Taxes are the largest source of revenue for the government. Taxes collected are used for governmental activities with aim of nation-building and its development.

As per Article 265 of the Constitution of India, ‘No Tax shall be levied or collected except by authority of law’. India is a federal state where both the Centre and the States have a division of power regarding levy and collection of taxes through respective sources to have Fiscal Federalism.

Taxes are classified into two categories- Direct Taxes are paid by the Assesse to the government. Example- Income Tax. While Indirect taxes are not directly paid by the taxpayer, it is paid via intermediaries such as supplier or trader. The intermediary files the tax return and forwards the tax proceeds collected to the respective government along with the tax return. The consumer bears the final economic burden of the taxes. Examples of indirect taxes are GST, VAT, Excise duty, etc.

Financial concept about Indirect Tax with phrase on the page

REVENUE AUTHORITIES UNDER THE MINISTRY OF FINANCE

CBDT-The Central Board of Direct Taxes. It is the body that provides inputs for policy, planning, administration of direct taxes in India. CBIC- The Central Board of Indirect taxes and Customs supervises formations, directorates and assists the government in policy-making of GST, continuing central excise levy, and customs functions.

As Indirect taxes in India are a greater source of revenue for the government over direct taxes Thus, GST is implemented to bring indirect taxes under one roof that has a wider purview and covers unorganized sectors.

BRIEF ABOUT GST

GST is a comprehensive single unified Value Added Tax levied at multi-stages on Taxable event of Supply of Goods or Services or both. GST is payable to State or Union territory in which goods or services or both are consumed.

When Consumption Goods or Services or both are within Same State or Union territory, it is called Intra State Supply subjected to CGST and SGST or UTGST. When Goods or Services or both supplied are consumed Outside State or Union territory, it’s called Inter-State Supply subject to IGST. Thus, exports are not taxable under GST because the place of consumption is outside India, and Imports are subjected to IGST in India.

CONCLUSION FOR GST

GST was brought with a view to harmonized indirect taxes. However, it is not serving its purpose there are a lot of issues arising due to Compensation Cess settlement issues. GST needs strong IT Infrastructure needs to be duly maintained then, one can call it Good and Simple Tax.

Author Bio

Qualification: LL.B / Advocate
Company: CS Prayjot Tungare and Associates Company Secretaries, Pune
Location: Pune, Maharashtra, India
Member Since: 09 Jan 2021 | Total Posts: 2

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