Books related to indirect tax laws in India. which covers all common questions and their answer related to Service Tax & VAT, good tax and other indirect tax system, written by CA Raman Singla.

http://indirecttaxprofessionals.com/

AN INTRODUCTION TO INDIRECT TAXES

Indirect Tax is a tax that is levied on goods & services unlike direct taxes which are levied on individuals. It is called as Indirect Tax as payer who pays tax to government, collects it from ultimate consumers on whom the burden of tax is shifted. Thus, tax payer and tax bearer is not the same person.

Various indirect taxes levied by Government include Excise Duty, Custom duty, Service Tax, Value Added Tax (VAT), Sales Tax etc. This tax is administered by the Central Board of Excise and Custom (CBEC).

Indirect Tax in India constitutes a group of tax laws & regulations such as Central Excise Act 1944, Central Excise Rules 2002, CENVAT Credit Rules 2004, Customs Act 1962, Finance Act’ 1994, Service Tax Rules’ 1994 etc.

These taxes are enforced upon various activities including manufacturing, trading and imports which influence almost all business lines in India.

FEATURES OF INDIRECT TAXES

1.      Source of Revenue

Indirect taxes are a major source of revenue for the Governments worldwide. They contribute about 1/2 of the total tax revenues.

2.      Levied on Goods and services

Indirect taxes are levied both on goods and services.

3.      Results in rise in prices

Since the indirect taxes are imposed on the goods and services, it increases the price of the commodities and the services. Thus, the imposition of the indirect taxes directly affects the prices of the goods and services and leads to the inflationary pressure in the economy.

4.      Promotes social welfare

Higher taxes are imposed on the consumption of the harmful products such as alcoholic products, tobacco, etc. This not only helps in controlling the consumption of the harmful products but also helps the government to collect the substantial revenue.

5.      Regressive in nature

The indirect taxes are collected on the goods and services regressively. And the collection authorities do not discriminate between the rich and the poor. Both have to pay the same rate of indirect taxes. This further increases the income disparities between the rich and poor.

6.      No direct pinch

Indirect taxes are generally inbuilt in the prices of the goods and services and most of the consumers are not actually aware that they are paying the taxes to the government. Thus, the consumers who bear the taxes do not feel the direct impact while paying the indirect taxes.

7.      Shift in tax burden

In case of the indirect taxes, the tax burden shifts from one person to another. For example, excise duty paid by the manufacturer is recovered from the ultimate consumers.

Source:- indirecttaxprofessionals.com (Devalya Advisory LLP)

DIFFERENCE BETWEEN DIRECT AND INDIRECT TAXES

S. No.	Direct taxes	Indirect taxes
	They are imposed on persons.	They are levied on the goods and services.
	No invoices are made.	Invoices are made.
	The burden of the tax is on the same person who pays it.	The burden of the tax is on the ultimate consumers.
	Direct tax assessee pays the tax directly to the government.	Indirect tax assessee collects from customers and then pays to the government.
	They are progressive in nature i.e., tax rates are high for people having higher ability to pay.	They are regressive in nature i.e., all the consumers equally bear the burden, irrespective of the ability to pay.
	Examples, income tax, wealth tax, etc.	Examples, excise duty, custom duty, VAT, service tax, etc.

Source:- indirecttaxprofessionals.com (Devalya Advisory LLP)

CONSTITUTIONAL VALIDITY OF TAXATION LAWS

THE CONSTITUTION OF INDIA

The powers to levy and collect the taxes emerge from the Constitution of India.                        

Article- 265:- No tax shall be levied or collected except by authority of law.

ARTICLE 245

EXTENT OF LAWS MADE BY PARLIAMENT AND BY THE LEGISLATURES OF STATES

Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.

ARTICLE 246

SUBJECT-MATTER OF LAWS MADE BY PARLIAMENT AND BY THE LEGISLATURES OF STATES

(1) Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").

(2) Parliament and the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List").

(3) The Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").

GIST

Seventh Schedule (Article 246)

Seventh Schedule (Article 246) (I)          List I – Union List: the CG has exclusive powers to make laws in respect of matters listed here. à Entry number 82: Taxes on income other than agricultural income. à Entry number 83: Duties of customs including export duties. à Entry number 84: Duties of excise on tobacco and other goods manufactured or produced in India except- ·         Alcoholic liquors for human consumption; ·         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. à Entry number 86: Taxes on capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of the companies. à Entry number 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 or commerce. à Entry number 92C: Taxes on services. [This entry has not yet made effective although amendment passed by the Parliament.] à Entry number 97: Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists. (II)       List II- State List: The SG has exclusive powers to make laws in respect of the matters listed here. à Entry number 54: Taxes on the sale or purchase of goods other newspapers, subject to the provisions of entry 92A of List I. (III)     List III- Concurrent List: The authority to make laws in respect of matters listed in the said list is given to both the CG and SG.

Thus, taxes levied and collected by the Central Government are as follows:-

1. Central Excise
2. Service Tax
3. Custom Duty
4. Income Tax

Taxes levied and collected by the State Government are as follows:-

1. Sales Tax (VAT)
2. Luxury Tax
3. Entertainment Tax, etc

source:http://indirecttaxprofessionals.com/