CHIEF EDITORS DESK

Sound tax policies of a nation are an indication of strong governance and

sustainable development. This fact is reflected from the historical
perspective also. All the successful rulers known for being good
administrators had also put in place an excellent revenue collection
system be it the Mauryas, Guptas, Iltutmish or Akbar.

Their name to fame was not just because of their potential supremacy
but also because of the taxation policies they pursued.
 TAXES CAN BE BROADLY CLASSIFIED INTO
TWO CATEGORIES:
Direct Tax
Indirect Tax
_________________________________

The government body that oversees the payment

of direct taxes is called Central Board of Direct
Taxes (CBDT)
The CBDT is a part of the Department of
Revenue
 WHICH OF THE FOLLOWING IS CORRECT
REGARDING CBDT?
1. The CBDT Chairperson is ex-officio special secretary
and is under the direct charge of the revenue
secretary of India.
2. He has a fixed tenure of 3 years
_____________________________________
A. Only 1 is true
B. Only 2 is true
C. Both are true
D. Both are false answer - A
 DIRECT TAX
Income Tax
Capital Gains Tax - This tax is payable when you receive a fairly
large amount of money from an investment or through a property sale,
whatever be it.

Securities Transaction Tax - Every time you buy a share, on

the Indian Stock Exchange you're also paying the tax on it.
Perquisite Tax - If the office vehicle is used for both official and
personal reason could be taxed but if it's only used for official purposes,
no taxes are levied on it.
 DIRECT TAX
Corporate Tax - This is the income tax levied on the
revenue earned by a company.
The international companies have different tax rates
compared to the domestic companies.
 INDIRECT TAX
Indirect taxes aren't directly payable to the
Government by the consumer. They are collected
and paid to the government by the middle man i.e.
the person who provides the service or sells the
product. These taxes are added to the price of the
product thus making it costlier. Some of the most
common examples of indirect taxes are Value
Added Tax (VAT) and Sales Tax.
SOME OF THE EXAMPLES OF INDIRECT TAXES
Sales Tax: This is the tax that is levied or imposed
on the sale of the product. The tax is imposed on
the product seller who transfers it to the end
consumer. The sales tax is included in the price of
the item sold.
SOME OF THE EXAMPLES OF INDIRECT TAXES
Service Tax: Like Sales Tax is added to the selling
price of goods, Service Tax amount is added to the
services provided. The Service Tax is applicable
only to companies that provide services. It is
collected on a monthly or quarterly basis
depending upon how the service is provided.
SOME OF THE EXAMPLES OF INDIRECT TAXES
Value Added Tax: This tax is levied or imposed throughout all the
stages of the supply chain viz. the manufacturer, the distributor,
wholesaler, retailer all the way to the consumer. However, it is not
applicable on food items, essential drugs or exported items.
VAT is only applicable on food items that are prepared in the
restaurant as they add value before serving it to you. So make
sure that you are not charged VAT on packaged food items or
water bottles.

Under state government

SOME OF THE EXAMPLES OF INDIRECT TAXES
Custom Duty & Octroi: Custom Duty is the tax levied
on goods that need to be imported from another
country by land, sea and or air. It doesn't matter if you
purchase the said item in a different country and then
bring it to India. The taxes will still be imposed. While
the Custom Duty makes sure that the products
entering India are properly taxed, similarly the Octroi
makes sure that goods leaving the state borders are
appropriately taxed. The Octroi charges are maintained
by the state government.
 Excise Duty: This is the tax that is levied on all
goods that are manufactured in India. It is also
called the Central Value Added Tax or CENVAT.
The tax is collected by the government from the
manufacturers or from those who receive and
consequently distribute the manufactured goods
 OTHERS
Entertainment Tax

Education Cess/Surcharge

Swachh Bharat Cess

Krishi Kalyan Cess

 WHAT IS GST?
Goods and Services Tax (GST) is an indirect tax

GST or Goods and Service Tax is the

comprehensive tax that is brought into effect in
order to replace all the other indirect taxes
(mentioned above) imposed by the state and
central government. It is levied on manufacture,
sale and use of the goods and services.
 HOW GST WILL WORK IN INDIA
GST, once implemented will club all of these
separate State and Central taxes into Central GST
and State GST, thus erasing the borders between
states and making India a common market place.
 TAXES CURRENTLY LEVIED AND COLLECTED BY THE CENTRE
a. Central Excise duty
b. Duties of Excise (Medicinal and Toilet Preparations)
c. Additional Duties of Excise (Goods of Special
Importance)
d. Additional Duties of Excise (Textiles and Textile Products)
e. Additional Duties of Customs (commonly known as
CVD)
f. Special Additional Duty of Customs (SAD)
g. Service Tax
h. Central Surcharges and Cesses so far as they relate to
supply of goods and services.
 STATE TAXES THAT WOULD BE SUBSUMED UNDER THE
GST ARE:
a. State VAT
b. Central Sales Tax
c. Luxury Tax
d. Entry Tax (all forms)
e. Entertainment and Amusement Tax (except when levied
by the local bodies)
f. Taxes on advertisements
g. Purchase Tax h. Taxes on lotteries, betting and gambling
i. State Surcharges and Cesses so far as they relate to
supply of goods and services.
 WHICH OF THE FOLLOWING STATE TAXES
ARE NOT INCLUDED IN GST?
1) State Value Added Tax
2) Luxury tax
3) Taxes on lottery, betting and gambling

