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Excise Duty

All India Bullion Jewellers and Swarnkar Federation members protest against the proposed hike in excise duty on jewellery at Jantar Mantar in New Delhi

Gold jewellery

Gold value chain activity halted with new duties, strike

Rahul Gandhi, Jewellers

Jewellers block the road during a protest against hike in excise duty on gold in Mirzapur    Photo courtesy: PTI

Jewellers

Members of jewellers' association protesting against the government proposal to impose 1% excise duty in jewellery sector in Mumbai (pic: Suryakant Niiwate)

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	Excise duty is a form of tax imposed on goods for their production, licensing and sale. An indirect tax paid to the Government of India by producers of goods, excise duty is the opposite of Customs duty in that it applies to goods manufactured domestically in the country, while Customs is levied on those coming from outside of the country.</div>
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	At the central level, excise duty earlier used to be levied as Central Excise Duty, Additional Excise Duty, etc. However, the Goods and Services Tax (GST), introduction in July 2017, subsumed many types of excise duty. Today, excise duty applies only on petroleum and liquor.</div>
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	Excise duty was levied on manufactured goods and levied at the time of removal of goods, while GST is levied on the supply of goods and services.</div>
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	Alcohol does not come under the purview of GST as an exclusion mandated by constitutional provision. States levy taxes on alcohol according to the same practice as was prevalent before the rollout of GST.</div>
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	After GST was introduced, excise duty was replaced by central GST because excise was levied by the central government. The revenue generated from CGST goes to the central government.<br />
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	The Budget estimate of the government&#39;s excise duty revenue for the year 2020-21 was Rs 2,67,000 crore. The revised estimates of excise duty for the 2019-20 Budget came at Rs 2,48,000 crore, while the actuals for the 2018-19 Budget stood at Rs 2,30,992 crore.</div>
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	<strong>Types of excise duty in India</strong></div>
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	Before GST kicked in, there were three kinds of excise duties in India.</div>
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	<strong>Basic Excise Duty</strong></div>
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	Basic excise duty is also known as the Central Value Added Tax (CENVAT). This category of excise duty was levied on goods that were classified under the first schedule of the Central Excise Tariff Act, 1985. This duty was levied under Section 3 (1) (a) of the Central Excise Act, 1944. This duty applied on all goods except salt.</div>
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	<strong>Additional Excise Duty</strong></div>
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	Additional excise duty was levied on goods of high importance, under the Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957. This duty was levied on some special category of goods.</div>
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	<strong>Special Excise Duty</strong></div>
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	This type of excise duty was levied on special goods classified under the Second Schedule to the Central Excise Tariff Act, 1985.</div>

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What is Excise Duty, Excise Duty Definition, Excise Duty News

What is Excise Duty

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	The Goods and Services Tax (GST) is a uniform indirect tax levied on goods and services across the country. GST, as an umbrella tax, replaced central taxes like central excise, service tax, additional duties of excise &amp; customs, special additional duty of customs, besides cesses and surcharges, on supply of goods and services.</div>
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	<strong>Central GST and State GST</strong></div>
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	CGST is levied on intrastate supplies by the central government and SGST is levied on intrastate supplies by respective state governments.&nbsp;</div>
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	<strong>Integrated GST</strong></div>
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	IGST is levied on interstate supplies by the Centre (equal to CGST + SGST combined on supplies made within the state).</div>
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	Any supply of goods or services or both on interstate basis typically attracts IGST on the consideration thereof.</div>
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	<strong>Key features of GST</strong></div>
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	* GST envisages all transactions and processes to be done only through the electronic mode, to achieve a non-intrusive administration. This minimises the taxpayer&#39;s physical interaction with tax officials.</div>
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	* GST provides for the facility of auto-populated monthly returns and annual return.</div>
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	* It also facilitates taxpayers by prescribing grant of refund within 60 days, and provisional release of 90 per cent refund to exporters within 7 days.</div>
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	* Further facilitation measures include interest payment if refund is not sanctioned in time, and refund to be directly credited to bank accounts.</div>
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	* Comprehensive transitional provisions for ensuring smooth transition of existing taxpayers to GST regime, credit for available stocks, etc.</div>
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	* Other provisions include system of GST compliance rating, etc.</div>
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	* Anti-profiteering provisions for protection of consumer rights: Any benefit by way of reduction in rate of tax or increase in input tax credit arising due to introduction of GST are passed on to customers (through reduction in sale price) by way of commensurate reduction in prices.&nbsp;</div>
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	* Under the GST regime, exports are zero-rated in entirety, unlike the earlier system where refund of some of the taxes did not take place due to fragmented nature of indirect taxes between the Centre and states.</div>
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	* GST is largely technology-driven and reduces the human interface to a great extent</div>
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	* GST is believed to have improved ease of doing business in India.</div>
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Learn what is meant by Goods and Services Tax, GST definition, types of GST, GST rates and more GST news here at Business Standard.

