Latest Development in

Indirect Tax
-By Chandeep Kumar.M M
22MBA015
 Indirect Tax
• Indirect tax is the tax levied on the consumption of goods
and services. 
• It is not directly levied on the income of a person.
• For eg:Excise Duty, GST,Customs Duty, Entertainment Tax,
Service Tax, Sales Tax, Gross Receipts Tax  and Value-Added
Tax (VAT) are examples of Indirect taxes.
 Different Types of Indirect Taxes

• Service tax:This tax is levied by an entity in return for the service

provided by them. The service tax is collected by the Government of India
and deposited with them.
• 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.
Conti……
• 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.
• 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.
Conti…..
• 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.
• Securities Transaction Tax:This tax is levied during the trading of
securities through Indian Stock Exchange.
 Advantages of Indirect Tax
 Convenience: Indirect taxes do not burden the taxpayer and are
convenient as they are paid only at the time of making a purchase.
Moreover, state authorities find it convenient to levy indirect taxes
because they are collected directly at the stores/factories which helps in
saving a lot of time and effort.
 Ease of collection: Indirect taxes are easy to collect in comparison with
direct taxes. Since indirect taxes are only collected at the time of making
purchases, the authorities need not worry about their collection.
Conti……
 Equitable contributions: Indirect taxes are directly related to the costs of
products and services. What this essentially means that the basic
necessities attract lower rates of tax while luxury items are charged at
higher tax rates, thereby ensuring that contributions are equitable.
 Disadvantages of Indirect Tax
Indirect Tax charged sometimes are cumulative. This means that in a point-based
transaction system, middlemen involved are likely to charge their own service tax
which may result in the overall price of the product increasing.
Indirect Tax can be regressive in nature. For example, salt tax remains the same for
both poor and rich, However, if a rich person defaults the payment, then the
penalties imposed will be higher as well.
Indirect Tax are not industry friendly. Taxes are levied on raw materials and goods
which in turn increases the cost of production, thus not allowing industries to
expand as their competitive capacity is restrict.
 Latest Development In Indirect Tax
1)GST revenues are buyant with record GST collection and returns
filed:
Gross GST collections for the month of January 2022 were confirmed as
the highest since GST’s inception - with Rs 1,40,986 crores (around
$18.8b) of tax collected.
This represents a 15% growth compared to the previous year which the
Finance Ministry linked with increased economic activity and the
introduction of anti-evasion measures.
Latest Development In Indirect Tax
2)Deadline for amendments and corrections extended:
The deadline for the amendment, correction, or uploading of missed sales
invoices or credit notes or for claiming missed input tax credits will
change from September 30 to November 30 of the following year. 
This provides taxpayers with additional time to identify discrepancies and
to correct the GST compliance position.
 Latest Development In Indirect Tax
3) Cancellation of GST registration after failure to submit consecutive
returns:
Where a composition taxpayer (i.e. a qualifying taxpayer under the
composition scheme) fails to file a return for three consecutive tax
periods, or any taxpayer fails to file a return for six consecutive tax
periods, then the GST registration can be cancelled.
However, before the cancellation, a taxpayer should be given a reasonable
opportunity to respond to the tax authority and have a hearing.
 Latest Development In Indirect Tax
 4)Input tax credit amendments:
A number of changes to input tax credits (ITC) were announced or confirmed in the Budget:
oITC for a month is restricted to the extent supplies are communicated to the recipient by means of Form
GSTR – 2B (the auto-generated ITC statement).
oEnabling provisions are introduced in GST to limit the amount of ITC that can be used for the discharge
of output tax liability.
oWhere the supplier fails to pay output tax within the prescribed time period, customers are required to
reverse ITC along with an applicable interest of 18%.
oThe balance in the Central GST cash ledger is to be made transferrable to the electronic Central GST or
Integrated GST cash ledger of different  Goods and Services Tax Identification Number (GSTIN) of the
same PAN number.
 Latest Development In Indirect Tax
5)Review of customs exemptions and tariff simplification:

There is a proposal to gradually phase out more than

350 customs duty exemptions, for example on certain
agricultural produce, chemicals, fabrics, medical
devices, & drugs and medicines for which sufficient
domestic capacity exists.
 Latest Development In Indirect Tax
6)Mandatory e-invoicing extended:

It was announced on February 25 that compulsory e-invoicing in India will be extended to all
Indian businesses with annual sales of  ₹20 crore (c.$3m) with effect April 1, 2022 (i.e. the start
of the new Financial Year). 

The official order said the decision has been taken on the recommendations of the GST Council.

 While one of the main drivers from the Government is to maximise GST revenues and reduce
fraud, this is also a great opportunity for Indian SMBs to further embrace digitalization and the
associated benefits. 

It has been reported that 180,000 businesses will need to implement a
 compliant e-invoicing solution by April 1, 2022.