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KEY ISSUES IN INDIAN INDIRECT TAXATION

Dr. Pradeep K P
BA (Eco.), LL.M & Ph.D (Cochin)

Advocate, Poduval Legal


High Court of Kerala, Kochi, Kerala, India
advpradeep@yahoo.com; poduvallegal@gmail.com

KEY ISSUES IN INDIAN INDIRECT TAXATION

Tax means

A regular imposition of the Sovereignty/ Government upon the person, property, privileges, occupations and enjoyments of the people for the purpose of raising public revenue It is regulatory in nature as well as for generation of State fund. It is an obligation or liability towards the State by the taxpayer. Levy of tax does not require any element of quid pro quo.

KEY ISSUES IN INDIAN INDIRECT TAXATION

Elements of Tax

Character of Imposition : Taxable Event Subject of Taxation : Person liable Rate of Tax Presumptive or otherwise Method for levy : Assessment of Tax

KEY ISSUES IN INDIAN INDIRECT TAXATION

Essentials of Tax

Progressive Taxation Policy/ canon of taxation suggests

Flexibility Productiveness Simplicity Diversity Elasticity Certainty Equality or Uniformity Convenience

KEY ISSUES IN INDIAN INDIRECT TAXATION

PRESENT TAXATION SYSTEM AND


PROPOSED CHANGES IN THE CONSTITUTION

KEY ISSUES IN INDIAN INDIRECT TAXATION

CENTRAL INDIRECT TAXES List I/ VII

83
Duties of Customs including export duties CUSTOMS ACT, 1962 DUTY ON IMPORT AND EXPORT

84
Duty of excise on tobacco and other goods manufactured and produced in India, except (a) alcoholic liquors for human consumption (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry CENTRAL EXCISE ACT, 1944 DUTY ON GOODS PRODUCED OR MANUFACTURED IN INDIA

92
Taxes on the sale or purchase of newspapers and on advertisements published therein.

KEY ISSUES IN INDIAN INDIRECT TAXATION

CENTRAL INDIRECT TAXES List I/ VII

92A
Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade and commerce.
CENTRAL SALES TAX ACT, 1956

92B
Taxes on consignments of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-state trade of commerce

92C
Taxes on services
CHAPTER V FINANCE ACT, 1994

97
Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists.

KEY ISSUES IN INDIAN INDIRECT TAXATION

STATE INDIRECT TAXES List II/ VII

51
Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India:

(a) Alcoholic liquors for human consumption;


(b) Opium, Indian hemp and other narcotic drugs and narcotics, But not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry.

KEY ISSUES IN INDIAN INDIRECT TAXATION

STATE INDIRECT TAXES List II/ VII

52
Tax on the entry of goods into a local area for consumption, use or sale therein

54
Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I.

55
Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by ratio or television.

62
Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling

KEY ISSUES IN INDIAN INDIRECT TAXATION

CENTRAL INDIRECT TAXES


Central Excise Duty and Additional Excise Duties Service Tax Customs Duty Other Additional Customs Duty like Countervailing Duty) Central Cesses and Surcharges

KEY ISSUES IN INDIAN INDIRECT TAXATION

STATE INDIRECT TAXES


Sales Tax/ Value Added Tax Tax on Luxury Taxes on Lottery, Betting and Gambling Taxes on Entertainment Taxes on Entry of Goods into Local Area State Cesses and Surcharges

KEY ISSUES IN INDIAN INDIRECT TAXATION

Significance of GST

Federal GST Unification of OR subsuming


Central Excise Duty Additional Excise Duties Service Tax Additional Customs Duties Central Surcharges and cesses Sales Tax Luxury Tax Entertainment Tax Taxes on Lotteries Entry Tax etc

KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

Article 246A
Parliament and Legislatures of every State to make laws on GST with a condition that parliament will have the exclusive power to levy GST on the supply of goods and or services in the course of inter-state and international trade or commerce

KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

Article 246A
to levy GST on supplies in the course of inter-State trade or commerce, by the Government of India with a pre-condition that a suitable law to apportion such tax between the Union and States shall be enacted by the Parliament. By the explanation, supply of goods and of services or both in the course of import into the territory of India shall be deemed to be supply of goods or of services or both in the course of inter-State trade or commerce

KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

Article 279A : GST COUNCIL

to constitute a GST Council with the Union Finance Minister as the Chairman. The Union Minister of State (Revenue), State Finance Ministers or such Ministers nominated by each State Governments are the members of the council. power to recommend taxes, cesses and surcharges be subsumed into GST. Recommendation on the rate of tax, turnover limits etc.

KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

Article 279B : GST DISPUTE SETTLEMENT AUTHORITY


to constitute a GST Dispute Settlement Authority with a chairperson and two other members. The chair person shall be a person who has been a Judge of the Supreme Court or chief Justice of a High court appointed by the president on the recommendations of the Chief Justice of India. Other two members shall be persons expertise in the field of law, economics or public affairs and appointed by the president on the recommendations of the GST Council.

KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

Article 366 (12A)

Definition clause 12A to define goods and service tax, which means any tax on supply or goods or services or both except taxes on the supply of goods such as petroleum crude, high speed diesel, motor sprit, natural gas, aviation turbine fuel and alcoholic liquor for human consumption. Definition of taxes on sale and purchases of goods in clause 29A deleted

KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

SCHEDULE VII List I, Entry 84 is substituted by limiting the levy of excise duty on certain products only.

Entry 92 and 92C are dropped. Entry 52, which deals with taxes on entry of goods into local area for consumption is substituted Entry 54, which deals with taxes on sales and purchase of goods is substituted Entry 62, which deals with taxes on luxury, betting etc is substituted Entry 55, which deals with the taxes on advertisement is omitted.

In List II, State List


KEY ISSUES IN INDIAN INDIRECT TAXATION

CONSTITUTION (ONE HUNDRED AND FIFTHEENTH) AMENDMENT BILL, 2011

FEATURES

Levy of GST is permitted on sale or purchase of newspaper and advertisements published therein. Levy of Entry tax on entry of goods in to local area for consumption, use or sale is permitted only to Local Authorities. State Governments are permitted to levy tax on intra-state sale of goods, such as petroleum crude, high speed diesel, motor sprit, natural gas, aviation turbine fuel and Alcoholic Liquor for Human Consumption .

KEY ISSUES IN INDIAN INDIRECT TAXATION

SOME CRITICISM

FEDERAL GST SYSTEM, (CGST, SGST & IGST) will make the Scheme more complication Regarding IGST no divisible pool between Centre and States. Art.246A will defeat the basic features of the constitution (Scheme of distribution of Legislative Powers and Federalism) Constitution Amendment is not an inevitable one. Use and Consumption Tax is the correct substitution

KEY ISSUES IN INDIAN INDIRECT TAXATION

SOME CRITICISM

Substitution of GST Council for Finance Commission. CST will be retained for some goods and Customs Duty will be in force. Taxation on E-commerce is not covered 40% of tax sourcing goods are out of the GST If service tax exemption limit is retained majority of service providers will be out of GST Will affect price, in absence of rate harmonization May widen the imbalance between States. No concern on population or other resources

KEY ISSUES IN INDIAN INDIRECT TAXATION

THANK YOU
Dr. Pradeep K P
BA (Eco.), LL.M & Ph.D (Cochin)

Advocate, Poduval Legal


High Court of Kerala, Kochi, Kerala, Indadvpradeep@yahoo.com;
poduvallegal@gmail.com

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