What is GST, Types of GST, GST News, Goods and Services Tax Updates

Goods and Services Tax

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	An indirect tax is one that is not paid directly by a person to the government but collected by an intermediary and passed on to the government. Indirect taxes are imposed on goods and services on the basis of production, supply, sale or purchase of products or provision of services, in the form of goods and services tax (GST).</div>
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	GST, rolled out in 2017, replaced various indirect tax laws that previously existed in India, such as import and export duty, excise, sales tax, value-added tax (VAT), service tax, entertainment tax, electricity duty, tax on passenger fares, freights etc.</div>
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	<strong>How are indirect taxes collected?</strong></div>
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	An indirect tax is collected from the consumer by an intermediary, such as manufacturer, trader or service provider. The intermediary files a tax return and forwards the tax proceeds to the government with the tax return. The consumer bears the final economic burden of the tax by paying more for the product.</div>
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	By comparison, direct taxes are imposed on persons and collected by the government directly from those on whom they are imposed.</div>
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	In indirect taxation, the obligation of tax payment varies from one consumer to another, as these taxes are levied by the government on goods and services &mdash; not on the income, profit or revenue of an individual. These taxes can be shifted from one taxpayer to another. This is unlike direct taxes, which are borne by the person on whom the tax is levied.</div>
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	<strong>What is GST?</strong></div>
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	GST was rolled out on July 1, 2017, as India&rsquo;s most comprehensive indirect tax reform. It consolidated multiple indirect tax that existed previously into a single one. The implementation of GST aimed to make the indirect tax system more unified across the many states of the country. Read more... (https://www.business-standard.com/about/what-is-goods-and-services-tax)&nbsp;</div>

Learn what is Indirect tax, Indirect tax Calculation, Definition and more Indirect tax news here at Business Standard.

What is Indirect tax, Indirect tax News, Budget 2020 News, Indirect tax Calculation

Indirect Tax

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	Companies can reduce their tax liability through various provisions of the Income-Tax Act, such as exemptions, deductions, depreciation, etc. There have been instances of some companies even managing to show nil taxable income despite making substantial profits and paying out dividends, thanks to the various tax concessions and incentives. The tax provision known as Minimum Alternate Tax (MAT) was created to bring these &lsquo;zero-tax paying companies&rsquo; within the ambit of income tax and make them pay a minimum amount in tax to the government.</div>
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	To improve accountability, and to ensure that no company avoided paying taxes, the Government of India in 1988 came up with the concept of MAT, which facilitates the taxation of zero-tax companies. Introduced by the Finance Act, 1987, MAT came into effect from assessment year 1988-89. According to MAT, such companies are liable to pay to the government by deeming a certain percentage of their book profit as taxable income.</div>
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	<strong>How is MAT calculated?</strong></div>
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	Minimum Alternate Tax is applied when the taxable income calculated according to the I-T Act provisions is found to be less than 15.5 per cent (plus surcharge and cess as applicable) of the book profit under the Companies Act, 2013.</div>
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	For example, a company with Rs 100 crore book profit is required to pay a minimum tax of Rs 15 crore (assuming 15 per cent MAT rate). If its normal tax liability after claiming deductions is Rs 10 crore (less than MAT), it is required to pay the remainder Rs 5 crore as MAT and use MAT credit equivalent to Rs 5 crore to pay tax in the future.</div>
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	In September 2019, the government reduced the MAT tax rate from 18.5 per cent to 15 per cent while also slashing the corporation tax rate to 22 per cent from 30 per cent. MAT is levied on book profit, unlike normal corporation tax, which is levied on taxable profit. Also, no MAT would be imposed on new domestic manufacturing company (incorporated on or after October 1, 2019).</div>
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	<strong>What is MAT credit?</strong></div>
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	MAT credit is the difference between the tax the company pays under MAT and the regular tax. It is allowed to be carried forward for a period of 15 financial years. MAT is similar to an advance tax. The concept of MAT credit was re-introduced in 2005 with a carry-forward mechanism of five years. This was subsequently increased to 10 years, and to 15 years in 2018.</div>
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	According to the Central Board of Direct Taxes (CBDT), companies opting for the lower corporation tax regime cannot adjust their accumulated credits on minimum alternate tax (MAT) against their tax liabilities.&nbsp;</div>

Learn what is Minimum Alternate Tax, Minimum Alternate Tax Calculation, Definition and more MAT news here at Business Standard.

