taxable income and applicable tax rate.
- Gross total income refers to a person's total earnings from all sources before any deductions. It includes income from salary, house property, business/profession, capital gains, and other sources.
- Direct taxes like income tax are paid directly by taxpayers on their gross total income. Income tax slabs are then applied to the total income which is gross total income minus various deductions.
- Agricultural income refers to income generated from farming, cultivation, and sale of agricultural produce. It is tax exempt up to a certain threshold under the Income Tax Act.
Taxation, Direct and Indirect Tax Macro Economicsckeebakhattak
this presentation tell about what is tax and what is the difference between direct and indirect taxation and its advantages(Pros) and disadvantages(Cons).
OBJECTIVE
Import of all kinds of goods and on the export of goods on certain situations attracts customs duty. The Customs Act,1962 contains provisions which govern the levy of customs duty. In this webinar, we shall understand the types customs duty levied and the duty drawback allowed under the customs law.
The document discusses the role of customs under the GST regime and procedures related to export. There are two options for export under GST - export under bond/LUT without IGST payment and claiming refund of unutilized credits, or export with payment of IGST and claiming refund of the tax paid. The document outlines the procedures for each option, including requirements for furnishing an LUT/bond, validation processes for IGST refunds, and changes to drawback rules and rates under the new regulations. It also covers self-sealing and electronic sealing procedures for exports.
This document provides an overview of taxation including:
1) It defines taxation as the act of a taxing authority levying taxes and notes that taxation has existed in various forms throughout history, including in ancient India and other parts of the world.
2) It describes the modern definition of a tax as a financial charge imposed by a government and outlines the main types of direct and indirect taxes.
3) It provides examples of different taxes like income tax, corporate tax, customs duty, excise duty, sales tax, service tax, and VAT and summarizes how they work.
The document provides an overview of India's tax system. It discusses direct taxes such as income tax, wealth tax, capital gains tax, and corporate tax. It also discusses indirect taxes including service tax, customs duty, excise duty, sales tax, and security transaction tax. It notes that the tax system is complex with defects including limited direct taxation coverage, reliance on indirect taxes, inequitable nature, and uncertainty in tax rates. The document then introduces the proposed Goods and Services Tax (GST) as a comprehensive tax that will replace existing taxes and have benefits such as removing the cascading effect of taxes and providing a more uniform, transparent tax regime.
This document discusses India's duty drawback procedures. Duty drawback allows exporters to obtain a refund of customs duties paid on imported goods that are later exported or incorporated into exported goods. It is governed by the Customs Act of 1962 and aims to promote exports. There are two categories of duty drawback: drawback on re-exported imported goods and drawback on goods manufactured from imported materials for export. Exporters must follow certain procedures to claim duty drawback, including endorsing shipping bills and retaining claims, and there are also rules around payment and recovery of drawback amounts.
Taxation is a system of compulsory contributions levied by a government to fund public expenditures. Governments increase taxes to stabilize prices, stimulate production, and influence the economy. A sound tax system is fair, clear, certain, convenient, and efficient. Different types of taxes, such as income tax, value-added tax, and capital gains tax, can affect personal and corporate decisions in various ways. Tax incidence refers to who ultimately bears the burden of a tax, and taxes can be shifted through higher prices or lower costs. Tax evasion involves illegal attempts to lessen one's taxes through fraud or underreporting.
This document provides an overview of taxation in India. It discusses that taxes are the main source of government revenue and are divided into direct and indirect taxes. The taxation system in India has a three-tier structure at the union, state, and local levels. Direct taxes include income tax, wealth tax, and corporate tax. Indirect taxes include customs duty, excise duty, and GST. The document also outlines the current tax slabs for general individuals, senior citizens aged 60-80, and senior citizens over 80.
This document discusses the Central Excise Act in India. It provides an overview of indirect taxes and defines central excise duty. It outlines the key laws governing central excise - the Central Excise Act of 1944, Central Excise Tariff Act of 1985, Central Excise Rules of 2002. It describes the objectives of central excise, types of excise duties, and conditions for liability. It also defines key terms like manufacture, taxable event, and bases for valuation of goods for duty purposes.
GST is nothing but a value added tax on goods & services combined. It is the provisions of Input Tax Credit that make GST a value added tax i.e collection of tax at all points after allowing credit for the inputs
This document provides an overview of the Goods and Services Tax (GST) system that is being implemented in India. Some key points:
- GST is a comprehensive indirect tax that will combine multiple state and central taxes into one. It is levied at each stage of production and distribution.
- The proposed GST structure has two components - Central GST to be levied by the Centre and State GST to be levied by the states. Standard rates are proposed at 20% for goods and 16% for services.
- GST aims to reduce tax cascading and make India's tax system simpler, more transparent and boost the economy by making exports more competitive.
- There were challenges
Presentation about Direct and Indirect tax KomalaPrakash
Direct taxes are levied directly on individuals and entities, such as income tax. Indirect taxes are levied on goods and services, and part or all of the tax is passed on to the consumer. The two main types are direct taxes like income tax, and indirect taxes like excise duty, customs duty, VAT, and GST. Taxes provide revenue for government expenditures like defense, education, healthcare, and infrastructure. Goods and Services Tax (GST) is an indirect tax introduced in India in 2017 that replaced other indirect taxes and aims to create a unified national market.
