GST (GOODS AND SERVICE TAX)

Indirect Tax = Tax the burden of which is indirectly put on us!

We buy garments – there’ll be VAT. We eat at KFC – there’ll be the sneaky VAT and Service Tax!

We are not paying these taxes as an Assessee - the respective tax departments don’t know it is us who are paying the taxes for what specific goods/ service we took – it is collected from the mass, everyone who buys or uses a service, at the same rate, irrespective of a person’s income level.

You buy a pack of biscuits or a person under BPL – both pay indirect tax – and most of the times you don’t even know or pay attention as to how much you are paying in indirect taxes!

It could be very easily more than what you pay for your income tax!

What is the scenario today?

Currently India (I mean us the consumers) is reeling under a lot of different indirect taxes – excise duty, VAT, Service Tax, sales tax etc.

Some are levied by the Central Government, while others by the State Government – as India has a ‘federal’ system of Governments – i.e. two governments, one in the centre and the ones in the states.

Excise and Service tax are central government levied indirect taxes. VAT and Sales tax are State Government levied indirect taxes.

Excise Duty is a tax on the manufacturing of excisable goods. Thus if a manufacturer, manufactures those goods which the central government has deemed to be ‘excisable’good(s) – then the manufacturer will have to pay excise duty on those goods.

Service Tax is a tax on ‘services rendered’ which are not in the ‘negative list’. Thus – all services rendered are under the blanker of service tax – except for those which are mentioned in the negative list!