What is Minimum Alternate Tax, MAT News, Budget 2020 News, MAT Calculation

Minimum Alternate Tax (MAT)

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	Fringe benefit tax (FBT) was a form of tax that companies paid in lieu of benefits they offered their employees in addition to the compensation paid to them. It was included by the Finance Act 2005 with effect from April 1, 2006. It was set at 30 per cent of the cost of benefits the company paid and it was aimed to bring under the tax net those benefits that were previously out of it. This tax was paid in addition to income tax, irrespective of whether or not the company had income-tax liability.</div>
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	<strong>What are fringe benefits?</strong></div>
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	Companies give some fringe benefits to all their employees and some only to those at the executive level for costs related to their work. Some others may also be extended for increasing general job satisfaction. Some of the common fringe benefits are telephone reimbursements, employer&rsquo;s contribution to the superannuation fund, and access to creche services. These could also include perks like tuition assistance, health insurance, childcare reimbursements, subsidised cafeteria, free bus service for commute, employee discounts and employee stock options.</div>
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	<strong>Why do companies offer fringe benefits to employees?</strong></div>
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	Companies use fringe benefits to motivate, recruit and retain high-quality employees at the organisation. Companies that compete for best talent in their field often offer extraordinary benefits.</div>
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	<strong>Abolition of the fringe benefit tax</strong></div>
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	Various provisions related to income tax on fringe benefits were modified by the Finance Act, 2006. Certain exemptions were clearly laid out with regard to what came under the purview of Fringe Benefit Tax. The Finance Act, 2009, abolished Fringe Benefits Tax completely, and now such perquisites are taxable in the hands of employees. These may include value of accommodation, leave travel concession, encashment of non-availed earned leaves, medical reimbursement and so on.</div>

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What is Fringe Benefit Tax, What is FBT, Fringe Benefits, Fringe Benefit Tax Definition

Fringe Benefit Tax (FBT)

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	A cess is a form of tax levied by the government on tax with specific purposes till the time the government gets enough money for that purpose. Different from the usual taxes and duties like excise and personal income tax, a cess is imposed as an additional tax besides the existing tax (tax on tax). For example, the Swachh Bharat cess is levied by the government for cleanliness activities that it is undertaking across India.</div>
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	A cess, generally paid by everyday public, is added to their basic tax liability paid as part of total tax paid.</div>
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	<strong>Difference between tax and cess</strong></div>
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	A cess is different from taxes as it is imposed as an additional tax besides the existing tax (tax on tax). Another difference lies in the way the revenue recovered from cess is maintained. While revenue from taxes like income tax is kept in the Consolidated Fund of India (CFI) and the government can use it for any purposes it deems fit, the revenue coming from cess is first credited to the Consolidated Fund, and the government may then, after due appropriation from Parliament, utilise it for the specified purpose.</div>
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	Another major difference between central taxes and cess is that the proceeds of a cess may or may not be shared with the state governments, while that of taxes have to be shared.</div>
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	<strong>Various types of cesses levied by the government</strong></div>
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	The government levies different cesses on services it provides to the public. Some of them are as follows:</div>
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	<strong>Education cess: </strong>Collected by the government to provide the mandatory free standard primary education to all citizens.</div>
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	<strong>Health cess:</strong> Proposed in 2018 by former finance minister Arun Jaitley to meet the health requirements of below-poverty-line families.&nbsp;&nbsp;</div>
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	<strong>Road cess or fuel cess: </strong>For maintenance of roads and infrastructure.</div>
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	<strong>Clean energy cess: </strong>Introduced in 2010, it is a carbon tax on the production and import of coal, lignite and peat, operating on the &ldquo;polluter pays&rdquo; principle.</div>
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	<strong>Krishi Kalyan cess:</strong> It was introduced in 2016 to provide additional support to farmers for agricultural activities.</div>
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	<strong>Swachh Bharat cess:</strong> Introduced in 2014 with the objective of delivering a clean India, it is levied at 0.5 per cent on all taxable services to fund Swachh Bharat initiatives.</div>
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What is Cess, Cess News, Cess Definition

Cess

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	As the name suggests, direct taxes are those that are levied directly on taxpayers &mdash; the income-tax, wealth tax, corporation tax, etc. In other words, it is a type of tax where the impact and the incidence fall under the same category.</div>
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	Direct taxes in India are overseen by the Central Board of Direct Taxes (CBDT). It was formed as a result of Central Board of Revenue Act, 1924.</div>
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	<strong>Some examples of direct tax:</strong></div>
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	<strong>Income tax</strong>: Income tax is paid by an individual based on his/her taxable income in a given financial year. Taxable income refers to total income minus applicable deductions and exemptions.<br />
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	The Budget estimate of the government&#39;s income tax revenue for the year 2020-21 was Rs 6,25,000 crore. The revised estimates of income tax for the 2019-20 Budget came at Rs 5,47,000 crore, while the actuals for the 2018-19 Budget stood at Rs 4,61,487 crore.</div>
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	<strong>Corporation tax: </strong>Corporation Tax is the money paid by companies and businesses on the income earned by them in a given financial year.</div>
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	On September 2019, the central government announced a cut in the rate of corporation tax for domestic companies to 22 per cent from 30 per cent previously. This brought effective corporation tax rate, including all additional levies, to about 25.2 per cent, for companies that do not receive any incentives or exemptions.<br />
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	The Budget estimate of the government&#39;s corporation tax revenue for the year 2020-21 was Rs 6,81,000 crore. The revised estimates of corporation tax for the 2019-20 Budget came at Rs 6,10,500 crore, while the actuals for the 2018-19 Budget stood at Rs 6,63,571 crore.<br />
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	<strong>Read provisions relating to direct taxes<br />
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	<a href="https://bsmedia.business-standard.com/_media/bs/data/general-file-upload/2020-02/memo.pdf" target="_blank">Provisions relating to direct taxes in Budget 2020-2021</a></strong><br />
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Learn what is Direct Tax, Direct Tax Definition, Direct Tax News and more here at Business Standard.

