Duties and Taxes

8/10/2019 Duties and Taxes

1/21

DUTIES & TAXES INVOLVED IN

RETAIL TRADE

1


2/21

AGENDA

Sales Tax/VAT

CENVAT

CST

GST

2


3/21

Taxation in IndiaIntroduction

India has a well developed tax structure with a 3-

tier federal structure:

the Union Government,

the State Governments and

the Urban/Rural Local Bodies.

These bodies levy taxes/duties in accordance with

the provisions of the Indian Constitution

3


4/21

Union Government

Income Tax (except tax on agricultural income,

which the State Governments can levy),

Customs duties,

Central Excise

Sales Tax

Service Tax

4


5/21


6/21

Local Bodies

tax on properties (buildings, etc.)

Octroi (tax on entry of goods for

use/consumption within areas of the LocalBodies),

Tax on Markets and

Tax/User Charges for utilities like water supply,

drainage, etc.

6


7/21

Since 1991, .

.some of the changes in the tax system in India

are:

Reduction in customs and excise duties

Lowering corporate Tax

Widening of the tax base and toning up the

tax administration

7


8/21

Direct Taxes

Personal Income Tax 0 1.8 L *(1.90 L) : 0%

1,80,001 - 5L : 10%

5,00,001

8L : 20%

8,00,001 and above : 30%

Corporate Income Tax

for domestic companies = 30% + 5% (surcharge) +

3% (education cess)

for foreign company = 40% + 2.5% sur. + 3% edu.

8*Limit of 190k is for women


9/21

Tax Incentives for Industries

Tax exemption of 100% on export profits for ten

years upto F.Y. 2009-10, for new industries

located in EHTPs and STPs and 100% EOU

For units set up in SEZs, 100% deduction of

export income for first 5 years followed by 50%

for next 2 years, even beyond 2009-10

9


10/21

Tax exemption of 100% of Export profits for 10 yrs

for new industries located in Integrated

Infrastructure Development Centres or IndustrialGrowth Centres of the North Eastern Region

10

Tax Incentives for Industries


11/21

Sales Tax

Central Sales Tax (CST) is 4% on manufactured

goods

Local Sales Tax (LST) in case of local sale,

governed by relevant state tax legislation -

normally up to 15%, (Bihar-5%)

11


12/21

Excise Duty

Excise duty on most commodities ranges

between 0 to 16%.

32% duty on motor cars, tyres, aerated softdrinks, air conditioners, polyesters filament

yarn, pan masala and chewing tobacco

Duty = 30% on petrol + Rs.7/litre as additional

excise duty

12


13/21

CENVAT

A.k.a. Central Excise VAT which is charged on the

productionof goods within India, and is levied by

the central govt., avoids cascading effect on duty

Standard rate for CENVAT is 10.3% since Feb10

CENVAT filings are monthly, on the 10th day

following the period end

SSI is exempted from payment of excise duty from

annual production up to Rs.1 crore 13


14/21

VAT

A.k.a. Central Sales Tax (CST) on the sales and

purchases of goods between Indian States and is

charged by the State of goods departure.

VAT is charged at 4%.

VAT reporting is either monthly or quarterly, depending

on the relevant Statesrules.

the tax paid on earlier point is allowed as a deduction

(tax may be payable only on the differential value) 14


15/21

Example

To illustrate, say, the first sale is effected at Rs

100. The second sale is effected at Rs 120. The

third sale is effected at Rs 150. The rate of VAT is

say 10 percent.

15


16/21


17/21

Service Tax

Service Taxis charged on certain services and is

levied by the central government

Service Tax is levied at 10.3%.

If required, Service Tax filings are bi-annual

17


18/21

G.S.T.

There are advanced plans to introduce a

unifying General Sales Tax (GST) in 2011

We have all seen and are aware of the impact

that VAT has had on the supply chain so far.

There are 4 key characteristics of the GST regime

that will impact the supply chain further:-

18


19/21

1. It is expected that we will have a dual GST structure- State GST and Central GST. Central GST chain may

extend right upto the last transaction at the retail

level.

State GST would comprise of VAT/Sales tax, Statecesses and surcharges on goods and services,

Octroi, Entry tax, taxes on lotteries, betting,

gambling and purchase tax as the main

components.

Central GST would incorporate Central excise

duties, additional customs duty, CVD, surcharges,

allied levies and service tax as the key taxes. 19

G.S.T.


20/21

2. Octroi and Entry tax are expected to be

disbanded

3. Inventory during transition will be impacted aspost GST, inventory will carry Central GST

4. The tax disincentive of cross-border sales and

supplies which is currently there because of CST

will hopefully go

20

G.S.T.


21/21

Sales tax- Same as VAT, mostly dominated by VAT

CST is levied on the INTER STATE sales of goods.

VAT is levied on the INTRA STATE sales of goods

EXCISE is charged on MANUFACTURED goods by

CENTRAL GOVT.

21

Summary

Duties and Taxes

Documents