Indirect Tax – Central Excise, Service Tax, GST
In Indian Tax scenario important indirect tax laws are:
Central Excise – This is Central/Federal Law imposing tax on all goods manufactured or produced in India. Labeling, re-labeling, repacking form bulk packs to smaller packs, branding un manufactured goods, sale of scrape generated in manufacturing process amounts to manufacture and also liable for Central Excise Duty. With Effect from December, 2008 Excise Duty is 8% on the assessable value (plus 0.16 % and 0.08% Education Cesses on the assessable value (which may be different than sales/transaction price).
Service Tax- This is Central/Federal Law imposing tax on about 104 services (Called as Taxable Services). Gross value of Taxable service rendered is liable for tax @ 10% (plus 0.30% Education Cesses). As a matter of general applicability Provider of Taxable Service is liable to register and pay the service tax. However, in case of services are availed in India from non residents person receiving the taxable service is liable to register and pay the service tax. Also in case of Goods Transport Agency Service, Sponsorship Service, Insurance Auxiliary Service the receiver of taxable service is liable for registration and payment of Service Tax. The Government has decided to introduce Goods and Service Tax by unifying Central Excise Duties and Service Tax.
Custom duty is attracted in respect of goods imported into or exported out of India. Peak Basic custom duty rate in most of the Goods imported ranges from 5% to 10% and in cases it also more than 10% depending upon HSN Code of the goods. Under export promotion schemes, the exporter of goods may avail import duty concession/ waiver under different schemes such as Advance License, Duty Entitlement Pass Book Scheme, and Export Promotion Capital Goods Scheme (EPCG). Apart from the Basic Custom Duty the importer also liable to pay additional duty of custom equal to excise duty (8.24%), special additional duty @ 4% , and educational cesses 3% of Total Custom Duty.
Indirect Tax laws provides for heavy penalties for evasion of taxes and at a times are equal to the tax evaded. Further it attracts interest @13% p.a. If the assessee fails to charge tax to his customer then whole liability comes on the assessee. Thus, Indirect Tax Compliance issues need to be address with extra care and diligence.
- Central Excise, Service Tax, Goods and Service Tax and Customs - Tax Planning and Transaction structuring
- Supply Chain Tax Planning
- Tax Advice for M&A and Corporate Organizing and Restructuring
- Tax Controversy & Litigation
- State & Local Taxes