This document provides an overview of indirect taxes in India prior to the Goods and Services Tax (GST) era. It discusses the types of indirect taxes in India including Value Added Tax (VAT) and its variants. It outlines key features of indirect taxes such as the taxable event, incidence and impact, regressive nature, and role in generating government revenue. The document also discusses provisions in the Indian Constitution related to tax authority and lists some major defects in the indirect tax structure like multiplicity of taxes, lack of cross-utilization of taxes, obstructed movement of goods, and multiple compliance requirements.
taxes are income of government. india is a developing country, therefore taxes is important source of income to indian government. the majority of taxes which are mostly collected by the government is included in this presentation.
The document discusses the various income tax authorities in India according to the Income Tax Act. It outlines the central authorities like the Central Board of Direct Taxes (CBDT) which is responsible for tax policy and administration. Below the CBDT are various officers like Directors General, Commissioners, Deputy/Assistant Commissioners, and Income Tax Officers who have powers to assess taxes, conduct searches and seizures, and investigate tax evasion. Their roles, appointment processes, and jurisdictions are explained. Key powers of authorities like the CBDT, Commissioners and Income Tax Officers are also summarized.
GST (Goods and Services Tax) is a comprehensive indirect tax that will combine multiple taxes and levies into a single tax to be applied at every stage of supply of goods and services in India. It aims to overcome the cascading effect of taxes and provide seamless tax credits across the entire supply chain. The GST model proposed for India is a dual GST where both the central and state governments will simultaneously levy GST across the country.
This document distinguishes between direct and indirect taxes. Direct taxes include income tax, corporation tax, capital gains tax, and capital transfer tax, which are paid by individuals and businesses directly. Indirect taxes are levied on the consumption of goods and services, through taxes like customs duty, excise duty, stamp duty, and sales/consumption taxes that are paid by manufacturers and importers and passed on to consumers. Examples are provided of calculating income tax, capital gains tax, customs duties, and excise taxes to illustrate how these different types of direct and indirect taxes are applied.
This document discusses the laws related to central excise duty in India. It outlines the Central Excise Act of 1994, Central Excise Tariff Act of 1985, and Central Excise Rules of 1944 as the basic laws governing the levy and collection of central excise duties. It also describes the conditions for goods to be subject to central excise duty, which are that the goods must be movable, marketable, excisable as defined in the Tariff Act, and manufactured/produced in India. Finally, it discusses the different bases for valuation of excise duty, including specific duty, tariff duty, maximum retail price, and ad valorem basis, with ad valorem being the most common
This document discusses tax evasion in the Philippines. It defines tax evasion as the criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country. Finally, it discusses what counts as tax evasion and common types of tax evasion such as tax fraud, abusive tax schemes, and employment tax fraud.
This document provides an overview of customs valuation and procedures in India. It discusses how the transaction value is the primary basis for valuing imported and exported goods according to Section 14(1) of relevant regulations. It also outlines how tariff values may be set by the Central Board of Excise and Customs (CBEC) for certain goods. The document then reviews exchange rate determination practices and relevant dates for rates/values. Finally, it summarizes import procedures such as filing bills of entry and export procedures like obtaining let export orders and filing shipping bills.
This document provides an introduction to basic concepts in India's income tax law. It defines what a tax is, explaining direct and indirect taxes. Taxes are levied by the government to fund expenses like defense, education, healthcare and infrastructure. The income tax law in India consists of the Income Tax Act, annual Finance Acts, Income Tax Rules, circulars/notifications, and legal decisions from courts. Income tax is levied on a person's total income in the previous year as classified under various heads like salaries, house property, business/profession, capital gains, and other sources. Deductions are applied to arrive at the total taxable income and applicable tax rate.
- Gross total income refers to a person's total earnings from all sources before any deductions. It includes income from salary, house property, business/profession, capital gains, and other sources.
- Direct taxes like income tax are paid directly by taxpayers on their gross total income. Income tax slabs are then applied to the total income which is gross total income minus various deductions.
- Agricultural income refers to income generated from farming, cultivation, and sale of agricultural produce. It is tax exempt up to a certain threshold under the Income Tax Act.
Taxation, Direct and Indirect Tax Macro Economicsckeebakhattak
this presentation tell about what is tax and what is the difference between direct and indirect taxation and its advantages(Pros) and disadvantages(Cons).
OBJECTIVE
Import of all kinds of goods and on the export of goods on certain situations attracts customs duty. The Customs Act,1962 contains provisions which govern the levy of customs duty. In this webinar, we shall understand the types customs duty levied and the duty drawback allowed under the customs law.
The document discusses the role of customs under the GST regime and procedures related to export. There are two options for export under GST - export under bond/LUT without IGST payment and claiming refund of unutilized credits, or export with payment of IGST and claiming refund of the tax paid. The document outlines the procedures for each option, including requirements for furnishing an LUT/bond, validation processes for IGST refunds, and changes to drawback rules and rates under the new regulations. It also covers self-sealing and electronic sealing procedures for exports.
This document provides an overview of taxation including:
1) It defines taxation as the act of a taxing authority levying taxes and notes that taxation has existed in various forms throughout history, including in ancient India and other parts of the world.
2) It describes the modern definition of a tax as a financial charge imposed by a government and outlines the main types of direct and indirect taxes.
