Sales tax and customs duty


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Sales tax and customs duty

  2. 2. SALES TAX The Government of India Act, 1935 by virtue of entry 48 of the Provincial List permitted tax to be levied on sales of goods and on advertisement. A sales tax is a tax paid to a governing body for the sales of certain goods and services. When a tax on goods or services is paid to a governing body directly by a consumer, it is usually called a use tax .
  3. 3. Ingredients The existence of goods in the State at the time sale. The manufacture has taken place in the State The Property in the goods is transferred in the State for a price There has been a payment of price & title in the goods has been
  4. 4. Applicability of CST (Act 1956) Tax is levied on interstate sales Sales tax thus collected is retained by the collecting state Sales tax under this scheme is payable in the state from where movement of goods
  5. 5. Rate of CST Different rates are prescribed for: Sales to Government (charged at 4% with an issued certificate in ‘D’ form). Sales to registered dealers (4%)of goods included in their registration certificates (‘C’ form). Sales of declared goods to un-registered dealers (twice rate). Sales of goods other than declared goods to un-registered dealers (as applicable for sale inside the State/10%). Sales of goods of whose tax rate is Nil /less than 4% for sales inside a State. If local sales tax is Nil, CST will also be Nil, if sale is to
  6. 6. As per Section 8 of CST Act, the rates of taxes are to be decided as per rates under Local Act. From 1/6/2008 onwards Local Rate of Tax Rate of tax under CST Act Supported by ‘C’ Form (Form D as abolished) Without C Form Declared goods 2% 4% If the goods are generally exempt under Local Act Exempt Exempt 1% 1%(C Form not required) 1% 4% 2% 4% 5% 2% 5% 12.5% 2% 12.5%
  7. 7. Customs Duty Customs duty is Governed by the Customs Act, 1962. It is levied as a percentage on the assessed value of the product that is exported or imported from India. Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country.
  8. 8. Objective • To restrict imports to preserve foreign exchange. • To protect Indian Industry from undue competition • To prohibit imports & exports of goods for achieving the policy objectives of the Govt. • To regulate exports • To co-ordinate legal provisions with other laws dealing with foreign exchange.
  9. 9. Exemption from Custom Duty(Sec 25) • Goods derelict, wreck, etc. (Sec 21) brought are entitled to be admitted duty free. • Remission of Duty on lost, Destroyed or Abandoned goods (Sec 23). • Denaturing or Mutilation of goods -Sec24 permits change in the form of goods to the other form and charging of lower rate of duty, if goods when imported in the condition they are in, attract a higher rate of duty. • Circumstances should be of an exceptional nature • The circumstances should be stated in the exemption order
  10. 10. Type of Customs Duties • Basic Duty • Countervailing Duty/Additional Customs Duty: It is payable only if the imported article is such as, if produced in India, its process of production would amount to 'manufacture' as per the definition in Central ExciseAct,1944. It is calculated on a value base of aggregate of value of the goods including landing charges and basic customs duty.
  11. 11. • Protective Duties: they are intended to give protection to indigenous industries, so as to not make a glut (an excessive supply) of cheap imported articles in the market making the indigenous goods unattractive. • Duty on bounty Fed Articles • Export Duty • Import Duty
  12. 12. Liability of payment of duty • To pay import duty commences as soon as goods enter the territorial waters and is collected when goods are unloaded on the land at a later date. • No customs duty is leviable on goods which are in transit in the same ships / if goods are in transit