Indirect Tax

Indirect tax is tax collected from intermediaries such as retailers but the ultimate taxpayer over here again are the citizens.The intermediaries apply these taxes on the product raising the price of the product and consumer pays the complete amount “inclusive all taxes”. This is how the tax is indirectly paid by the citizens of India.

Now after collecting the tax from the consumer, intermediary has to file a tax return to pay that tax to government.This may include Value added tax, Service Tax sales tax etc.

Let’s discuss about the various taxes being applied indirectly on us :

GST :

Goods and Service is the tax applicable from 1st of July, 2017. This is a consumption-based tax which includes all the taxes which were being applied previously on the good consumed and services provided.

Being consumption-based tax, at each stage of consumption in chain of supply it is levied on value added goods and services. The taxes which are now subsumed in GST are VAT, Sales tax, Luxury Tax, Central Excise duty, service tax, custom duty, property tax, etc.

Le’s have a brief desc about all such taxes.

Value Added Tax :

Value Added Tax is now included into GST. Being a commercial tax it was levied on all the stages of supply chain which included manufacturers, distributors and consumers. The tax was applied on the goods sold in the state and decided by the state itself. There were schedules as per the VAT percentages such as Schedule 3 had 1% vat, Schedule 2 had 5 % and the goods without any category were having VAT of 15%.  But now being included into GST it is not being applied separately after 1st July, 2017.

Sales tax:

Sale tax is a tax levied at the time of sale of the product, that means it is beared by the saler. The tax is levied only once and 2nd time for the same product it is not applicable but it can be trasfered to the consumer by adding the same into the final price of the product.    

Service Tax:

As the name indicates, this is the tax levied on the companies or organizations providing their particular services. The service tax may be collected monthly, quarterly or annually depending on the services being provided.But now service tax is also amongst the taxes included in GST.

So, these are few of the examples of indirect tax and there is much more than this. Gaining knowledge about taxation is not as easy as you thing. You won’t be able to grab the thing through internet. Tally Training institute in Chandigarh is the only way out if you are thinking to go for Financial Management, CA or Commerce.