3) It provides examples of different taxes like income tax, corporate tax, customs duty, excise duty, sales tax, service tax, and VAT and summarizes how they work.
The document provides an overview of India's tax system. It discusses direct taxes such as income tax, wealth tax, capital gains tax, and corporate tax. It also discusses indirect taxes including service tax, customs duty, excise duty, sales tax, and security transaction tax. It notes that the tax system is complex with defects including limited direct taxation coverage, reliance on indirect taxes, inequitable nature, and uncertainty in tax rates. The document then introduces the proposed Goods and Services Tax (GST) as a comprehensive tax that will replace existing taxes and have benefits such as removing the cascading effect of taxes and providing a more uniform, transparent tax regime.
This document discusses India's duty drawback procedures. Duty drawback allows exporters to obtain a refund of customs duties paid on imported goods that are later exported or incorporated into exported goods. It is governed by the Customs Act of 1962 and aims to promote exports. There are two categories of duty drawback: drawback on re-exported imported goods and drawback on goods manufactured from imported materials for export. Exporters must follow certain procedures to claim duty drawback, including endorsing shipping bills and retaining claims, and there are also rules around payment and recovery of drawback amounts.
Taxation is a system of compulsory contributions levied by a government to fund public expenditures. Governments increase taxes to stabilize prices, stimulate production, and influence the economy. A sound tax system is fair, clear, certain, convenient, and efficient. Different types of taxes, such as income tax, value-added tax, and capital gains tax, can affect personal and corporate decisions in various ways. Tax incidence refers to who ultimately bears the burden of a tax, and taxes can be shifted through higher prices or lower costs. Tax evasion involves illegal attempts to lessen one's taxes through fraud or underreporting.
This document provides an overview of taxation in India. It discusses that taxes are the main source of government revenue and are divided into direct and indirect taxes. The taxation system in India has a three-tier structure at the union, state, and local levels. Direct taxes include income tax, wealth tax, and corporate tax. Indirect taxes include customs duty, excise duty, and GST. The document also outlines the current tax slabs for general individuals, senior citizens aged 60-80, and senior citizens over 80.
This document discusses the Central Excise Act in India. It provides an overview of indirect taxes and defines central excise duty. It outlines the key laws governing central excise - the Central Excise Act of 1944, Central Excise Tariff Act of 1985, Central Excise Rules of 2002. It describes the objectives of central excise, types of excise duties, and conditions for liability. It also defines key terms like manufacture, taxable event, and bases for valuation of goods for duty purposes.
GST is nothing but a value added tax on goods & services combined. It is the provisions of Input Tax Credit that make GST a value added tax i.e collection of tax at all points after allowing credit for the inputs
This document provides an overview of the Goods and Services Tax (GST) system that is being implemented in India. Some key points:
- GST is a comprehensive indirect tax that will combine multiple state and central taxes into one. It is levied at each stage of production and distribution.
- The proposed GST structure has two components - Central GST to be levied by the Centre and State GST to be levied by the states. Standard rates are proposed at 20% for goods and 16% for services.
- GST aims to reduce tax cascading and make India's tax system simpler, more transparent and boost the economy by making exports more competitive.
- There were challenges
Presentation about Direct and Indirect tax KomalaPrakash
Direct taxes are levied directly on individuals and entities, such as income tax. Indirect taxes are levied on goods and services, and part or all of the tax is passed on to the consumer. The two main types are direct taxes like income tax, and indirect taxes like excise duty, customs duty, VAT, and GST. Taxes provide revenue for government expenditures like defense, education, healthcare, and infrastructure. Goods and Services Tax (GST) is an indirect tax introduced in India in 2017 that replaced other indirect taxes and aims to create a unified national market.
This document provides an overview of indirect taxes in India prior to the Goods and Services Tax (GST) era. It discusses the types of indirect taxes in India including Value Added Tax (VAT) and its variants. It outlines key features of indirect taxes such as the taxable event, incidence and impact, regressive nature, and role in generating government revenue. The document also discusses provisions in the Indian Constitution related to tax authority and lists some major defects in the indirect tax structure like multiplicity of taxes, lack of cross-utilization of taxes, obstructed movement of goods, and multiple compliance requirements.
The document discusses taxation in India. It provides definitions of taxation, explains the different types of taxes based on form, essence, volume, and income. It describes the constitutional framework for taxation in India and how taxing powers are divided between central and state governments. Direct taxes like income tax, wealth tax, and corporate tax are levied directly on individuals and companies. Indirect taxes like customs duty, excise duty, and service tax are levied on goods and services and the burden can be passed on to consumers.
Structure of taxation and classification of taxesshaik moin
Tax is a compulsory payment to the government and can be direct or indirect. Direct taxes have an immediate burden on the taxpayer, like income and wealth taxes. Indirect taxes are collected by intermediaries and included in the price, like sales tax. Governments in India levy various direct and indirect taxes. The central government levies income, wealth, customs, excise and service taxes. State governments levy professional, entertainment, VAT and state excise duties. Local governments levy property, water and sewerage taxes. Direct taxes are more equitable but also more complex and unpopular. Indirect taxes are more convenient but also more inflationary and expensive to collect.
