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Indirect Tax Laws




                    Notes          7.  Possibility of  Tax Evasion:  There is a possibility of evasion of indirect taxes as some
                                       customers may not pay indirect taxes with the support of sellers. For instance, individuals
                                       may purchase items without a bill, and therefore, may not pay Sales tax or VAT (Value
                                       Added Tax), or may  obtain the services without  a bill,  and therefore,  may evade the
                                       service tax.

                                   1.2 Indirect Tax System in India

                                   In general, the Indirect Tax in India is a complex system of interconnecting laws and regulations,
                                   which includes specific laws of different states. For this there are many reliable organizations in
                                   India, which  employs  efficient  Indirect  Tax  professionals  to  help  their  clients. These  tax
                                   professionals  with their  in-depth  knowledge  and wide-ranging  experience offers  effective
                                   planning methods  to their clients in  order to  help in  their cost  minimization. The  Indirect
                                   Taxation regime encompasses various types of taxes like Sales Tax, Service Tax, Custom and
                                   Excise Duties, VAT and Anti-Dumping Duties, and the organizations provide services in  all
                                   these related fields.
                                   In the recent year, the Indian government has undertaken significant reform of indirect taxation
                                   system. This includes the initiation of a region-based and state-level VAT on goods. However,
                                   it should be noted that as taxes still forms a barrier to inter-state trading in order to attain a
                                   secured market for the activities related to services and goods more reform is needed. Some of
                                   the reforms that can be introduced for a better indirect taxation system in India are –

                                      The serialized set of Indirect Taxes so far activated at the central and state levels should be
                                       amalgamated and treated as a single tax.

                                      The integrated Indirect Tax should be neutral at all levels such that chances of fraudulence
                                       would be minimized.
                                      The Central Sales Tax, which obstructs easy trading between different states, is being
                                       under the process of termination that would help to abolish the control measures on the
                                       inter-state trade.

                                   Indirect Taxes during Pre-Reforms

                                   The indirect tax structure was extremely irrational between the reforms. The Constitution gives
                                   the permission to levy a multitude of indirect taxes. But the most important ones are customs
                                   and excise duties charged by the Central government and sales tax excepting inter state sales tax
                                   to be charged by the state government. The indirect taxes levied by the center like customs,
                                   excise and central sales tax and the major indirect taxes levied by the states and civic bodies like
                                   passenger and goods tax, electricity duty and octroi  when taken  together did not present a
                                   rational system.

                                   1.3 Indirect Taxes in Post Reforms

                                   Even post reforms, the indirect tax regime in India is still in the early stages of growth. Both the
                                   Central and State governments charge a multitude of indirect taxes. The  Central Government
                                   charges tax on goods at the point of import (Customs duty), manufacture (Excise duty), interstate
                                   sales (Central sales tax or CST) and on provision of services (Service tax).
                                   The State Governments charge tax on goods sold within the state (Sales tax/Value Added Tax or
                                   VAT), and on the goods that enter the state (Entry tax). In the present scenario corporate would
                                   have to analyze the tax cost involved in a transaction, have enough backup documentation to
                                   support their tax positions and keep looking for ways for tax  maximization.




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