INDIRECT TAX
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Indirect taxes are levied both by the Union and the State Governments. The most important Union taxes are Customs and Excise. The Central Board of Customs and Excise formulates policy in relation to administration of these taxes. The changes in rates are announced annually at the time of the presentation of the budget. EXCISE DUTY It is a tax on production, levied on certain categories of manufactured items. The rates vary and may be specific, advalorem or a combination of both. To limit the cascading effect of excise taxes, MODVAT (Modified Value Added Tax) scheme was introduced in 1986 that allows manufacturers of final products to claim relief on account of excise duty paid on bought inputs. Exporters get relief from excise paid on inputs bought by them through a duty drawn back scheme. Excise duty is paid before the goods are cleared from the factory/bonded warehouse. CUSTOMS DUTY Indian tariff levels have generally been high, but have come down sharply in recent years. Details on tariff structure and concessions are given in the Module 44 : Indicative Import Tariffs. SALES TAX Sales tax are levied either by the Central Government (for inter-State sales) or by State Governments (for intra state sales). Central sales tax rate is generally 4% while State sales tax may go upto 15% in certain cases. Sales tax in levied on the seller who recovers it from the customer at the time of sale. Source: Doing Business with India |