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Indirect Tax
The Ministry of Finance (Department of
Revenue) through the Central Board of Excise and Customs (CBEC), an apex
indirect tax authority, implements and administers excise (central excise),
customs and service tax laws. Circulars, notifications and clarifications
issued by the CBEC supplement these indirect tax laws. Issues involving
interpretation of tax laws are decided by the judiciary, which is
independent of the legislature.
Value Added Tax / Sales Tax
Value Added Tax (VAT) is a form of indirect Tax and is in the nature of multipoint sales tax. Tax on sale
by states in the form of VAT continues to draw power from entry 54 in list of seventh schedule of the
constitution of India. Sale and purchase of goods is subjected to charge of VAT. VAT is levied under
Central and State VAT legislations depending upon the movement of goods in pursuance of a sale
transaction. If the transaction involves movement of goods from one state to another (inter-state), the
tax is levied under Central Sales Tax Act (CSTA), 1956.
This Act also covers transactions of import of goods into or export of goods out of India. Sales tax is
not imposed on import of goods into the country or export of goods out of the country. The Central
Sales Tax (CST) Act is administered by the state governments and the tax is levied at the origination of
transaction (origin based levy). The rates of tax under Central Sales Tax Act vary from state to state and
product to product. The standard rate of CST is 2 per cent or the lower rate applicable in the state of
seller if the purchaser is purchasing the same for resale or for use in manufacture of goods for sale or for
specified purposes and both the seller and buyer are registered dealers. Otherwise, the rate is higher of
12.5 per cent or the rate applicable in the state of sale.
The transactions of sales or purchases involving movement of goods within a state (intra-state) are
governed by respective State Sales Tax Acts. States also levy tax on transactions which are "deemed
sales" like works contracts and leases. A works contract essentially is a contract for carrying out work
involving supply of labor and material where the property in the materials passes during the course of
execution of the contract. Lease is a transaction involving transfer of right to use goods.
The standard rate of VAT is 12.5 per cent and there is reduced rate of 5 per cent. Besides that, there are
exemptions and rate of 1 per cent and 20 percent for specified products. In addition to sales tax, some
states also levy additional tax / surcharge, turnover tax or entry tax.
Sales tax / state VAT is payable by the seller to the government. Ordinarily, sales tax / state VAT is
recovered from the buyer as a part of consideration for sale of goods.
We Provide VAT related following services:
* Registration under Local & Central VAT Act.
* Assessment & Appeal
* Getting statutory Forms- C Form/ F Form
* Refund application for exporters
* VAT Audit