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  • 29 July, 2021

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Indirect Taxes

Indirect Taxes

  • Indirect taxes are consumption-based taxes that are applied to goods or services when they are bought and sold.
  • The government receives indirect tax payments from the seller of the good/service.
  • The seller, in turn, passes the tax on to the end user i.e. buyer of the good/service.
  • Thus, the name indirect tax as the end user of the good/service does not pay the tax directly to the government.

Goods and Services Tax

  • Goods and Services Tax (GST) is an indirect tax (or consumption tax) levied in India on the supply of goods and services. It is levied at every step in the production process.
  • The tax is divided into five slabs -- 0 per cent, 5 per cent, 12 per cent, 18 per cent, and 28 per cent.
  • Although GST is collected by the central government, taxes on petroleum products, alcoholic drinks, electricity are separately collected by the state government.

Types of GST

  • Based on the kind of transaction, there are four types of GST, viz.
    • Central Goods and Services Tax (CGST),
    • State Goods and Services Tax (SGST),
    • Integrated Goods and Services Tax (IGST), and
    • Union Territory Goods and Services Tax (UTGST).

Central Goods and Services Tax

  • CGST is charged on the intra state supply of products and services. The Central Government levies CGST and it is governed by the Central Goods and Services Tax Act.
  • CGST has effectively replaced all the previous Central taxes such as Central Excise Duty, Customs Duty, Service Tax, SAD, CST, etc. It is charged to taxpayers along with SGST. The rate at which CGST is charged is usually the same as the SGST rate, and the revenue collected under CGST is remitted to the Central Government.

State Goods and Services Tax

  • SGST, like CGST, is charged on the sale of products or services within a state. The State Government is responsible for the levy of SGST. This tax replaces all the previous taxes such as Entry Tax, Value Added Tax, Entertainment Tax, State Sales Tax, cesses, and surcharges. The revenue collected under SGST is remitted to the State Government.

Integrated Goods and Services Tax

  • IGST is charged on inter-state transactions of products and services. It is also levied on imports. The Central Government collects IGST and distributes it among states. IGST is levied when goods or services are transferred from one state to another. The tax was implemented so that states would only have to deal with the Union Government rather than dealing with each state.

Union Territory Goods and Services Tax

  • UTGST is levied on the supply of products and services in any of the Union Territories in the country, viz. Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, Lakshadweep, and Chandigarh. UTGST is levied along with CGST.

Tax Collection in the 1st Quarter of 2021-22

  • Net Indirect Tax (GST and Non-GST) revenue collection in the 1st quarter of FY 2021- 2022 is Rs. 3,11,398 crore.
  • The Minister stated that the net direct tax collection in the 1st quarter of FY 2021-2022 is Rs. 2,46,519.82 crore as against Rs. 1,17,783.87 crore during the same period of previous FY 2020-21.

Vivad-se-Vishwas Scheme

The primary objective of the Scheme is to resolve pending direct tax disputes amicably, as provided in the short title therein ‘An Act to provide for resolution of tax and for matters connected therewith or incidental thereto’. The declarations received under the Scheme cover around 28.73% of pending tax disputes.

For More: https://www.aspireias.com/daily-news-analysis-current-affairs/Goods-and-Service-Tax-GST-Indirect-Tax

https://www.aspireias.com/daily-news-analysis-current-affairs/Direct-Tax-Vivad-se-Vishwas-Bill-2020

Source: PIB

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