The document summarizes a webinar on concepts of GST presented by Mr. Tushar Ranjan Barik. It discusses key topics like the meaning of tax, types of taxes, direct vs indirect taxes, components of GST, and advantages of GST. The webinar aims to explain GST mechanisms, features, need for GST in India, and comparisons between pre-GST and post-GST regimes through illustrations. It also lists central and state levies subsumed under GST.
The document discusses the key aspects of direct taxes in India such as income tax, corporation tax, wealth tax, and capital gains tax. It provides definitions and explanations of direct taxes, income tax, and compares direct taxes with indirect taxes. Some of the key points made in the document include:
- Direct taxes are taxes that are directly paid to the government by the taxpayer. They include income tax, corporation tax, and wealth tax.
- Income tax is paid based on an individual's taxable income in a given financial year after deductions and exemptions. Corporation tax is paid by companies on worldwide income.
- Direct taxes cannot be shifted to another entity while indirect taxes can be shifted from one taxpayer to another.
Indirect taxes are taxes that are paid indirectly by taxpayers when purchasing goods, commodities, or services that are taxable. The impact of the tax is on one person, while the incidence, or burden of the tax, falls on another. Examples of indirect taxes include sales tax, excise duties, customs duties, and service taxes. Indirect taxes are typically shifted forward to consumers in the form of higher prices.
GST is India's biggest indirect tax reform that unified multiple indirect taxes into a single tax regime. It aims to simplify taxation, reduce cascading taxes, and create a single market. Under GST, taxes are levied at each stage of production and distribution based on the added value. It addresses issues like cascading taxes and lack of input tax credits by allowing businesses to claim credits for taxes paid on inputs. GST also shifts the tax burden to the final point of consumption rather than production. This comprehensive tax system replaces previous indirect taxes and aims to reduce costs and inflation in the long run.
This document provides an overview of income tax in India. It defines tax and outlines the main features of taxation, including that taxes are compulsory payments used to fund government services. It also describes the objectives and classifications of taxes, and distinguishes between direct and indirect taxes. Direct taxes have the same incidence and impact, while indirect taxes impact different entities. The administration of tax laws is hierarchical, with the Ministry of Finance overseeing the Central Board of Direct and Indirect Taxes. The Income Tax Act of 1961 governs income tax determination and assessment in India.
This document discusses direct and indirect taxes under Indian law. It provides definitions and examples of direct and indirect taxes. Direct taxes are paid directly to the government by taxpayers and include income tax and corporate tax. Indirect taxes are collected by intermediaries and passed on to the government, including sales tax, VAT and GST. The document also discusses tax rates and proposals from Indian budgets in 2010 and 2011, including changes to income tax slabs, corporate tax rates, and the planned introduction of a unified GST.
Government revenue(Public Fiscal Administration)Suzana Vaidya
The document discusses government revenue and taxation. It defines government revenue as money received by a government from sources like taxes on income, wealth, goods, services, exports/imports, and non-tax sources like profits from state-owned corporations. Revenue is used to fund government services that benefit the public like infrastructure development. The main sources of government revenue are taxes, non-tax revenue, and capital receipts. Taxes are either direct taxes paid directly by individuals/corporations or indirect taxes paid to intermediaries and passed on to consumers. Non-tax revenue comes from sources like dividends, interest, fees, and grants. A good tax system aims to raise sufficient and equitable revenue while minimizing economic burden and incentivizing productivity
General principles-of-taxation.pptx-joni-2jonipaloma
This document defines and classifies various types of taxes. It begins by defining taxation as the process by which governments raise funds through compulsory payments. It then distinguishes between direct and indirect taxes. Direct taxes are borne by the person paying, while indirect taxes can be passed on to others. The document also defines proportional, progressive, and regressive taxes based on tax rates. It provides examples of different taxes classified by subject matter, who bears the burden, how amounts are determined, purpose, scope, and more. It concludes by distinguishing taxes from other terms like tolls, penalties, and debts.
This document provides an overview of taxation concepts in India. It defines key terms like tax, assessee, direct tax, indirect tax and more.
It notes that tax is a statutory payment imposed by the government. An assessee refers to any person on whom tax is imposed or for whom tax proceedings have been initiated. Direct taxes are imposed directly on income or wealth, while indirect taxes are included in the price of goods and services.
The document outlines the objectives of taxation from both traditional and modern approaches. Traditionally, the main objectives were to generate government revenue and promote welfare. Modern objectives focus more on economic development through employment, reducing inequality, and capital formation.
It then discusses the characteristics,
The document discusses different theories and principles related to taxation. It begins by defining taxation and describing the key aspects of a taxation system, including the purposes of taxation. It then discusses several theories of taxation, including:
1) The expediency theory, which states that the main consideration in taxation should be practicality and administrability.
2) The socio-political theory, which argues that social and political objectives, rather than individual interests, should guide taxation policy.
3) The benefits-received theory and cost-of-service theory, which propose tax liability should be linked to the benefits and services received from the state.
It also covers principles of taxation like equity, certainty, and convenience
Taxes allow governments to provide goods and services by generating revenue. The US Constitution grants Congress the power to collect taxes to fund the common defense and general welfare. Federal taxes must be uniform across states and exempt religious activities. Taxes include income, sales, property and corporate taxes. Governments use tax revenue along with borrowing to fund expenditures through annual budgets. Fiscal policy aims to influence economic growth through taxing and spending decisions.
