tax 4 Flashcards
goods and service tax
tax levied on manufacture, sale and consumption of goods and serives at national level.
tax structure in India
direct tax and indirect tax
direct tax
income, corporate and wealth
indirect tax
excise duty, custom duty and service duty
method of taxation
progressive, regressive and proportional
progressive tax
increasing rate of tax for increasing value or volume
regressive tax
decreasing rate of tax for increasing value or volume
proportional tax
fixed rate of tax for every level of income or production
shortcomings in tax system
tax cascading
complexity
tax at manfacturing levels
exclusion of service
tax evasion
corruption
vat
value added tax
tax structure before gst
Before the implementation of GST, taxation laws between the Centre and states were clearly determined. There were no overlaps between the fiscal powers, what so ever. The Centre would levy tax on goods manufacture, except alcohol for consumption, narcotics, etc.
The states had the power to charge tax on the sale of goods.
The Centre would levy the Central Sales Tax that was collected by the originating states.
The Centre was also levying service tax on all types of services.
Additionally, the Centre was charging and collecting additional duties of customs on goods that were imported into or exported from India. This tax was levied in addition to the Basic Customs Duty. This additional duty of customs is referred to as Countervailing Duty (CVD) and Special Additional Duty (SAD) and it counter balances excise duties, state VAT, sales tax, and other such taxes.
The introduction of the GST regime made amendments to the Constitution so that the Centre and states are empowered at the same time to levy and collect GST. This concurrent jurisdiction of the states and Centre also requires an institutional mechanism that ensures joint decisions are taken about the structure and operation of GST.
existing tax structure in India
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proposed tax structure in India
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salient features of gst
cgst igst sgst
cgst
central goods and services tax. revenue for central gov. past central taxes like central excise duty, additional excise duty, special excise duty, service tax is subsumed by central government. collected by the intra state (within the state) central government.
central goods and services act 2016
SGST
state goods and services tax. revenue for state government. taxes like vat, entertainment tax, luxuruy tax, entry tax etc will be merged. state goods and services act 2016
IGST
intergrated goods and services act 2016. revence divided btwn stat and central government as rates specified by the central government. will transfer goods from one state to another.
key features of gst regime
- def, “destination based”
- if destination based, exports are allowed with zero tax but import are taxed on par with domestic production
- cgst, igst, cgst are levied at rates mutually agreed by the centre and stae.
benifits or gst
- unified common national market for india, boosts foreign exchange
- harmonization of laws preocedures and rates of taxes
3.boosts eport and manufacturing acts - more employment
- increase in gdp which results in substainable development
6.eradication of poverty - neturalization of taxed, esp for exports so indian market has more competition with foreign market.
- improvement in overall investment climate change