a. 1, 2
b. 1, 3
c. All of the above
d. None of the above Answer - D
 Goods for other states during manufacturing can
be bought at cheaper rates.
The final price of products will be much cheaper
due to reduction in multiple taxes (Tax Cascading)
 CASCADING EFFECT
Action Cost Tax 10% Total

Buys raw materials 100 10 110 VAT(state tax)

Manufacturing+40 150 15 165 -Excise

Wholesaler+30 195 19.50 214.50 -VAT

Retail + 20 234.50 23.45 257.95 - CST

Total 190 67.95 257.95

 GST ACROSS THE GLOBE
About 160 countries in the world already have a
unified GST or VAT in place
France kickstarted this back in 1954. Almost all of
the European countries have GST.
USA happens to be one of the world powers
without a GST, as it provides a high level of
autonomy to the states when it comes to taxation.
 Goods and Service Tax is imposed by the government
as a sort of Value Added Tax on the goods you buy or
services that you enjoy.

Pre-GST, the taxes imposed by the state include Sales

Tax,Value Added Tax, Octroi, Stamp Duty,
Entertainment Tax, Toll Tax etc. The Central
government levies Customs Duty, Income Tax, Excise
Duty, Central Sales Tax while the Property Tax is
imposed by local authorities.
 ADVANTAGES OF GST
The GST being a federal law prevents the states have
their own taxation laws on goods and services.
Makes the taxation system easier to understand and
cost effective in terms of implementation.
Tax evasion at various stages will be eliminated as tax
offsets can be collected only if taxes have been paid
originally.You will also be able to buy raw materials or
constituent materials for production only from those
who have paid taxes, in order to claim benefits.
 DISADVANTAGES
GST is not good news for all sectors, though. In
the current system, many products are exempted
from taxation. The GST proposes to have minimal
exemption list. Currently, higher taxes are levied
on fewer items, but with GST, lower taxes will be
levied on almost all items.
 GST has eliminated all the above-mentioned taxes.
After July 1 excise, octroi, sales tax, CENVAT,
Service tax, turnover tax, etc. are not applicable.
Now all these taxes fall under GST.
 GST WILL NOT CAUSE INFLATION IN INDIA
About 160 countries in the world already have a
unified GST or VAT in place
France kickstarted this back in 1954. Almost all of
the European countries have GST.
USA happens to be one of the world powers
without a GST, as it provides a high level of
autonomy to the states when it comes to taxation.
 WHAT IS SGST/CGST/IGST?
For e.g.: Rajesh, a dealer in Maharashtra sold
goods to Anand in Maharashtra worth Rs. 10,000.
The GST rate is 18% comprising of CGST rate of
9% and SGST rate of 9%, in such case the dealer
collects Rs. 1800 and Rs. 900 will go to the central
government and Rs. 900 will go to the Maharashtra
government.
tax Rates Products
0% Milk Kajal
Eggs Educations Services
Curd Health Services
Lassi Childrens Drawing & Colouring Books
Unpacked Foodgrains Unbranded Atta
Unpacked Paneer Unbranded Maida
Gur Besan
Unbranded Natural Honey Prasad
Fresh Vegetables Palmyra Jaggery
Salt
5% Sugar Packed Paneer
Tea Coal
Edible Oils Raisin
Domestic LPG Roasted Coffee Beans
PDS Kerosene Skimmed Milk Powder
Cashew Nuts Footwear (< Rs.500)
Milk Food for Babies Apparels (< Rs.1000)
Fabric Coir Mats, Matting & Floor Covering
Spices Agarbatti
Coal Mishti/Mithai (Indian Sweets)
Life-saving drugs Coffee (except instant)
12% Butter, Computers
Ghee Processed food
Almonds Mobiles
Fruit Juice Preparations of Vegetables, Fruits, Nuts or other parts of Plants
including Pickle Murabba, Chutney, Jam, Jelly
Packed Coconut Water Umbrella
18% Hair Oil Capital goods
Toothpaste Industrial Intermediaries
Soap Ice-cream
Pasta Toiletries
Corn Flakes Computers
Soups Printers
28% Small cars (+1% or 3% cess) High-end
motorcycles (+15% cess)
Consumer durables such as AC and fridge Beedis
are NOT included here
Luxury & sin items like BMWs, cigarettes and
aerated drinks (+15% cess)