Taxation serves four main functions: revenue raising, social/political, economic, and redistribution. The revenue raising function provides funding for government services. The social/political functions promote social equity and establish a relationship between citizens and the government. The economic functions can influence consumer behavior. The redistribution function aims to address wealth inequality through progressive taxation. Taxes are either proportional (flat rate), progressive (rates increase with the tax base), or regressive (rates decrease with the tax base). Direct taxes are paid directly by individuals/entities based on income/wealth, while indirect taxes are paid through consumption but the burden ultimately falls on consumers.
The document discusses Goods and Services Tax (GST) in India. It provides definitions and key details about GST, including that it is a value-added tax levied on domestic consumption of goods and services. There are different types of GST - Central GST, State GST, Integrated GST, and Union Territory GST. The document also discusses advantages of GST and provides comparisons between direct and indirect taxes.
This document discusses various ways to align text and numbers within cells in Microsoft Excel, including using the ribbon, keyboard shortcuts, and the Format Cells dialog box. It provides details on how to horizontally and vertically align text to the top, middle, bottom, left, right, or center of a cell. It also describes how to change text orientation, indentation, justification, and distribution. The Format Cells dialog box allows additional alignment options like filling a cell with text, centering text across selections, and changing text direction from left-to-right to right-to-left.
This document provides an overview of the key features and functions of Microsoft Word 2013. It describes the main sections of the Word interface, including the ribbon, tabs, groups, commands, rulers, zoom controls, views, and backstage view. It also explains how to get started with Word 2013 and open, save, and close documents.
This document provides an overview of the Microsoft Word application. It covers topics such as creating and opening documents, mouse and keyboard operations, navigating the Word interface including the ribbon and quick access toolbar, and formatting text and paragraphs. The document also discusses templates in Word and how they allow preconfigured settings to be applied to new documents for consistency.
1) Business income is computed by adjusting the net profit as shown in the profit and loss account by adding back inadmissible expenses and deducting allowable expenses not accounted in the profit and loss account and income not taxable under the head 'profits and gains from business or profession'.
2) Several examples are given showing the computation of business income by making the prescribed additions and deductions like salary, interest, donations, depreciation, income from other heads etc.
3) House property income is also computed by deducting standard deduction and interest on home loan from annual rent received in case of let out and self-occupied properties respectively.
Forms of organisation non-corporate enterprisespremarhea
This document summarizes different forms of business organization in India. It discusses sole proprietorships, partnership firms, and joint Hindu family firms. Some key points covered are:
- Sole proprietorships are owned and managed by one person who has unlimited liability. They are easy to form but have limited capital and managerial ability.
- Partnership firms require an agreement between partners to share profits and have features like implied agency and unlimited liability of partners. They allow for larger capital but can lack stability.
- Joint Hindu family firms are formed by operation of law between members of a Hindu undivided family. They provide continuity but can have restricted membership and lack of incentive or stability.
The document provides examples of computing taxable professional income for different professionals - a doctor, chartered accountant, lawyer, and medical practitioner. It shows how to calculate professional receipts and allowable professional expenses to determine the net professional gain or income based on the accounting system and other details provided. The computations deduct expenses like rent, salary, depreciation allowances, and other costs from the total receipts to arrive at the taxable professional income.
The document provides examples of computing professional income for different professionals including doctors, chartered accountants, lawyers, and medical practitioners. It shows how to calculate professional receipts and deduct allowable professional expenses to determine the taxable professional gain. Expenses include rent, salaries, depreciation, cost of medicines/supplies, and more. The net professional income is calculated by deducting total expenses from total receipts.
The document defines business and profession and provides examples of computation of business income under various scenarios. It discusses adding inadmissible expenses and deducting allowable expenses not debited in arriving at business income. It also provides an example of computation of house property income where there is a let out property and self-occupied property with a loss.
Forms of organisation - non-corporate enterprisespremarhea
This document summarizes different forms of business organization in India. It discusses sole proprietorships, partnership firms, and joint Hindu family firms. Some key points covered are:
- Sole proprietorships are owned and controlled by one person who has unlimited liability. They are easy to form but have limited capital and managerial ability.
- Partnership firms require an agreement between partners to share profits and have implied agency and unlimited liability unless otherwise agreed. They allow for larger capital but can lack stability.
- Joint Hindu family firms are formed by operation of Hindu law between co-parceners of a family. They provide continuity but can lack incentive and stability if mismanaged by the head of the family.
This document provides an overview of the nature of business. It defines business as an organization that obtains resources like funds, labor, and equipment to provide goods or services to customers in exchange for money. The document outlines key characteristics of business like the sale of goods/services, continuity, and profit motive. It also discusses the components/systems of business including personnel, finance, marketing, and production functions. The primary objective of modern business is stated as making a profit, with secondary objectives like creating customers, innovating new products, providing value, employment, and fair returns. Principles of organization, essentials of success, qualities of successful businessmen, and business ethics are also summarized.
1. Mr. Prashant went to Germany for a diploma course from August 2020 to February 2021. As he was out of India for more than 182 days, his residential status for FY 2020-2021 is non-resident.
2. An individual was in India for 185 days in FY 2020-2021, 15 days in 2019-2020, and 26 days in 2018-2019. As the stay in India was less than 182 days in the last 2 years, the residential status for AY 2021-2022 is non-resident.
