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A tax may be defined as a

"financial burden laid upon

individuals or property owners to

support the government [...] a

payment exacted bygovernmental authority."[1]A tax

"is not a voluntary payment or

donation, but an enforced

contribution, exacted pursuant to

governmental authority" and is"any contribution imposed by

government [...] whether under

the name of toll, duty, custom,

excise, subsidy, etc.

WHAT IS TAXWHAT IS TAX

Rain


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TYPES OF TAXES IN INDIATYPES OF TAXES IN INDIA

DIRECT TAXES: These taxes are directlyapplied on the capital gain, profit, earningsand salaries of people.

Income tax

Wealth taxProperty tax etc.

INDIRECT TAXES: Indirect taxes are chargedhidden without the prior information ofpayee.Mostly these are consumption taxes.

Sales tax

VatExcise duty

Custom duty etc.


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In Accordance With The Constitution Of IndianIn Accordance With The Constitution Of Indian

GovernmentGovernment

TheThe Main Taxes/Duties That The Union GovernmentMain Taxes/Duties That The Union GovernmentIs Empowered To LevyIs Empowered To Levy

INCOME TAX (except tax on agricultural income, which theState Governments can levy),

VAT (value added taxes)

Central Excise and Sales Tax (CST)

Service Tax (tax levied on service provided )


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PRINCIPAL TAX LEVIED BY THEPRINCIPAL TAX LEVIED BY THE

STATE GOVER

NMENTSTATE GOVER

NMENT Sales Tax

Stamp Duty

State Excise

Land Revenue

Octroi


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WHAT IS SALES TAX?WHAT IS SALES TAX?

Sales tax is a tax on the

supply of goods and certain

services ,it is charged at the

time of sale and thendeposited in the

Government treasury.


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WHAT TYPES OF BUSINESS AREWHAT TYPES OF BUSINESS ARE

NOT LIABLE FOR SALES TAX?NOT LIABLE FOR SALES TAX?

A gricultural Products

Most Of Pharmaceutical Products Educational &Scientific Materials

Equipment For FightingAIDS& CANCER


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Objects of sales taxObjects of sales tax

To formulate principles for determining

To provide for levy, collection and distribution oftaxes

To declare certain goods


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INTERINTER--STATE AND INTRASTATE AND INTRA--

STATE SALESTATE SALE


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WHAT IS INTERSTATE SALEWHAT IS INTERSTATE SALE

ASale Or PurchaseShall Be DeemedToTake Place InThe Course

Of InterstateTrade Or Commerce InThe Following Cases:

WhenTheSale Or Purchase OccasionsThe Movement OfGoods From OneStateToAnother

WhenTheSale Is Effected ByATransfer Of Documents

OfTitleToThe Goods DuringTheir Movement From One

StateToAnother

The Central Sales Tax (CST) Act that comes under

the direction of Central Government takes into

consideration all the interstate sales of commodities


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BASIC SCHEME OF THE CSTBASIC SCHEME OF THE CST

ACTACT SalesTax RevenueToStates

Tax Collected InTheSated (satisfactory)Where Movement

Of Goods Commences

Tax On InterStateSale Of Goods

StateSalesTax LawApplicable In ManyAspects

CSTAct DefinesSome Concepts

Declared Goods


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INTRODUCTION OFINTRODUCTION OF

VATVATVATwas introduced into the Indian taxation

system from 1 April 2005. Of the 28 Indian states,

eight did not introduce VAT. Haryanahad alreadyadopted it on 1 April 2003.

VATis a multi point tax with begin for tax paidon purchases. It is collected in installments at each

transaction in the production and distributions

system. It does not have cascading(flowing) effect due

to the system of deduction or tax credit mechanism.

Vat Means ValueAddedTax


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WHY CHANGE TO VATWHY CHANGE TO VAT

Vat IsAModernAnd ProgressiveTax

SystemNow Used In Over 130 OtherCountries.


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WHAT ARE THE BENEFIT OF VATWHAT ARE THE BENEFIT OF VAT

It IsSimple, TransparentAnd Progressive

Business FriendlySystem OfTaxation

Reduction InTheNumber OfTax RatesTo Only

Two Main Rates 4% And 12.5% Reduction InThe EffectiveTax Rate For Many

Goods

Elimination Of Tax OnTax Existing InTheSalesTaxSystem

Simplification OfTax FormsAnd Procedures


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WHAT TYPES OF BUSINESS AREWHAT TYPES OF BUSINESS ARE

LIABLE FOR VAT?LIABLE FOR VAT?

VATAPPLIESTOALLTYPESOF BUSINESSINCLUDING:

Manufacturers

Distributors Wholesalers

Retailers

Works Contractors

Lessors(Landlord)


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HOW IS VAT CHARGED?HOW IS VAT CHARGED?

Vat IsNotACostToThe Dealers

VatAsASeparateAmount OnABill Or Cash

Memorandum


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WHAT ARE THE OBLIGATIONSWHAT ARE THE OBLIGATIONS

OF DEALERS REGISTERED FOROF DEALERS REGISTERED FOR

VATVAT?

Dealers WhoAre RequiredTo Be Registered For

Vat Must:

ChangeAnd Collect Vat OnTheirSales OfTaxable Goods

Issue ProperTax Invoices

Keep Proper RecordsAnd Books OfAccount

CalculateThe VatTo Government Based On Vat

File Vat Returns OnARegular Basis DeclaringTheir Vat

Liability


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WHAT IS RATE OF VAT?WHAT IS RATE OF VAT?

UnderThe Vat, TheTax Rates Have BeenSimplified:

4% For Items Consisting Mainly Of Raw Materials

Used InT

he Manufacturing Process 12.5% ForAll Goods UnlessTheyAre Listed Under

The Other Rates.

Foodgrains Including Pulses, Milk, Vegetables BooksareNotSubjectTo Vat.


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Sale Price Rs. 1,000Sale Price Rs. 1,000

VatVatRs.@ 4%Rs.@ 4%= 40 Rs.= 40 Rs.

DealerDealer

Sale Price Rs. 900Sale Price Rs. 900

VatVatRs.@ 4%Rs.@ 4%= 36 Rs.= 36 Rs.

ManufacturerManufacturer

net tax payable by him will be 40-36= 4and he will pay to the Government only Rs. 4

on the sale of Rs. 1000/- (@ 4% tax rate))

First

Stage

Third

StageRetailerRetailer

Sale Price Rs. 1,200Sale Price Rs. 1,200

VatVatRs.@ 4%Rs.@ 4%= 48 Rs.= 48 Rs.

Second

Stage

CustomerCustomer

net tax payable by him will be 48-40= 8and he will pay to the Government only Rs. 8

on the sale of Rs. 1200/- (@ 4% tax rate))


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