What is Direct Tax, Direct Tax Definition, Direct Tax News

Direct Tax

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	Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on import and export of goods. The government uses this duty to raise its revenues, safeguard domestic industries, and regulate movement of goods.</div>
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	The rate of Customs duty varies depending on where the goods were made and what they were made of.</div>
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	Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall under the Central Board of Excise &amp; Customs (CBEC).<br />
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	The Budget estimate of the government&#39;s customs revenue for the year 2020-21 was Rs 1,38,000 crore. The revised estimates of customs for the 2019-20 Budget came at Rs 1,25,000 crore, while the actuals for the 2018-19 Budget stood at Rs 1,17,812.85 crore.</div>
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	<strong>Types of custom duty</strong></div>
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		Basic Customs Duty (BCD)</li>
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		Countervailing Duty (CVD)</li>
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		Additional Customs Duty or Special CVD</li>
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		Protective Duty,</li>
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		Anti-dumping Duty</li>
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	<strong>Changes in Customs duty</strong></div>
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	In Budget 2019, the government announced a slew of changes to Customs duty in order to meet multiple objectives, including promotion of clean energy, curbing non-essential imports, boosting domestic manufacturing and raising revenue. Customs duty was cut on several inputs to incentivise domestic production and increased on finished products to garner additional revenues.</div>
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	The government had said it was expecting a 19 per cent growth in Customs collection to Rs 1.5 trillion for 2019-20.</div>
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What is Customs Duty, Customs Duty Definition, Customs Duty News

Customs duty

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	Dividend Distribution Tax (DDT) is a tax levied on dividends distributed by companies out of their profits among their shareholders.</div>
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	The Dividend Distribution Tax is taxable at source and is deducted at the time of the distribution. According to the law, DDT is levied at the hands of the firm, and the shareholder. An exception is that when a shareholder receives more than Rs 10 lakh in dividend, they have to pay an additional tax.</div>
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	Under the Income Tax Act, any domestic firm which is distributing dividends has to pay DDT at the rate of 15 per cent of the gross amount. At different times, governments of the day have imposed and removed Dividend Distribution Tax according to market needs.</div>
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	The Dividend Distribution Tax has to be paid to the government within 14 days of the dividend declaration. If not paid within the stipulated time, it has to be paid with an accumulated interest charged at the rate of 1 per cent per month. The tax is paid separately, over and above the company&rsquo;s income tax liability.</div>
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	Brokers, especially on Indian bourses, have been calling for Dividend Distribution Tax to be scrapped, since it leads to significant taxation of corporate earnings, making markets unattractive.</div>
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	Other than DDT, the Securities Transaction Tax (STT) and Long-Term Capital Gains (LTCG) tax are some major taxes levied on market instruments.</div>

Learn what is Dividend Distribution Tax (DDT), Dividend Distribution Tax (DDT) Definition, Dividend Distribution Tax (DDT) News and more here at Business Standard.

What is Dividend Distribution Tax (DDT), Dividend Distribution Tax (DDT) Definition, Dividend Distribution Tax (DDT) News

Dividend Distribution Tax (DDT)

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	Taxation is the primary source of income for the government. The most important revenue receipts for the government, taxes are involuntary fees levied on individuals and corporations to finance government activities. Revenue receipts can be of two types &mdash; non-tax revenue and tax revenue. Tax revenue is the income gained by the government through taxation.</div>
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	Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget.</div>
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	Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country&#39;s output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy&#39;s resources.</div>
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	Taxes collected from both direct tax and indirect tax are the government&rsquo;s tax revenue. It includes collections from income tax, corporation tax, customs, wealth tax, tax on land revenue, etc.</div>
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	Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied. Income tax, wealth tax, corporation tax and property tax are some examples of direct tax. Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of indirect tax. Corporation tax forms a large chunk of the government&rsquo;s tax revenue.</div>
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Page 15 - Latest Updates on Excise Duty

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