3. Mr. Rohan, a foreign national, has been in India for more than 120 days in 5 of the last 6 years. Therefore, his residential
1. The document discusses the residential status of individuals, HUFs, AOPs, and firms under the Indian Income Tax Act. It provides examples and solutions for determining residential status based on the number of days spent in India and the location from which business affairs are controlled.
2. Residential status is determined based on satisfying conditions for being a resident under section 6(1) or by being ordinarily resident as defined in section 6(6).
3. Location of control and management is the determining factor for residential status of HUFs, AOPs and firms, regardless of the residential status of members.
The document discusses the residential status rules for individuals, HUFs, firms, AOPs, and companies in India for income tax purposes. For individuals, residential status depends on the number of days spent in India in the relevant fiscal year or previous years. A HUF's residential status is based on the residential status of the Karta. For firms, AOPs, and other persons, residential status is determined by where their control and management is located. All Indian companies are considered residents, while foreign companies may be resident or non-resident depending on where their control and management is located.
- The document discusses the tax treatment of various incomes for individuals with resident, not ordinary resident, and non-resident tax statuses in India. It provides examples of incomes from different sources and whether they would be taxable under each residential status.
- Tables are presented showing the taxable income for three individuals - Mr. X, Mr. Devilal, and Mr. Deepak - under each residential status. The types of incomes included business income, agriculture, salary, house property, capital gains, and more.
- Whether an income is taxable depends on factors like where it was earned, where it was received, and whether a business or property is controlled from India. In general, more income sources are taxable
The document discusses the scope of total income based on a taxpayer's residential status in India as a resident and ordinarily resident, resident but not ordinarily resident, or non-resident. It outlines the different types of income that are taxable or not taxable in India for each residential status, based on factors such as where the income was earned and received, and whether it relates to a business or profession in or outside of India. The three main considerations for determining the scope of total income and tax incidence are the taxpayer's residential status, place of accrual or receipt of income, and the time at which income had accrued or was received.
This document provides an overview of basic income tax concepts in India. It defines key terms like assessee, previous year, assessment year, and heads of income. It explains the different types of taxes in India including direct and indirect taxes. It also outlines the criteria for determining an individual's residential status for income tax purposes as normal resident, resident but not ordinarily resident, or non-resident. Specific examples are provided to illustrate how to determine an individual's residential status based on their period of stay in India.
This document provides an introduction to income tax in India. It discusses why taxes are paid, what the government does with tax revenue such as healthcare, education, national defense, and welfare programs. It defines key aspects of Indian taxation including that it is compulsory, imposed by the government, and not a voluntary donation. The major sources of tax revenue are income, wealth, sales, and expenditures related to service, production, imports and exports. The constitution outlines which levels of government can tax which areas. The history of income tax in India is also briefly discussed.
The document discusses customs duty in India. It provides definitions and explanations of key terms:
1) Customs duty refers to taxes imposed on goods transported across international borders. Duties are determined based on factors like where goods were acquired or manufactured.
2) There are different types of customs duties including basic customs duty, additional customs duty, protective duty, and anti-dumping duty. Drawback allows refunds of import duties paid on goods that are later exported.
3) Sections 74-76 of the Customs Act cover duty drawback, allowing refunds of duties paid on imported goods that are re-exported, and on imported materials used to manufacture exported goods.
The document discusses various methods of financing for businesses. It describes capital structure as the combination of debt and equity used to finance a company's assets. It then discusses three main methods of financing - equity financing, debt financing, and lease financing. Equity financing involves selling ownership stakes, debt financing involves taking loans that must be repaid with interest, and lease financing allows using assets without ownership through rental agreements.
Capital budgeting involves planning expenditures for long-term assets that provide returns over several years. It is an important process that requires evaluating projects carefully due to their large size, long-term implications, and irreversible nature. Key aspects of capital budgeting include identifying and evaluating investment proposals, determining which provide the highest expected rates of return, and preparing a capital expenditure budget. Various techniques can be used to evaluate projects, including payback period, accounting rate of return, net present value, internal rate of return, and risk-adjusted methods that account for uncertainty in projected cash flows.
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
How to Add Chatter in the odoo 17 ERP ModuleCeline George
In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Dr. Vinod Kumar Kanvaria
Exploiting Artificial Intelligence for Empowering Researchers and Faculty,
International FDP on Fundamentals of Research in Social Sciences
at Integral University, Lucknow, 06.06.2024
By Dr. Vinod Kumar Kanvaria
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
1. INDIRECT TAX
An indirect tax is collected by one entity in the supply chain (usually a producer or retailer)
and paid to the government, but it is passed on to the consumer as part of the purchase price
of a good or service. The consumer is ultimately paying the tax by paying more for the
product.
Understanding Indirect Tax
Indirect taxes are defined by contrasting them with direct taxes. Indirect taxes can be defined
as taxation on an individual or entity, which is ultimately paid for by another person. The
body that collects the tax will then remit it to the government. But in the case of direct taxes,
the person immediately paying the tax is the person that the government is seeking to tax.
Excise duties on fuel, liquor, and cigarette taxes are all considered examples of indirect taxes.
