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Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
Tax may be levied on natural persons like Among direct tax only two types of taxes
individual, Hindu undivided family artificial are in existence today, namely income tax
entities like Firm, association of persons, and wealth tax
company, society etc. and also on goods and
services. Thus, another classification of tax Income tax: Under Indian income tax law
we found into direct tax and indirect tax. both flat rate (proportional tax) and slab rate
(progressive tax) applies. Tax is computed
Direct tax means a type of tax which is paid on total income. On lottery income, long
by a person directly to the Government. For term capital gain, and in some cases short
example income tax and wealth tax in India. term capital gain is taxed under proportional
taxation system. Again the income of
Indirect tax means tax on goods and assesses such as for companies, firms etc.
services which are paid by a person to the proportional taxation system is applied
producer, seller or service provider who is while for individual and cooperative society,
liable to pay the same to the account of progressive taxation system is followed.
Government. For example customs duty,
excise duty, VAT, service tax, entertainment Wealth tax: wealth tax is levied at 1% on
tax etc. in India. Now a modern system of the net wealth of individual, Hindu
taxing all goods and services ―goods and undivided family and company if net wealth
services tax‖ is about to be introduced. This exceeds Rs.30 lakhs on the valuation date. It
will replace all existing enactments relating is payable in every assessment year based on
to goods and services. valuation of net wealth on the respective
valuation dates. Valuation date means last
Taxing system in India day of the corresponding previous year
relating to each assessment year. Net wealth
In India, progressive and proportional taxing
is computed as the difference between value
systems are followed. In Indian tax law, slab
of assets and the value of liabilities. Assets
wise taxability arises somewhat for income
include House, Motor car, Jewellery, Urban
tax while proportional tax is applicable for
land, Cash in hand and yatch, boat and air
other taxes, for example excise duty,
craft.
customs duty, VAT, service tax, wealth tax
etc. Further under income tax, lottery Among the indirect taxes regime important
income, long term capital gain, and in some ones are Excise duty, service tax, customs
cases short term capital gain is taxed under duty and sales tax,
proportional taxation system. Again the
income of assesses such as for companies, Excise duty: Excise duty is levied on
firms etc. proportional taxation system is manufacture or production of excisable
applied while for individual and cooperative goods in India at the rates specified in
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Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
Central excise tariff act. It is based on value .Thus, it is a multi-point taxation system on
added concept since it includes the provision value addition. It has been introduced to
of input tax credit covered under CENVAT avoid cascading (double taxation) effect and
credit rules. to check tax evasion.
Customs duty: Customs duty is levied on Goods and Services Tax (GST)
goods imported or exported from India at
the rates specified in Customs tariff act. Till now in India, there are separate
Import means bringing into India from a enactments for goods and services. Efforts
place outside India while export means are being made to consolidate the taxing
taking out of India from a place outside system for entire goods and services.
India. India includes territorial waters of Goods and service Tax has evolved as a
India which extends up to 12 nautical miles modern Taxing system. It is a composite
from the base line. Taxing system which covers all goods and
Service tax: Service tax is a type of indirect services for specified transactions. This New
tax which levied on services. It is Act will replace all indirect Taxes being
consumption based destination tax. It is presently levied on all goods and services by
governed by chapter V and chapter V-A of central as well as state government.
the finance act 1994 as amended to finance However, this new act is yet to be
act 2012. Service tax is levied @12% of implemented in India.
gross value of taxable service. Additionally Tax Collection pattern in India
education cess @ 2% and higher education
cess @ 1% is also payable. Thus, the Gross tax collection in India is more or less
effective rate of tax comes out to 12.36%. stagnant after financial year 2009-10, if we
take it as % of GDP (Table-I). To meet the
Sales tax: Sales Tax is the older version of challenges, the Government is financing its
VAT. Under Sales Tax system, Tax was fiscal deficit by cutting down its
levied on entire selling price and not on expenditure. This is not only lowering down
value added. Thus, there was double the capital formation in the country but also
taxation effect under sales tax system. Even adversely affecting the overall economic
now sales tax is prevalent in inter-state sales. growth. The pattern of indirect collection is
VAT: VAT is the short version of value also not showing any favourable growth
added tax. It is a type of indirect tax which (Table-II). Shortfall has not only incurred in
is levied on sale of goods within a state. tax collection but also in non-debt receipts.
VAT is a modern system of taxing goods
which has been introduced to replace the
existing sales tax system. Under VAT
system tax is levied on the value added at
each stage of production or distribution
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Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
www.ssarsc.org Page 4
Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
www.ssarsc.org Page 5
Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
www.ssarsc.org Page 6
Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
Tables
Table-I
Pattern for Gross tax collection in India
Table-II
Pattern for Indirect tax collection in India
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Scientific Society of Advanced Research and Social Change
SSARSC International Journal of Management
Volume 3 Issue 1, January-June 2017, ISSN 2349-6975
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