Dr.RANM ARTS AND SCIENCE COLLEGE�Affiliated to Bharathiar University , Accredited with “ B+” NAAC

Mrs.K.SATHYA M.Com.,M.phil.,M.ed

Assistant Professor,

Department of Commerce (PA)

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Course Name : INDIRECT TAX

Welcome You All

INTRODUCTION TO INDIRECT TAX

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• What is a tax? A tax may be defined as a "pecuniary burden laid upon individuals or property owners 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 Government, which is used to provide public services.

DIRECT AND INDIRECT TAXES

• Direct Taxes: A direct tax is a kind of charge, which is imposed directly on the taxpayer and paid directly to the Government by the persons (juristic or natural) on whom it is imposed. A direct taxis one that cannot be shifted by the taxpayer to someone else. A significant direct tax imposed in India is income tax.
• Indirect Taxes: If the taxpayer is just a conduit and at every stage the tax incidence is passed on till it finally reaches the consumer, who really bears the brunt of it, such tax is indirect tax. An indirect tax is one that can be shifted by the taxpayer to someone else. Its incidence is borne by the consumers who ultimately consume the product or the service, while the immediate liability to pay the tax may fall upon another person such as a manufacturer or provider of service or seller of goods.

SPECIAL FEATURES OF INDIRECT TAXES

• An important source of revenue:
• Tax on commodities and services:
• Shifting of burden:
• No perception of direct pinch:
• Inflationary:
• Wider tax base:
• Promotes social welfare:
• Regressive in nature:

TAX REVENUE:

• Tax revenue is money collected by a government body from its constituents for public spending. Taxes may be based on income, property value, or sales of goods and services.
• In the U.S., federal tax revenue mostly derives from taxes on the income of individuals and the profits of businesses. State and local governments derive much of their revenue from income taxes and sales taxes. Local governments may also impose income taxes, property taxes, school taxes, and sales taxes.

TYPES OF TAX REVENUE

• State Taxes
• Flat-Rate Taxes
• Sales and Use Taxes
• Value-Added Taxes

ADVANTAGES OF INDIRECT TAX

• Tax participation from the entire country – Direct taxes
• Convenient 
• No tax evasion
• Spread over a wide range 

DISADVANTAGES OF INDIRECT TAXES 

• Can be perceived as regressive 
• Increase the price of commodities

CONCEPT OF GST

Before we proceed with the finer nuances of Indian GST, let us first understand the basic concept of GST.

GST is a value added tax levied on manufacture, sale and consumption of goods and services.

GST offers comprehensive and continuous chain of tax credits from the producer's point/service provider's point up to the retailer's level/consumer‘s level thereby taxing only the value added at each stage of supply chain.

The supplier at each stage is permitted to avail credit of GST paid on the purchase of goods and/or services and can set off this credit against the GST payable on the supply of goods and services to be made by him. Thus, only the final consumer bears the GST charged by the last supplier in the supply chain, with set-off benefits at all the previous stages.

NEED FOR GST IN INDIA

• Excise duty and value added tax (VAT) on intra-State sale of goods. However, the VAT dealer on his subsequent intra-State sale of goods charged VAT (as per prevalent VAT rate as applicable in the respective State) on value comprising of (basic value +excise duty charged by manufacturer + profit by dealer).Further, in respect of tax on services, service tax was payable on all ‗services‘ other than the Negative list of services or otherwise exempted.
• The earlier indirect tax framework in India suffered from various shortcomings. Under the earlier indirect tax structure, the various indirect taxes being levied were not necessarily mutually exclusive.

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ADVANTAGES OF GST

Simplified Tax Structure:

Higher Tax Compliance Levels:

Greater Revenue Collection: 

Increasingly Efficient Logistics:

Increased Transparency: 

Easy Accessibility: 

Convenience for Small Businesses: 

Encouragement for Foreign Investments:

Digitization: 

Boost to the Economy: 

DISADVANTAGES OF GST

• Increased Costs:
• Higher Tax Liability of SMEs:
• Penalties and Fines:
• Impact on Un organized Sector:
• Other Teething Issues: 

THE STRUCTURE OF GST IN INDIA

• 1. Central GST (CGST)

CGST is levied by the Central Government of India on the intra-state supply of goods and services. The transaction value is defined as the price actually paid or payable for the said supply of goods or services.

