BUSINESS STUDIES (CLASS 11) WORKSHEET 27 -INDIRECT TAXES

Indirect taxes
Indirect tax is the tax levied on the consumption of goods and services. It is not directly levied on the income of a person. Instead, he/she has to pay the tax along with the price of goods or services bought by the seller.

An indirect tax is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of market price of the goods or service purchased. For example, Goods and Services Tax (GST), excise duty ,customs duty, and stamp duty

Excise duties
Excise duty (Central VAT) is a tax on the manufacture of goods within the country. Excise duties are levied under the Central Excise and Salt Act, 1944, the Excise Tariff Act, 1985, and the Modified Value Added Tax (MODVAT) scheme or CENVAT.

The rates of excise duty levied vary depending inter alia on the nature of the item manufactured, the nature of the manufacturing concern, and the place of ultimate sale.

The duty rates are either ad valorem (i.e. a fixed percentage of the cost of production), specified (a fixed rate depending on the nature of the manufactured item, for example, length of product or count of product), or a combination of both.

The MODVAT scheme, introduced in 1986, on the recommendation of the L K Jha Committee, applies to certain specific items.

The objective of this scheme is to limit the cascading effect of duty incidence on several goods subject to excise which are further used as inputs for other excisable goods.

Under the scheme, MODVAT credit can be claimed on the purchase of raw materials on which excise has been paid.

This MODVAT credit can be used to set off excise duty payable on subsequent manufacture of goods.

Excise goods are:

Beer ,wine and intermediate products (for instance sherry and port)and other products containing alcohol (for instance spirits).Tobacco products (for instance cigarettes, cigars and pipe/cigarette tobacco).Mineral oil (for instance petrol, diesel oil and LPG).

Stamp duty is a tax that is levied on single property purchases or documents. A physical revenue stamp had to be attached to or impressed upon the document to show that stamp duty had been paid before the document was legally effective. Stamp duty is an indirect tax because it is charged on the value of a transaction and can be passed on to the consumer. 

Customs Duty is a type of Indirect Tax which is levied on goods which are imported into India. In some cases, it is also levied when the goods are exported from India.

In India, the basic law for levy and collection of customs duty is Customs Act, 1962 . It provides for levy and collection of duty on imports and exports, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences, etc.

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words, Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

TAXES WHICH ARE ROLLED ON OR SUBSUMED BY GST

Taxes on entertainments and amusements (covered by the erstwhile entry 62 of State List of the Constitution) have been subsumed under GST except to the extent of taxes on entertainments and amusements levied by a Panchayat or a Municipality.
Gifts upto a value of Rs 50,000/- per year by an employer to his employee are outside the ambit of GST. However, gifts of value more than Rs 50,000/- made without consideration are subject to GST, when made in the course or furtherance of business.
Service tax was abolished with the rollout of GST on July 1, 2017, as the new tax subsumed service tax in addition to many other indirect taxes. Service tax
GST is a single domestic indirect tax law for the entire country. Under the GST regime, the tax is levied at every point of sale. There by sales tax is subsumed by GST