India currently follows a highly complex event based indirect tax regime. India being a federal country, power to levy tax is with Centre as also with the States. Centre levies Customs Duty, Central Excise Duty (other than liquor for human consumption), Service Tax and Central Sales Tax, whereas the States levy Sales Tax (also called VAT), State Excise Duty (Only on liquor) and Entertainment Tax, etc. This event based taxation is proposed to be substituted with the advanced and more progressive Goods and Services Tax (GST) regime which shall be supply based. Athena provides whole spectrum of services in indirect taxes ranging from litigation, advisory, review and training.
FTP & Customs Duty is levied on Import and Export of goods into or out of India. For classification of goods, India follows the Harmonised System of Nomencleture (HSN). Dealing with Customs laws involves various issues such as classification, valuation (especially in related party transactions), import-export procedures, claims for refund, rebate related issues, etc. requiring expertise of professionals.
Excise Duty is imposed on goods manufactured in India. Central Board of Excise and Customs (CBEC) is the central body overseeing the process of levy and collection of excise duty. Management of excise duty is an important and a challenging task for any manufacturing unit/ business. This involves a range of activities being classification, valuation, chargeability, management of CENVAT credit, litigation at various levels such as CESTAT, High Courts and the Supreme Court, etc.
Service Tax Laws
Service Tax in India has witnessed a sea change from 01.07.2012 from which date service tax is charged on all activities which are done for a consideration barring only sale of goods, securities and immovable properties and certain other exceptions provided in the negative list and the exemption notifications Starting from a narrow base of three services and imposed at five percent in 1994 it has now widened its coverage to all services except those in the negative list and in the exempted category. Service tax is applicable to whole of India except the state of Jammu and Kashmir which has its own service tax law called Jammu & Kashmir GST Act. Issues under the service tax laws involve complex issues of place of provision of service, chargeability, valuation etc.
FTP & DGFT Matters
Export of goods from India and Import of goods into India is governed by the Foreign Trade Policy. DGFT i.e., the Directorate General of Foreign Trade is the administrative body which governs foreign trade in India. The Foreign Trade Policy is closely knit with the Customs and Excise laws of India. Dealing with Foreign Trade Policy issues and gaining the maximum benefits from the policy involves a lot of planning regarding the relevant transactions.
For promoting and simplifying exports, the Union of India has evolved various schemes such as the Special Economic Zones, 100% Export Oriented Undertakings, Electronic Hardware Technology Parks and Software Technology Parks. Establishing these Units involves evaluation of the benefits granted under the scheme and the conditions laid down for availing such benefits. Once it has been decided to opt for the scheme, there are various approvals and formalities involved for entering the regime of these complex schemes.
In order to charge tax only on value addition, the CENVAT Credit Scheme was introduced in India. Credit for both Excise Duty and Service Tax is dealt by the CENVAT Rules, 2004and it allows setting-off of credit for both against either of the taxes. Opportunity to avail CENVAT Credit gives a direct cost benefit to businesses and is thus a thrust area in tax planning. The practice of Customs, Central Excise and Service Tax invariably involves CENVAT Credit issues and all taken together forms the indirect tax code of India at the Union level. This involves diverse issues both in consulting as well as litigation.
The State Sales Tax Legislations, in the early 2000were re-engineered and the new approach was referred to as VAT laws. Sales Tax is a State subject, though Centre reserves its exclusive power to levy tax on transactions of sale/purchase taking place outside the States (CST). It is necessary to conduct in-depth analysis and manage business transactions to optimize VAT liabilities in the business.
Other State Taxes
» State excise on liquor
» Entry tax
» Profession tax
» Stamp Duty
» Entertainment tax
» Luxury tax