GST & CUSTOMS LAW
Meaning of TAX:
Tax is a compulsory payment to be made by every resident of India. It is a charge
or burden laid upon persons or the property for the support of a Government.
Government decided the rates and the items, on which tax will be charged, like
income tax, GST, etc
Tax can be defined in very simple words as the government‘s revenue or source of
income. The money collected under the taxation system is put into use for
the country‘s development through several projects and schemes.
The Indian Constitution authorizes the Central and the State Governments to
levy taxes.
The Parliament passes laws to approve taxes collected by the Central
Government. In the case of the State Governments, the State Legislature
holds this power.
By the State Government: Also, the local governing and civic bodies too
have the right to levy certain taxes.
TYPES OF TAXES:
There are four ways to classify different types of taxes in India:
1. Taxes Levied by the Central Government and State Governments
2. On the Basis of Relationship between Tax Base and Tax Rates
3. On the Basis of Method of Assessment
4. On the Basis of Incidence and Impact of Taxes
,1. Taxes Levied by the Central Government and State Governments
By the Central Government: These include Income taxes, GST, Customs
duties, Corporation taxes, Excise duties, Estate duty and more
By the State Government: These include State GST, Excise on Liquor,
VAT(value Added Tax) on Petrol & Diesel, Tax on Agricultural Income,
land revenues, tolls and more.
By the Local Civic Bodies: Municipal corporations and other local
governing bodies collect taxes like property taxes, Water Taxes, etc.
2.On the Basis of Relationship between Tax Base and Tax Rates:
On this basis the Taxes are classified into four types, such as;
Proportional Tax: A proportional tax also referred to as a flat tax, impacts
low-, middle-, and high-income earners relatively equally. They all pay the
same tax rate, regardless of income o wealth.
Example: Corporation tax-corporation tax in India whereby government
charges a flat rate of 30% on the income earned by the companies in India
Progressive Taxes: A progressive tax has more of a financial impact on
higher-income individuals and businesses than on low-income earners. A
progressive tax imposes a greater percentage of taxation on higher income
levels, operating on the theory that high-income earners can afford to pay
more.
Example: Income Tax
Regressive Taxes: Low-income individuals pay a higher amount of their
incomes in taxes compared to high-income earners under a regressive tax
system because the government assesses tax as a percentage of the value of
, the asset that a taxpayer purchases or owns. This type of tax has no
correlation with an individual‘s earnings or income level.
Example: GST, Excise Duty, sin tax toll tax etc.
Digressive Taxes: A tax is called Digressive when the rate of progression in
taxation does not increase in the same proportion as the income increases. In
this case, the rate of tax increases up to certain limit, after that a uniform rate
is charged and become constant.
3. On the Basis of Method of Assessment
On this basis, taxes are classified into two types, Such as;
Specific Duty: Taxes levied according to some unit of a product is called as
Specific Duty. For example, Excise Duty on cigarettes is levied on the basis
of length of the cigarettes.
Ad-Valorem Tax: Taxes levied on the basis of value of the goods is called
as Ad-Valorem Duty. It is generally expressed in percentage form.
4. On the Basis of Incidence and Impact of Taxes:
Incidence of Tax: Incidence of Tax means the first burden of tax. Incidence of
tax falls on a person on whom the tax levied for the first time. Incidence of tax
can be shifted to another person.
Impact of Tax: Impact of tax means the ultimate/final burden of tax. The
Impact of tax falls on the person, who ultimately bears the burden of tax, i.e. the
Consumer.
On the basis of incidence and impact of tax, a tax can be
either,„Direct Tax‘ or ‗Indirect Tax‘
, Direct Taxes: The individuals directly pay these taxes to the respective
governments. In this case the both Incidence and Impact will fall in a single
person, i.e. an assesse. The most notable examples include Income
tax, Capital gains tax, corporate tax, Wealth Tax and Securities transaction
tax.
Indirect Taxes: These taxes are not directly paid to the governments but are
collected by the intermediaries who sell or arrange products and services. In
this case, the Incidence and impact of taxes will fall on two different
persons. GST (Goods and Service Tax), customs duty, value-added tax, and
excise duty, customs duty, are some of the top examples
Direct tax vs. Indirect tax
Direct tax Indirect x
Meaning Direct Taxes are the taxes Indirect Taxes are such type
in which the incidence of taxes where incidence
and impact falls on the and impact fall on two
same person/assesse different persons.
Nature of tax Direct Tax is progressive in Indirect Taxes are regressive in
nature. nature.
Taxable Event Taxable Income / Taxable Purchase / Sale / Manufacture
Wealth of the Assesses. of goods and /or rendering of
services.
Levy & Collection Levied and collected from the Levied & collected from the
Assessee. consumer but paid / deposited to
the Exchequer by the Assessee /
Dealer.
