INTRODUCTION TO
INDIAN TAXATION
SYSTEM AND GST
INTRODUCTION TO TAXATION
1.Direct taxes-Taxes paid directly to the government by the person on whom it is imposed.
Examples: Income tax, Corporate Tax,
2.Indirect taxes-Taxes levied on goods and services, and paid indirectly by consumers.
Examples: GST,VAT,Excise Duty
FEATURES OF
INDIRECT TAXES
Indirect taxes are recessive in nature.
Collected from intermediaries(producers, retailers) but
ultimately borne by consumers.
Promotes voluntary compliance as its included in product
pricing
Difficult to evade compared to direct taxes
Differences between direct and indirect taxes
Indirect taxes Direct taxes
Nature Nature
Indirect taxes are regressive. Direct taxes are progressive.
Incidence and impact
Incidence and impact
Indirect taxes are transferred to
Direct taxes are borne by taxpayers.
consumers.
Burden Burden
Indirect tax fall on consumption. Direct tax fall on income/wealth.
Administration Administration
Indirect are easier to collect. Direct taxes need extensive record keeping.
Advantages and Disadvantages ofIndirect tax
Advantages Disadvantages
Regressive impact,burden on poor.
simpler to collect and administer. Inflationary tendencie.
Encourage savings and investment. Can lead to higher prices
wider tax base.
Sources and Authority of taxes in India.
Union List(List I) : Central Government has the power to levy taxes like Income
Tax, Customs, etc.
State List (List II) : State Governments have the power to levy taxes like Sales
Tax, State Excise, etc.
Concurrent List (List III) : Both Central and state Governments can levy taxes like
VAT( before GST), etc.
Introduction to GST
DEFINITION- Goods and Services Tax (GST) is a comprehensive , multi-
stage,destination-based tax that is levied on every value addition.
GENESIS OF GST IN INDIA-
Need for uniform tax structure.
Efforts starting from 2000, implemented in 2017.
CONSTITUTIONAL PROVISIONS RELATED TO GST
CONSTITUTIONAL AMENDMENT ACT,2016
INTRODUCED ARTICLE 246A-SPECIAL PROVISION WITH RESPECT TO GST.
EMPOWERED BOTH THE CENTRE AND STATES TO LEVY AND COLLECT GST.
EXTENT AND COMMENCEMENT OF GST
EXTENT- Applies to the whole of India
including Jammu and Kashmir.
COMMENCEMENT-GST came into effect on
July 1,2017.
UNIFIED TAX REVENUE-Reduces tax on tax and
integrates multiple indirect taxes.
BENEFITS OF EASE OF DOING BUSINESS-Broader tax base.
GST REDUCTION IN CORRUPTION-Automated and
transparent processes.
CONCEPTUAL FRAMEWORK OF GST
CGST- (Central SGST- (State IGST- (Integrated UTGST- (UNION
GST): Lived by the GST):Levied by GST): Lived by the territory GST):
Central state governments Central government Lived by the Union
government on on intra state on inter state territories without
intra- state supplies supplies. legislature.
supplies
IMPORTS and EXPORTS under GST
IMPORTS: Treated as inter state supply; IGST is applicable.
EXPORTS: Zero rated , no tax on exports,but input tax credit
is available.
TAXES SUBSUMED UNDER GST
SUBSUMED TAXES:
Central Excise Duty, Services Tax, VAT,
CST,Luxury Tax, etc.
NOT SUBSUMED TAXES:
Basic customs duty, Property Tax, Stamp Duty,
etc.
CONCLUSION
GST has revolutionised the Indian tax system by bringing
uniformity and transparency.
Significant impact on the economy, simplifying taxation and
improving compliance.