• 2. State GST (SGST)

GST imposed by specific State governments on the intra-State trade and services or trade within the state is called SGST(State-GST). Here the revenues are earned by the State govt. due to SGST as the transaction occurred within the state.s

• 3. Union Territory GST (UGST)

In case of Union territories such as Chandigarh, instead of State govt. the GST is collected by the Central administration and is referred to as UGST

• 4. Integrated GST (IGST)

IGST would be collected by the central government on the inter-state transactions of goods and services. Centre would levy IGST (CGST plus SGST) on all inter-state transactions of taxable goods and services.

LEVY AND COLLECTION

Goods and Services Tax (GST) has been identified as one of the most important tax reforms in post independence. GST is a path breaking indirect tax reform which will create a common national market by removing inter-state trade barriers.GST has subsumed (absorbed or include) multiple indirect taxes imposed by central and state governments. Power to levy any tax is derived from the Constitution of India. As per article 265 of The Constitution of India no tax shall be imposed or collected except by the authority of any Law. The charging section is the must in any Taxing Law for levy( impose) and collection (payment) of taxes. The very basic for the charge of tax in any taxing statute is taxable event, i.e. the point of time when tax will be imposed.

CONCEPT OF SUPPLY

• The concept of ‗supply‘ is the key stone of the GST architecture. The provisions relating to meaning and scope of supply are contained in Chapter III of the CGST Act read with various Schedules given under the said Act. Therefore, following shall be discussed in this chapter:

What is Zero Rated Supply

• In any country, the export of goods and services plays a major role in maintaining a country’s economic growth. Therefore, in order to boost the same, the government provides such businesses with certain reliefs and perks. One such relief provided in the Indian Taxation system, GST is Zero-Rated Supplies.

Why is value of supply important?

• The GST to be applied on a transaction will depend on the value of these goods and services sold or transferred. 
• Buyers can pay for transactions with a monetary consideration by giving the seller cash or electronically transferring money. They can also pay for transactions with non-monetary considerations by giving the seller other goods or services in exchange. 
• Finally there are cases where they can pay for transactions partly in cash and partly in kind (by bartering goods or services). Hence it is really important to accurately calculate the value of supply.

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Important points:

(i)TheturnoverwillbecomputedPANwise.

(ii)The partner and partnership firm will have different PAN Nos. Thus the turnover of the partner and partnership firm will not be aggregated.

(iii)The HUF and individual coparcener of the family have different PAN Nos. Hence, turnover of Karta of HUF in his individual capacity and turnover of Karta as a Karta of HUF will not be aggregated.

IGST–Levy on supply of good:

• Supplyofgoodsinthecourseofinter-Statetradeorcommercemeansanysupplywhere:
• thelocationofthesupplier and
• theplaceofsupplyareindifferent StatesDeemedInterStateSupply:
• Asupplyofgoodsand/orservicesinthe course of import
• Anexportofgoodsand/orservices

CONCEPT OF TAXABLE PERSON

• As per section 2(107) of the CGST Act, taxable person means a person who is registered or liable to be registered under section 22 or section 24. Persons liable to be registered under sections 22 and 24 have been discussed in detail in the preceding paras.From the definition of‗taxable person‘provided above, it may be inferred that even an unregistered person who is liable to be registered is a taxable person. Similarly, a person not liable to be registered, but has taken voluntary registration and got himself registered is also a taxable person.

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Types of Custom Duties

• Basic Custom duty
• Additional Custom duty
• Special Countervailing duty
• Safe Guard duty
• Anti Dumping Duty
• Protective Duties
• Integrated Goods and Service Tax
• Goods and Services Tax Compensation Cess
• Social Welfare Charge Basic Custom Duty,

Functions Of Customs Department

Collection of Customs Duties on imports and Exports as per Law.

Enforcement of Various provisions of Custom Act.

Discharge of Agency functions and enforcing prohibitions and restrictions on imports and imports under various legal enactments.

Prevention of Smuggling.

International Passenger Clearance.

EXPORT DUTIES

The rate of export duties are enlisted in schedule 2 of customs tariff act, 1975. the central government may impose export duties by making amendment to the second schedule by issue of a notification in the official gazette. Export duty can be specific or ad valorum. After GST export duty is not applicable in India on goods under GST regime.

LEVY OF CUSTOM DUTY

• (i) Customs duty is imposed on goods when such goods are imported into or exported out of India;
• (ii) The levy is subject to other provisions of this Act or any other law;
• (iii) The rates of Basic Custom Duty are as specified under the Tariff Act, 1975 or any other law;
• (iv) Even goods belonging to Government are subject to levy, though they may be exempted by notification(s) under Section 25.

THANKYOU

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