Indirect taxes are taxes levied on goods and services that are not income or profits. Sales tax, value added tax (VAT), and excise tax are examples of indirect taxes. These taxes are usually levied on businesses by governments, and businesses pass the cost on to consumers. In all, indirect taxes are considered regressive, meaning that they take more income from low-income earners than high-income earners.
What types of direct taxes are there?
The Goods and Services Tax (GST) and Central Excise Tax are the two main indirect taxes.
In addition to GST and Central Excise Tax, the Center imposes other indirect taxes, such as tariffs to protect domestic industries from foreign competition by making them more expensive, and countervailing duty (CVD) on imports to offset foreign imports. Among other things, government subsidies for these goods.
What is GST?
GST is a value-added tax on the purchase of goods and services. It replaced several indirect taxes, including Value Added Tax (VAT), Central Sales Tax (CST), and Service Tax. GST is a destination-based tax imposed at the point of sale. GST rates are determined by the GST Commission, a constitutional body that makes recommendations to federal and state governments on GST-related matters.
What is Excise duty?
Central Excise Duty is a tax levied on the production of goods. It is levied on domestically produced goods to generate government revenue. Consumption tax rates vary depending on the type of product being manufactured.