|
| Indirect Taxes |
| Customs and Central Excise duties are the main indirect taxes levied and collected by the Central Government. |
| Custom Duties |
Customs duties are collected by the central Government on goods imported into India. Duties consist of three parts: a Basic Customs Tariff- the border tariff; a Countervailing Duty, being the equivalent of the excise duty on equivalent goods manufactured in India; and an Education Cess, which is a surcharge on the duties, imposed for a public cause (education in this case). These tariffs apply in a cascading manner; as a result, the final duties are much higher than the border tariffs notified to the WTO. In line with commitments to the WTO, India has progressively reduced basic tariffs of nearly all-industrial goods, and the peak basic duty is presently 12.5% for most categories. These are being further reduced to 10%, with effect from 1 April, 2007.
Table Individual Illustration of Customs Duties |
| CIF Value |
Basic duty (BD) |
Countervailing duty (CVD)
on CIF + BD |
Subtotal
BD+ CVD |
Education Cess (EC) 0n
BD + CVD) |
Total value
CIF + BD + CVD + EC |
Effective duty on CIF Value |
| |
15% |
16.32% |
|
2% |
|
|
| 100 |
15 |
18.768 |
33.768 |
0.67536 |
134.44336 |
|
|
| Central Excise Duty |
| A two-part excise duty structure applies on all goods manufactured in India. The first component is VAT (CENVAT) fixed at a uniform rate of 16% and is eligible for credit on excise-duty paid inputs; and the second component depends on the classification of the product in the excise tariff schedule, with no duty credit applicable on this component. |
| Central Sales Tax |
 Applies on sale of goods involving inter-state transfer and movement of goods |
| Local Sales Tax |
| Is imposed on all sales within the state, and varies from state to state. |
| Value Added Tax: |
| India was to introduce a uniform VAT system to replace the sales tax system. However a nationwide VAT system is not yet operational on account of differences among states on the common VAT rate and also their own preparedness to introduce the VAT system. |
| Octroi |
| This is an entry tax on goods levied in the state of destination of the goods. Many states have exempted octroi altogether. However, some, like Maharashtra, continue to impose octroi. |
| Service Tax |
| A Service Tax of 12% on the value of invoices levied on nearly all business services |
| Fringe Benefit Tax |
| Several categories of expenditure including travel, hotels, conveyance, telephone, staff welfare and employee stock options (ESOPs) attract a consumption tax known as Fringe Benefit Tax. The tax rate is 30% but applies on a certain percentage of the expenditure (this differs from 5% to 50% across expense categories) that is deemed to be a fringe benefit. |
| Stamp Duty |
|
| Transactions are required to be recorded on instruments containing stamps of a value as specified by the Stamps Act. The duty amounts to the value of the stamps rather than determined by the value of the transaction itself. |
| Property Tax |
| Property tax applies to immovable properties, and is payable on the basis of the category of property and its use. The rate varies from state to state. |
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ICREON