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onstitution Indian1.4.1 ticular union sub-ordinate
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FEATURES 2. 1.
state
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Promotes Impact
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a country. states. the also higher the
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Source at
increases
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law. it.
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ondirectbruntdirectly of TAXES
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It I I List
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TAXMANN®of
part whole
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by duties is and taxes levy and law enact authority
to The 246: Article 3.
state. Legislature
aof the Parliament
onand
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laws enacting
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extra-territorial have the
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made law
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part any whole
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titution, thisprovisions
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to that,provides article This 245: Article 2.
tax. imposing
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of term The
tcollection
ax. of arbitrary prohibits fact,
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laauthority
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or shall
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It Article 1.
taxation: regarding constitution provisions
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taxation regarding constitution Provisions
of 1A.2
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12anarticles containing
448 parts nble,
25
pre- consists
a ofConstitution Constitution.
The Indian provisions of the accordance
with
overnment,
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is and taxes levy power to The
Government Local The (c)
Government State The (b)
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1.4 Para GOVT. STATE UNION& POWERS
OF TAXATION 1.3
bee has ItGST.subsumed
in
Syllabus. (Hons.) B.Com.
been has present,it Pre-GST
era. of
part forms topic this here,discussed
At prevailing
in tax, level state as was VAT The
1.
nel the adjusting
ITC, after means 70,000. liabilityis
pay" VAT net payable;
the
20,000.It minus 90,000
VAT output against
adjusted ?be
shall month the for ableVAT
10%] 9,00,000>x [Calculated
as =90,000 purchases
becan on
paid V¤T Since,
4%] 5,00,000x [Calculated
as =720,000 payable VAT Output
means
purchases onpaid VAT
10%).
It were9,00,000 V¬T
@ (plus
4%). @
VAT (plus 5,00,000 wort h inputs purchased mont h the in sales actual
example: Mr. has and dealerregistered The
ForCredit". Ta"Input
x called
as availability Bhuvan
a is
stage
is earlier is credit This off. set allowed
the paiatd tax the and value Sales entire the as
words,
the otherconditions.In certain subject stage
on each imposed at istax
registered
ealer tax, input for credit take allowed to shall
such case that state, to in same the in
sold were goods subsequently be
ded value paid has and particular
state within purchasing the and tax
a goods dealerisregistered Ifany
Credit Tax Input 1.5.3
redit. Tax Input called
as system, credit through
tax
The price. sale entire
prevented been haseffect cascading
the on not and stage each addition at value on
only chargedeffectively
is
tax possible
as become has Thi s taxes. cascading
effect
of avoid developed
to been has VAT
effect
cascading eliminated has VAT 1.5.2
ng tax':. Effect
ofCascading called
as istax on TAXMANN®
tax of
The paid. and levied already taxes
includes which value, calculatedon
ach magnifies
at as taxation effect istax level
of process,
the this sales.
In point
of eachincreasing at
on
keeps tax burden
of product,
the the price of selling the charged
on always
er, this point.
In that istax the if
toup paid taxes inclusive al of considered
which
is is
value total
the tax, levy of time of the words, at other Intax. on charging
tax implies effect cascading The
EffectCascading What
is 1.5.1
purchases on
paid Tax sales- collected on Tax VAT=
manner: following calculated
the in payable
is tax net system,
the VAT the Under
. payable
on tax (i.e. output
tax against rebated purchases) is onpaid (i.e. tax input The
s. ofinvolving
sale transactions and Stages collected
in tis
ax the VAT, Under inputs.
on
paid tax for credit grant provided
to mechanism is whereina goods of
sale taxation
on
temof point multi ais2005.
It India
in introduced
in was (VAT) tax added value The
(VAT) TAX ADDED VALUE CONCEPT
OF 1.5
introduction". AnIndia: 2:"GST in
er detail
in discussed in been have 2016Amendment)
Act, (101st
Constitution provisions of
t The 2016. Amendment)
Act, (101st
Constitution introduced
the by was which stitution
Con the 246A
of Article conferred
by been has (GST) Services
Tax and Goods levy power
to The
GST Levy Power
to
PRE-GST
ERA INDIA: TAXES
ININDIRECT 1.5 Para
Syllabus.
discussed
it as been have VAT variants
of in
The GST.subsumed been has VAT I.
