Sources of Indirect Tax in India

Sources of Indirect Tax in India

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The taxpayers are not directly impacted by the indirect tax. Products and services are frequently subject to this tax, which drives up their prices. Service Tax, central excise and customs duty, and value-added tax (VAT) are a few examples of indirect taxes in India. Here are seven of the most common indirect taxes in India::

Service Tax Act - This tax is called the "Service Tax," and it is paid by businesses that provide services like legal advice and consulting. This tax is paid to the central government by recipients of services. Service Tax was 14% as of June 1, 2016, with Swacch Bharat Cess (0.5%) and Krishi Kalyan Cess (0.5%) raising the rate to 15%. This tax is not owed by small service providers whose annual income is less than INR 10 lakh.

Excise Duty - All goods manufactured in India are subject to this tax. Manufacturers are responsible for paying this indirect tax, which is frequently passed on to customers. In India, the Central Government collects this indirect tax in accordance with the Central Excise Act of 1944.

VAT or, the Value Added Tax - In the nation, the sale of movable goods is subject to VAT, also known as the Value Added Tax (VAT). All points in the production and distribution chain where value is added are subject to VAT. Under Entry 54 of the State List, the governments of the states levy this tax.

Customs Duty - One of the indirect taxes that apply to the importation of goods into the country is customs duty. This tax may also be imposed on exported goods in some cases. This duty's levy and collection, import and export procedures, penalties, prohibitions, and offenses are all governed by the Customs Act of 1962.

Securities Transaction Tax (STT) - When stocks are traded on any Indian stock exchange, this indirect tax known as the Securities Transaction Tax (STT) is levied. STT was introduced in 2004 and can be used for transactions involving shares, mutual funds, futures, and options. The short-term capital gains tax was reduced and the long-term capital gains tax was eliminated with the introduction of STT.

Stamp Duty - is an indirect tax levied by state governments when immovable property within their jurisdiction is transferred. Additionally, all legal documents must include stamp duty. The rates of it vary from state to state.

Entertainment Tax - State governments levy an entertainment tax on every entertainment-related transaction. Tickets to movies, arcade games for video games, stage shows, exhibitions, amusement parks, and sports-related activities are all examples.