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charts and Level II pricing are just some of the reasons why many
traders today choose cTrader as their go-to platform.
Indirect Taxation
Indirect tax is a tax that can be passed on to another individual or entity. Indirect tax is generally imposed on suppliers or manufacturers who pass it on to the final consumer.
Indirect Taxation – Deepti Bhagtani & Associates In Vadodara
Indirect taxes are touted to be streamlined following the introduction of the uniform Goods and Services Tax (GST). The points below will help you understand more about the types of indirect taxes and where they are applicable from a consumer’s perspective.
There are many indirect taxes applied by the government of India. Taxes are levied on manufacture, sale, import and even purchases of goods and services.
Indirect Taxation – Deepti Bhagtani & Associates In Vadodara
These laws aren’t also well-defined Acts from the government, rather orders, circulars and notifications are given out by relevant government bodies to this end. As such, it can be cumbersome trying to understand every feature of indirect taxes in India.
Types Of Tax
Value Added Tax
Also known as VAT, this type of tax is levied on any product sold directly to customer and are movable. VAT consists of Central Sales Tax which is paid to the Government of India State Central Sales Tax which is paid to the respective State Government.
Entertainment Tax
This tax is charged by the state government and is applicable on any products or transactions related to entertainment. Purchasing of any video games, movie shows, sports activities, arcades, amusement parks, etc. are some of the products on which Entertainment Tax is charged.
Custom Duty
This a tax levied on the goods imported to India. Sometimes, Custom Duty is also levied on products which are exported out of India.
Stamp Duty
This is a tax levied on the transfer of any immovable property in a state of India. The state government in whose state the property is located charges this type of tax. Stamp tax is also applicable on all legal documents too.
Excise duty
When any product or good is manufactured by a company in India, then the tax levied on those goods is called the Excise Duty. The manufacturing company pays the tax on the goods and in turn recover the amount from their customers.
Features of Indirect Tax
- Tax liability: The service provider or seller pays indirect taxes to the government, and the liability is transferred to the consumer.
- Payment of tax: The seller pays indirect taxes to the government and the same is transferred to the consumer.
Indirect Taxation – Deepti Bhagtani & Associates In Vadodara
- Nature: Indirect taxes were initially regressive in nature, but thanks to the implementation of the Goods and Services Tax, they are now pretty progressive.
- Saving and investment: Indirect taxes are generally growth-oriented considering the fact that they encourage consumers to save and invest.
- Evasion: It is difficult to evade indirect taxes because they are now implemented directly through products and services.
Features of Indirect Tax
Charged on Commodities
Tax Evasion
Revenue for Government
Shifts the Burden of Tax
Paid by the Consumer
Consumer is not Directly Affected
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General Questions
As the name suggests, Indirect tax is not directly levied on the taxpayers. This tax is often levied on goods and services which results in their higher prices. A few examples of indirect taxes in India include service tax, central excise and customs duty, and value added tax (VAT).
Indirect Tax can be defined as a type of tax in which the incidence and impact of the tax are passed on to another individual or entity i.e. the end consumer of the product. Unlike direct taxes, It is not levied on the income of the person but on the value of goods or services purchased.
An indirect tax (such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST), excise, consumption tax, tariff) 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 good or service purchased.