(Hons.) B.Com. Part Forms
of
of
VAT. variants three the under payable VAT and price selling vompute
12.5% sales onVAT (e)
cost total on
20% mnargin Profit (d)
6,00,000 expenses indirect and Direct (c)
of
12.5% VAT@ Exclusive years) 10machinery
(Life Purchase
of (b)
24,00,000
4%) (Exclusive
VAT@ of component andmaterial of
raw Purchase (a)
8,00,000 Particulars
()
Amount
information following Consider
the lustration
1:
goods. capital components
as
well as materials
and raw all on
of credit
is VAT 100% variant, this Under Variant:Consumption (c)
paid VAT allowed
years. those assets
in capital such allowanceon depreciation ratio
at
the years
in various apportioned to goods
is capital credit
an V¤T means, themn.
It on
eciation extent
of the to
onlyallowed credit
is VAT goods, capital of
case nents.
In
compo andmaterial raw onpaid VAT allallowedon credit
is VAT Variant:
The Income (b)
prevails. still effect
cascading Cost, thiscalculated
on is
tax When product. final of
cost of
part also and V¬T portion of some includes portion
ciation The goods. capital that of
cost of
part formtherefore wil and credít for
eligible machinery)
not wil
TAXMANN® be and plant (like goods capital purchase
of paidan VAT The
goods.
non-capital credit
on VATallowance
of todue effect
cascading prevention
of
the variant
is Product Gross of
merit The Goods. capital than othermaterials raw on
paid VÀT of onlallowed
y credit
is VATvariant, this Under Variant: Product Gross (a)
Variant
Consumption (c)
Variant Income (b)
Variant Product Gross (a)
variants: three has VAT
The VAT. variants
of called
as purchase
is on
paid VAT for creditpossibilities
of various The
VAT! VARIANTS
OF 1.6
available. not ITis
C goods,exempted manufacture
the to
used been have goods It()
scheme. position
com for opted has who dealer frompurchases
a respect
of available
in not is
ITC The (e)
dealer.registered froma made purchases
are the y
onlifallowed isIt(d)
ITC. as
allowed not state
is outside from madepurchases onpaid (CST) Tax Sales Central The c)
goods. capital purchase
of on
paid VAT respect at allowed
in also is It b)
dealer.registered allowed
ato is Itia)
VAT: under entitlement
ITC of theabout noted be
may pointsimportant lowing
fol- The Tax. Service and Excise VAT, prevailing
in was ITC concept
of the era,Pre-GST In
VAT under credit tax input Scope
of 1.5.4,
1.6 Para VATVARIANTS
OF 1.5
parotforms discussed
itas been have computation
VAT of metfor hods syllabus. (H.) B.Com.
The GST.subsumed
in been has VAT 1.
system. VAT under liability computing
mmon most the Methis od Invoice tax the met
for hod popular
taxeffectively,
1s the that noted bemay added. and
Thus,
purchases. It value on
only levied
sale full levied
on on pai d tax for given credit is
istax method,
the this Under Method: Voucher the But, price.