Meaning of TAX:
Tax is a compulsory payment to be made by every resident of India. It is a charge
or burden laid upon persons or the property for the support of a Government.
Government decided the rates and the items, on which tax will be charged, like
income tax, GST, etc
Tax can be defined in very simple words as the government‘s revenue or source of
income. The money collected under the taxation system is put into use for
the country‘s development through several projects and schemes.
The Indian Constitution authorizes the Central and the State Governments to
levy taxes.
The Parliament passes laws to approve taxes collected by the Central
Government. In the case of the State Governments, the State Legislature
holds this power.
By the State Government: Also, the local governing and civic bodies too
have the right to levy certain taxes.
TYPES OF TAXES:
There are four ways to classify different types of taxes in India:
1. Taxes Levied by the Central Government and State Governments
2. On the Basis of Relationship between Tax Base and Tax Rates
3. On the Basis of Method of Assessment
4. On the Basis of Incidence and Impact of Taxes
,1. Taxes Levied by the Central Government and State Governments
By the Central Government: These include Income taxes, GST, Customs
duties, Corporation taxes, Excise duties, Estate duty and more
By the State Government: These include State GST, Excise on Liquor,
VAT(value Added Tax) on Petrol & Diesel, Tax on Agricultural Income,
land revenues, tolls and more.
By the Local Civic Bodies: Municipal corporations and other local
governing bodies collect taxes like property taxes, Water Taxes, etc.
2.On the Basis of Relationship between Tax Base and Tax Rates:
On this basis the Taxes are classified into four types, such as;
Proportional Tax: A proportional tax also referred to as a flat tax, impacts
low-, middle-, and high-income earners relatively equally. They all pay the
same tax rate, regardless of income o wealth.
Example: Corporation tax-corporation tax in India whereby government
charges a flat rate of 30% on the income earned by the companies in India
Progressive Taxes: A progressive tax has more of a financial impact on
higher-income individuals and businesses than on low-income earners. A
progressive tax imposes a greater percentage of taxation on higher income
levels, operating on the theory that high-income earners can afford to pay
more.
Example: Income Tax
Regressive Taxes: Low-income individuals pay a higher amount of their
incomes in taxes compared to high-income earners under a regressive tax
system because the government assesses tax as a percentage of the value of
, the asset that a taxpayer purchases or owns. This type of tax has no
correlation with an individual‘s earnings or income level.
Example: GST, Excise Duty, sin tax toll tax etc.
Digressive Taxes: A tax is called Digressive when the rate of progression in
taxation does not increase in the same proportion as the income increases. In
this case, the rate of tax increases up to certain limit, after that a uniform rate
is charged and become constant.
3. On the Basis of Method of Assessment
On this basis, taxes are classified into two types, Such as;
Specific Duty: Taxes levied according to some unit of a product is called as
Specific Duty. For example, Excise Duty on cigarettes is levied on the basis
of length of the cigarettes.
Ad-Valorem Tax: Taxes levied on the basis of value of the goods is called
as Ad-Valorem Duty. It is generally expressed in percentage form.
4. On the Basis of Incidence and Impact of Taxes:
Incidence of Tax: Incidence of Tax means the first burden of tax. Incidence of
tax falls on a person on whom the tax levied for the first time. Incidence of tax
can be shifted to another person.
Impact of Tax: Impact of tax means the ultimate/final burden of tax. The
Impact of tax falls on the person, who ultimately bears the burden of tax, i.e. the
Consumer.
On the basis of incidence and impact of tax, a tax can be
either,„Direct Tax‘ or ‗Indirect Tax‘
, Direct Taxes: The individuals directly pay these taxes to the respective
governments. In this case the both Incidence and Impact will fall in a single
person, i.e. an assesse. The most notable examples include Income
tax, Capital gains tax, corporate tax, Wealth Tax and Securities transaction
tax.
Indirect Taxes: These taxes are not directly paid to the governments but are
collected by the intermediaries who sell or arrange products and services. In
this case, the Incidence and impact of taxes will fall on two different
persons. GST (Goods and Service Tax), customs duty, value-added tax, and
excise duty, customs duty, are some of the top examples
Direct tax vs. Indirect tax
Direct tax Indirect x
Meaning Direct Taxes are the taxes Indirect Taxes are such type
in which the incidence of taxes where incidence
and impact falls on the and impact fall on two
same person/assesse different persons.
Nature of tax Direct Tax is progressive in Indirect Taxes are regressive in
nature. nature.
Taxable Event Taxable Income / Taxable Purchase / Sale / Manufacture
Wealth of the Assesses. of goods and /or rendering of
services.
Levy & Collection Levied and collected from the Levied & collected from the
Assessee. consumer but paid / deposited to
the Exchequer by the Assessee /
Dealer.
