courtesy : Tax Design And Development
Income Tax
Main article : Income tax in India
Income Tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income). Income tax generally is computed as the product of a tax rate times taxable income. However, for individuals, tax is payable at slab rates. In the Finance Act, 2020 the Government introduced a new tax regime for individuals giving them the option to opt for the new regime or continue with the old regime.
The tax is collected by the Income Tax Department for the central government. Farmers – who constitute 70% of the Indian workforce – are generally excluded from paying income tax in India.
Income tax returns are due in India generally on 31 July, 30 September or 30 November, depending on the category of taxpayer. Everyone who earns or gets an income in India is subject to income tax. Income is divided into five categories: Income from Salary, Income from Other Sources, Income from House Property, Income from Capital Gains, and Income from Business and Profession.
Goods and Services Tax
Main article: Goods and Services Tax (India)
Goods and Services Tax is an indirect tax collected on supply of goods or service.
- Central Goods and Services Tax (CGST): Portion of Tax to central government on intrastate sales.
- State Goods and Services Tax (SGST): Portion of Tax to state on intrastate sales.
- Integrated Goods and Services Tax (IGST): tax for interstate sales.
Goods and services are divided into five different tax slabs for collection of tax – 0%, 5%, 12%, 18% and 28%. However, petroleum products, alcoholic drinks, and electricity are not taxed under GST and instead are taxed separately by the individual state governments, as per the previous tax system.
Custom Duty
Customs duty is a tax on import & export of goods in India with specific rates on certain types of goods. Customs authorities are rightful in checking accurate details of the items exported or imported along with the origin of the item and duly validated rates & structure. Custom duty measures the value of the items in the context of the tax applicable on such item and is much higher on certain types of items including sin goods i.e. liquor & imported cigars.
Custom Duty is an indirect tax levied on import or export of goods in and out of country. When goods are imported from outside, the tax known as import custom duty. when goods are exported outside India, the tax is known as export custom duty. The tax collected by Central Board of Indirect Taxes and Customs. In February 2020, as part of India’s attempts to increase and support local production, the government stated that it raised taxes on imports for items such as electronic devices, furniture and toys.
Service tax
Main article: Service Tax
Service tax is imposed by the government on all the services provided by firms and servicing companies in lieu of monetary benefit. The service tax levied on services is actually borne by the customers which in turn goes through multiple channels of levying authorities till back to the government. Service tax will be applicable on the taxable services only which is provided or will be provided by the service provider agreeing upon the concern of actually offering services.
It is a tax levied on services provided in India. The responsibility of collecting the tax lies with the Central Board of Excise and Customs (CBEC). From 2012, service tax is imposed on all services, except those which are specifically exempted under law(e.g. Exempt under Negative List, Exempt as exclusion from Service definition as per Service Tax, Exempt under MEN(Mega exemption notification)). In budget presented for 2008–2009, it was announced that all small service providers whose turnover does not exceed ₹10 lakh (US$13,000) need not pay service tax. Service tax at a rate of 14 percent(Inclusive of EC & SHEC) will be imposed on all applicable services from 1 June 2015. From 15 November 2015, Swacch Bharat cess of 0.5% has been added to all taxable service leading the new Service Tax rate to be 14.5 percent (Inclusive of EC, SHEC & Swacch Bharat cess). On 29 February 2016, Current Finance Minister Mr. Arun Jaitley announces a new Cess, Krishi Kalyan Cess that would be levied from 1 June 2016 at the rate of 0.5% on all taxable services. The purpose of introducing Krishi Kalyan Cess is to improve agriculture activities and welfare of Indian farmers. Thus, the new Service Tax rate would be 15% incorporating EC, SHEC, Swachh Bharat Cess and Krishi Kalyan Cess.
From 2015 to currently, the gross tax collection of the centre from service tax has amounted in excess of ₹2.10 trillion (US$26 billion).
Service tax has been replaced by Goods and Services Tax in India. Service tax no longer applies to services in India.
Central Excise
Logo of Customs and Central Excise
In 2015–2016, the gross tax collection of the centre from excise amounted to ₹2.80 trillion (US$35 billion).
- Central Excise Act, 1944, which imposes a duty of excise on goods manufactured or produced in India;
- Central Sales Tax, 1956, which imposes sales tax on goods sold in inter-state trade or commerce in Indisale of property situated within the state
In the 2016 Union budget of India, an excise of duty of 1% without input tax credit and 12.5% with input tax credit was imposed on articles of jewellery with the exception of silver jewellery. The government had earlier proposed an excise duty in the Budget 2011–12, which had to be rolled back after massive protests by jewellers.
- Central Excise Tariff Act, 1985
- Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000