added Value Method
or Invoice (b)
Ratxe TaxLiability= VAT
aThese
re etc. wages, capital, interest
on charges,
payments. factor called
as
pro factors of the al made payments
depreciation,
hire rent, rduction
a e
to The profit. payment
and
i.e., added value identification
of upon based factor aggregate at
met hod
is This Method: Addition (a)
MethodSubtraction (c)
Method Invoice (b)
computation Method Addition (a)
VAT. of fmethods
or commonly
used three There
are
COMPUTATION
VAT OF METHODS
FOR 1.7
3,32,000 62,000 32,000
Total
3,00,000 30,000 Nil Goods Capital
32,000 32,000 32,000
Consumption Goods Input
Income Product Gross TAXMANN®
Variants various under (ITC) Credit Tax InputCalculation
of 2:
Note Working
2.40.000 24,00,000 Income/Consumption
10 Variant=
-2.70.000 3,00,000 24,00,00010
t Variant= Product Gross
Depreciation Calculation
of Not1:eWorking
(86,000)| 1,84,000 2,18,500 payable VAT Net
(3,32,000) (62,000) (32,000) (WN-2) ITC (-)
2,46,000 2,46,000 2,50,500 VAT Output
19,68,000 19,68,000 20,04,000 Price Selling
3,28,000 3,28,000 3,34,000 Margin
16,40,000 16,40,000 16,70,000 Exp. Total
6,00,000 6,00,000 6,00,000 Expenses
2,40,000 2,40,000 2,70,000 (WN-1)
Depreciation
8,00,000 8,00,000 8,00,000 Material Raw
Consumptlon Income Product Gross
PAYABLE VAT CALCULATION
NET OF
Solution:
.6 1,7 Para
PRE-GST
ERA INDIA: TAXES
ININDIRECT
the about brief Xplain
in
framework
ofconstitutional
GST. before TaxesIndirect major Explain
the
Pre-GST
Era. System
in Taxes Indirect drawbacks in
2017? July 1st w.e.f. GST duction
of
andvariants various the are What Yt.
thbefore
e existed which tax, added value methods of
intro "Constitution provisions
of Describe
the .3.
taxation. regarding India" of
taxes. indirect feature
of salient Explain
the Q2.
are taxes indirect way, what In Vil.
taxes? direct fromdifferent
KNOWLEDGE YOUR TEST
taxes. level state the
the only not there
is being, reason 1ne
but
also taxation services at
and Goodsintegration
haslevels, State andCentral both introduction
GST.
at of The
blems. the
above overcome
returns, payments, form costs
in
of the compliance was
high drawbacks
etc. aswell time
as
one
of
the Therefore, saved. otherwise be could which money,
major procedures, numbers,registration
filing trations,
ending .
toled This etcdates, due
regismultiple required procedures, compliance
which own their had etc.) tax, service
The Repetitive Multiple 4.
VAT, duty, excise (like taxesindirect various Compliances:
trade. of
was there etc. posts, check tax, entry octroi, suchbarriers
as tax
flow in
freehindrance Obstructed 3.
non-tariff
and trade of
and tariff creation of
toDuegoods: movement
TAXMANN®. sales. payable
on VATagainst ITC under CST such utilize to
allowed was
not purchases inter-State onCST paid has who dealer example.
The For
taxes. cascading
of toled Thatallowed. Government
not were levies State thagainst
e
ernment Central levies
of The taxes: utilization
of Non-Availability
cross of 2.
pre-GST
era. taxes
inindirect structure
of the defect
in
major the considered
be to authorities.
is
That various levied
by being taxes indirect of
tiplicity ato
led has This etc.octroi,entertainment
tax, tax,luxury goods, of
sale
on
VAT empowered
levy to Government
was State the side other the On
services,
etc.
provisionof on
service
tax manufacture, imports/Exports,
on
duty excise On
duty. toms
cus empowered
levy to Government
was Central TheTaxes: Indirect Multiplicity
of 1.
implementation:
GSI to
prior taxes indirect structure
of the backs
in draw major the werefollowing The
IOO PRIOR TAXES
OFINDRECT STRUCTURE
DEPECISINTHE 18MAJOR
exclusive purchases Value
of
Aggregate tax of
purchases value
of
inclusive Tax
Minus added
value Minus Added
sales value
ofinclusive Tax Tax Cum exclusive
tax of sales value
of
Aggregate Value
methodsubtraction Indirect methodsubtraction Direct
method.Subtraction Indirect andmethodSubtraction Direct intoanalysed
further could
be methodsubtraction The sold. goods value
of total calculated
on been
not has tax the credit
as tax guestion
of purchases.
noThere
is of and price
between difference the onpaid istax method,
the this Under Method:value
Siibtraction sale (c)
KNOWLEDGE YOUR TEST