9/15/2016

ClassificationofTaxesinIndia|BankExamsToday

SmartFacts
RajaChelliahCommittee(1991)andKelkarCommittee(2001)recommendedincreased
ofDirectTaxationanddecreaseofIndirectTaxation

FiveMajorTaxes(HighertoLower)
CorporateTax
IncomeTax
ExerciseDuty
CustomDuty
ServiceTax

Taxesareclassifiedareasfollows:
1.DirectandIndirectTaxes
DirectTaxItsburdencannotbeshifted.Itispaidbythesamepersononwhomitis
imposed,Exaplesareasfollows:
IncomeTax
WealthTax
FringeTax
CorporateTax
ProfessionalTax
PropertyTax
IndirectTaxTheburdenofIndirectTaxcanbeShifted,Examplesareasfollows:
Exerciseduty
Customsduty
VAT
EntertainmentTax
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9/15/2016

ClassificationofTaxesinIndia|BankExamsToday

2.AdValorumandSpecificTax
AdValorumTaximposedonthebasisofthetotalvalueofthecommodityproducedor
sold
SpecificTaxItisimposedonthebasisofspecificattributeslikelength,breadth,
quantity,sizeetc.e.gCigarettes

3.ProgressiveandRegressiveTax
ProgressiveTaxAsincomeofapersonincreases,therateoftaxesalsoincreases,so
thatheendsuppayingmore.
RegressiveTaxAsincomeofapersonincreases,therateoftaxgoesdown.
NOTEEverycountrytriestohaveataxstructurewhichisbyandlargeprogressive,
becauseitisequitableinnature

SomeImportantTaxes
ValueAddedTax(VAT)Itisataxonvalueadditionateachstagefromthefirst
stageofproductiontothelaststageofdistributionuptothefinalconsumer,sothatat
eachstagetaxispaidonvalueaddition
GoodsandServiceTax(GST)Itisataxonconsumption.Recommendedbythe
VijayKelkarTaskForce,GSTistheultimatereformsintheIndirectTaxation.The
proposedGSTwillsubsumeamultiplicityofcentralandstatelevelIndirectTax,soasto
bringaboutanuniformIndirectTaxStructureinIndia.
MinimumAlternateTax(MAT)Itisimposedonsuchcompanieswhichmakeprofits
,distributiondividendstoshareholdersandyesoadjustandlawfullymanipulatetheir
accountsthattheyendupaszerotaxcompany.Thus,theylawfullyavoidtaxbyusing
variousrebates,ConcessionsandexemptionsprovidedintheIncomeTaxLaw.OnSuch
companies,GovernmentimposesMATof18%andmoreattheirbookprofits.

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