Indirect Taxation in India that Founders should super worry about
You sure know that efforts are being made to replace the existing indirect tax system with a unified Goods and Services Tax system (“GST”). But GST is expected to knock the door sometime late July of this year, till then these indirect taxes are going to be a part of our lives. Without any further due, let’s get you on to the important stuffs.
- Value Added Tax (VAT): Imposed on the sale of goods within the particular state and rates may vary from 0%, 1%, 4%, to 15% although there may be further variations depending on the state. Liquor VAT Rate is higher at least in Karnataka to 28%
- Service Tax: Is levied by the Central Government under the service tax legislation on all but certain excluded taxable services and is generally required to be paid by the service provider. Currently the rate of service tax is 15% (inclusive of cess). This rate is computed on the ‘gross amount’ charged by the service provider for the taxable services rendered by him. When a taxable service is provided by a person from outside India and is received by a person in India, the service rendered is chargeable to service tax in India and payable by the recipient of services.
- Central Sales Tax (CST): Applicable on the sale of goods in the course of inter-state trade or commerce. CST is not applicable on direct imports or exports or the purchase or sale effected during imports or exports. The process of phasing out CST commenced with a reduction in the CST rate is 2%.
- Customs Duty: Customs duty is a duty that is levied on goods that are imported into…..