All about indirect tax | Housing News

What is indirect tax?

A tax passed on to individuals after purchasing goods or services is called an indirect tax. These taxes are imposed on the manufacturer or supplier, who then pass on to customers who buy the product. Some of the common forms of indirect taxes are excise tax, GST or VAT.

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Indirect tax: Various types

Sales Tax: These taxes levied by shop owners are usually added to the retail price of the product. Any household items, clothes, or commodities are subject to sales tax.
Excise Tax: These taxes are levied on the purchase of raw materials to produce goods or services. However, every business passes the burden of excise tax on the consumer through sales tax.
Custom Tax: These taxes are levied on imported goods. Every country has individual custom taxes. The custom tax rate is different for merit and demerit goods.

Indirect tax: Emergence of GST

From July 01, 2017, India implemented Goods and Services Tax (GST) as a common form of indirect tax. Several indirect taxes were paid under GST and governed by one tax authority. Moreover, GST is divided into four parts: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), Integrated Goods and Services Tax (IGST), and Union Territory Goods and Services Tax (UGST). While GST has 5 tax brackets – 0%, 5%, 12%, 18%, or 28% — certain essential goods are exempted from GST taxability.

However, the implementation of excise duty is still present in the country. This tax is levied on tobacco products, aviation turbine fuel, natural gas, high-speed diesel, and petroleum crude. GST has to be paid by every individual involved in a financial transaction.

Indirect tax: Why was GST implemented?

The primary objective of GST was to eliminate double or cascading taxation from the manufacturing level to the consumption level. GST is applicable for all intra-state and inter-state transactions. Moreover, GST implementation brought a much-needed technological revolution, allowing people to fill their GST online through a government portal. This portal is used for GST filing returns and smooth and transparent transactions.

Indirect tax: Benefits of GST

Simpler and lesser number of compliances.
Lower tax burden on Industry and Trade.
Regulation of unorganised industries.
Simple online procedure.
Uniformity in Taxation.
Helping Government revenue find floating cash reserves.
No cascading of taxes.

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Housing News Desk

Housing News Desk is the news desk of leading online real estate portal, Housing.com. Housing News Desk focuses on a variety of topics such as real estate laws, taxes, current news, property trends, home loans, rentals, décor, green homes, home improvement, etc. The main objective of the news desk, is to cover the real estate sector from the perspective of providing information that is useful to the end-user.

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