By contrast, income tax is the clearest example of a direct tax, since the person earning the
income is the one immediately paying the tax. Admission fees to a national park is another
clear example of direct taxation.
Some indirect taxes are also referred to as consumption taxes, such as a value-added tax
(VAT).
Examples of Indirect Taxes
The most common example of an indirect tax is import duties. The duty is paid by the
importer of a good at the time it enters the country. If the importer goes on to resell the good
to a consumer, the cost of the duty, in effect, is hidden in the price that the consumer pays.
The consumer is likely to be unaware of this, but he will nonetheless be indirectly paying the
import duty.
Essentially, any taxes or fees imposed by the government at the manufacturing or production
level is an indirect tax. In recent years, many countries have imposed fees on carbon
emissions to manufacturers. These are indirect taxes since their costs are passed along to
consumers.
Sales taxes can be direct or indirect. If they are imposed only on the final supply to a
consumer, they are direct. If they are imposed as value-added taxes along the production
process, then they are indirect.
2. Regressive Nature of Indirect Taxes
Indirect taxes are commonly used and imposed by the government in order to generate
revenue. They are essentially fees that are levied equally upon taxpayers, no matter their
income, so rich or poor, everyone has to pay them. But many consider them to be regressive
taxes as they can bear a heavy burden on people with lower incomes who end up paying the
same amount of tax as those who make a higher income.3 For example, the import duty on a
television from Japan will be the same amount, no matter the income of the consumer
purchasing the television. And because this levy has nothing to do with a person's income,
that means someone who earns $25,000 a year will have to pay the same duty on the same
television as someone who earns $150,000 — clearly, a bigger burden on the former.
There are also concerns that indirect taxes can be used to further a particular government
policy by taxing certain industries and not others. For this reason, some economists argue that
indirect taxes lead to an inefficient marketplace and alter market prices from their equilibrium
price.
Features of Indirect Taxes
1. Taxable Event: The indirect taxes are levied on purchase/sale/manufacture of
goods and provision of services.
2. Incidence & Impact: In case of indirect taxes, the incidence and impact fall on two
different persons. It means the tax burden is shifted by the supplier to the buyer or
recipient of goods or services.
3. Regressive Taxation: The indirect taxes do not depend on paying capacity as tax
payable on commodity is same whether it is purchased by a poor man or rich person.
Therefore, indirect taxes are regressive in nature. There are exceptions to this
argument as higher taxes may be imposed on luxury goods.
4. Impact of Indirect Tax: The indirect tax on goods and services increases its price.
This leads to inflationary trend.
3. 5. Promotes Welfare: The harmful or sin products like alcohol, tobacco, etc. may be
taxed at higher rate. This practice not only discourages consumption of such goods but
also increases the revenue of the State.
6. Major Source of Revenue: In India, the contribution of indirect taxes to total tax
revenue is more than 50%. Therefore, it is a major source of tax revenue for the
Government.
Taxation Powers of union & State Government
In India, the constitution is Supreme and all laws and actions of the
Government are sub-ordinate to it. The constitution provides that no tax shall be
levied or collected except by authority of law.
The Structure of Government in India is federal in nature. As per article 1(1) of
constitution, India shall be union of States. There is a bifurcation of powers between
union and states. Government of India (Central Government) has certain powers in
respect of whole country. Each state (and union territory) has certain powers in respect
of that particular state (Union territory).
Indian constitution
India has a three-tier federal structure, comprising the following:-
(a) The Union Government
(b) The State Government
(c) The Local Government
The power to levy taxes and duties is distributed among the three tiers of
Government, in accordance with the provisions of Indian Constitution. The
constitution consists of a preamble, 25 parts containing 448 articles and 12 Schedules.
Provisions of constitution regarding taxation
The power to levy and collect taxes emerges from the constitution of India. The
following are the significant provisions of the constitution regarding taxation:
4. 1. Article 265: It states that no tax shall be levied or collected except by authority of
law. In fact, it prohibits arbitrary collection of tax.
2. Article 246: The authority to enact law and levy taxes and duties is given by
constitution vide Article 246. The Parliament may make laws for the whole of India or
any part of the territory of India, the State legislature may make laws for whole or part
of the State.
3. Seventh Schedule (to Article 246): The Seventh Schedule contains three lists which
enumerate the matters under which the union and the State Governments have the
authority to make laws.
(a) List I (Union List): The Central Government has the exclusive right to make laws
in respect of any matter covered in this list. Parliament makes law in this regard. Some
of the items in List I are defense of India, naval, military and air forces, atomic energy
and mineral resources, central bureau of intelligence and investigation, railways,
highways, currency, RBI, post office saving bank, taxes on income other than
agricultural income, duties of customs, corporation tax, etc.
(b) List II (State List): It contains the matters in respect of which the State
Government has the exclusive right to make laws. These matters include public order,
police, local government, public health and sanitation, hospital, burials and burial
grounds, cremation ground, libraries, water, fisheries, betting and gambling, etc.
(c) List III (Concurrent List): It contains the matters in respect of which both Central
& State Governments have powers to make laws. This list includes criminal laws,
criminal procedure, marriage and divorce, contracts including partnership, agency,
bankruptcy and insolvency, trust and trustees, trade unions, industrial and labour
disputes, etc.
