Features of Indirect Taxes
1. Taxable Event: The indirect
taxes are levied on purchase/sale/manufacture of goods and provision of
services.
Ref:
1. Balachandran V - Indirect Taxes
2. ICAI - Indirect Taxes
3. ICSI - Indirect Taxes
4. ICMAI - Indirect Taxes
5. LPU - Indirect Taxes
2. Incidence & Impact:
In case of indirect taxes, the incidence and impact fall on two different persons.
It means the tax burden is shifted by the supplier to the buyer or recipient of
goods or services.
3. Regressive Taxation:
The indirect taxes do not depend on paying capacity as tax payable on commodity
is same whether it is purchased by a poor man or rich person. Therefore,
indirect taxes are regressive in nature. There are exceptions to this argument
as higher taxes may be imposed on luxury goods.
4. Impact of Indirect Tax:
The indirect tax on goods and services increases its price. This leads to
inflationary trend.
5. Promotes Welfare:
The harmful or sin products like alcohol, tobacco, etc. may be taxed at higher
rate. This practice not only discourages consumption of such goods but also
increases the revenue of the State.
6. Major Source of Revenue:
In India, the contribution of indirect taxes to total tax revenue is more than
50%. Therefore, it is a major source of tax revenue for the Government.
Ref:
1. Balachandran V - Indirect Taxes
2. ICAI - Indirect Taxes
3. ICSI - Indirect Taxes
4. ICMAI - Indirect Taxes
5. LPU - Indirect Taxes
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