4.Indirect Tax – Concepts and General

 

Glossary 4

Indirect Taxes are taxes that are imposed on goods and services rather than on individuals or businesses. These taxes are generally collected by intermediaries, such as retailers or service providers, and passed on to the government. Here are some important definitions related to indirect taxes.

 Value-Added Tax (VAT): Value-added tax is a consumption tax that is levied on the value-added at each stage of production and distribution of a goods or service. The tax is based on the value-added by the business rather than on the final price of the product.

 Excise Duty: Excise duty is a tax that is levied on certain goods that are produced within a country, such as alcohol, tobacco, and petroleum products. Excise duty is often used as a tool for discouraging the consumption of harmful products.

 Customs Duty: Customs duty is a tax that is levied on goods that are imported into a country. The tax is typically based on the value of the imported goods,and is intended to protect domestic industries and generate revenue for the government.

Sales Tax: Sales tax is a tax that is levied on the sale of goods and services at the retail level. The tax is usually collected by the seller and passed on to the government.

 Service Tax: Service tax is a tax that is levied on the provision of certain services, such as telecommunications, banking, insurance, and advertising. The tax is typically collected by the service provider and passed on to the government.

 Central Sales Tax: Central Sales Tax (CST) is a tax levied by the Central Government of India on the sale of goods from one Indian state to another.

 Inter-state Sale: An inter-state sale is a sale of goods that takes place between two states within India. The CST is levied on such sales.

 Rate of Tax: The rate of CST is determined by the Central Government of India and is currently set at 0%. This means that no CST is payable on inter-state sales.