Difference between Direct Taxes and Indirect Taxes:
Direct Taxes Indirect Taxes
Payer of tax and sufferer of tax one and
same (i.e. impact and incidence on the same
Payer of tax not sufferer of tax whereas
sufferer of tax is not paying directly to the
5. person) Government (i.e. impact on one head and
incidence on other head)
Income based taxes Supply based taxes
Rate of taxes are different from person to
person
Rate of duties are not differ from person to
person
Entire revenue goes to Central Government
of India
Revenue source to Central Government of
India as well as State Governments (i.e.
CGST and SGST)
Previous year income assessed in the
assessment year
There is no previous year and assessment
year concept
Central Board of Direct Taxes (CBDT) is an
important part of Department of Revenue.
Central Board of Excise and Customs
(CBEC) is an important part of Department
of Revenue.
The Central Board of Excise & Customs is
being renamed as the Central Board of
Indirect Taxes & Customs (CBIC), after
getting legislative approval.
Progressive nature. Regressive nature.
Advantages/Merits of Indirect Taxes
1. Convenient: Indirect taxes are imposed on production, sale and movements of
goods and services. These are imposed on manufacturers, sellers and traders, but their
burden may be shifted to consumers of goods and services who are the final taxpayers.
Such taxes, in the form of higher prices, are paid only on purchase of a commodity or
the enjoyment of a service. So taxpayers do not feel the burden of these taxes.
Besides, money burden of indirect taxes is not completely felt since the tax amount is
actually hidden in the price of the commodity bought. They are also convenient
because generally they are paid in small amounts and at intervals and are not in one
lump sum. They are convenient from the point of view of the government also, since
the tax amount is collected generally as a lump sum from manufacturers or traders.
6. 2. Difficult to Evade: Indirect taxes have in-built safeguards against tax evasion. The
indirect taxes are paid by customers, and the sellers have to collect it and remit it to
the Government. In the case of many products, the selling price is inclusive of indirect
taxes. Therefore, the customer has no option to evade the indirect taxes.
3. Wide Coverage: Unlike direct taxes, the indirect taxes have a wide coverage.
Majority of the products or services are subject to indirect taxes. The consumers or
users of such products and services have to pay them.
4. Elastic: Some of the indirect taxes are elastic in nature. When government feels it
necessary to increase its revenues, it increases these taxes. In times of prosperity
indirect taxes produce huge revenues to the government.
5. Universality: Indirect taxes are paid by all classes of people and so they are broad
based. Poor people may be out of the net of the income tax, but they pay indirect taxes
while buying goods.
6. Influence on Pattern of Production: By imposing taxes on certain commodities or
sectors, the government can achieve better allocation of resources. For example by
imposing taxes on luxury goods and making them more expensive, government can
divert resources from these sectors to sector producing necessary goods.
7. May not affect motivation to work and save: The indirect taxes may not affect
the motivation to work and to save. Since, most of the indirect taxes are not
progressive in nature, individuals may not mind to pay them. In other words, indirect
taxes are generally regressive in nature. Therefore, individuals would not be
demotivated to work and to save, which may increase investment.
8. Social Welfare: The indirect taxes promote social welfare. The amount collected
by way of taxes is utilized by the government for social welfare activities, including
education, health and family welfare. Secondly, very high taxes are imposed on the
consumption of harmful products such as alcoholic products, tobacco products, and
such other products. So it is not only to check their consumption but also enables the
state to collect substantial revenue in this manner.
7. 9. Flexibility and Buoyancy: The indirect taxes are more flexible and buoyant.
Flexibility is the ability of the tax system to generate proportionately higher tax
revenue with a change in tax base, and buoyancy is a wider concept, as it involves the
ability of the tax system to generate proportionately higher tax revenue with a change
in tax base, as well as tax rates.
Disadvantages/Demerits of Indirect Taxes
1. High Cost of Collection: Indirect tax fails to satisfy the principle of economy. The
government has to set up elaborate machinery to administer indirect taxes. Therefore,
cost of tax collection per unit of revenue raised is generally higher in the case of most
of the indirect taxes.
2. Increase income inequalities: Generally, the indirect taxes are regressive in nature.
The rich and the poor have to pay the same rate of indirect taxes on certain
commodities of mass consumption. This may further increase income disparities
among the rich and the poor.
3. Affects Consumption: Indirect taxes affect consumption of certain products. For
instance, a high rate of duty on certain products such as consumer durables may
restrict the use of such products. Consumers belonging to the middle class group may
delay their purchases, or they may not buy at all. The reduction in consumption affects
the investment and production activities, which in turn hampers economic growth.
4. Lack of Social Consciousness: Indirect taxes do not create any social
consciousness as the taxpayers do not feel the burden of the taxes they pay.
5. Uncertainty: Indirect taxes are often rather uncertain. Taxes on commodities with
elastic demand are particularly uncertain, since quantity demanded will greatly affect
as prices go up due to the imposition of tax. In fact a higher rate of tax on a particular
commodity may not bring in more revenue.
6. Inflationary: The indirect taxes are inflationary in nature. The tax charged on
goods and services increase their prices. Therefore, to reduce inflationary pressure, the
government may reduce the tax rates, especially, on essential items.
8. 7. Possibility of Tax Evasion: There is a possibility of evasion of indirect taxes as
some customers may not pay indirect taxes with the support of sellers.