Taxation systems in India After 1991 – A Quick Facts

• Tax is a payment compulsorily collected from the individual or company.
• Direct tax – Corporate, Income, etc.
• Indirect tax – Excise duty, Customs duty etc.

Direct tax is paid by the individual or a company while indirect tax is collected from the   consumers (manufacturing and selling of goods).

• After 1991, tax system in India has undergone substantial rationalization (Better administration after 1991 crisis).
• Intro of VAT, GST.
• States have the constitutional power to levy sales tax apart from various other local taxes like entry fee, control etc.…
• Revenue from corporate tax is the highest contributor next is income tax.

Service Tax

• Intro in 1994.
• Negative list exempted services introduced in July 2012. Some of them are metered taxis Autorickshaw, transportation of goods or passengers, distribution of electricity by private companies, vocational studies, and education instruction immovable property given rent to education centers (expect training institutes). Etc…
• Levied by Centre.
• GST – both center’s & state jointly taxed.
• “Tax on services” is not mentioned in union list or state list according to 7^th schedule of our constitution.
• 88^th amendment to the construction (2004) amended article 270 & inserted tax on services” under union list [entry no. 92c].

Goods and service Tax (GST)

• Taxed by Centre and shared with state.
  • 8% for state.
  • 16% for Centre.

• Tax levied to consumption of goods / products in domestic.
• Medical, groceries, prescription have 0% exemption.
• It will replace excise duty, service tax and value added tax (VAT).
• Exports would not be subject to (GST).
• Both State and Centre will impose GST for all products produced in India.
• 115^th amendment bill, 2011 introduced in parliament budget session deals with GST & GST council.
• Article 336 – Accounts to 7^th schedule, GST to mean, any tax on supply of goods or services or both except taxes on the supply of petroleum product & alcohol.
• Union government has the power to (levy) impose tax on the manufacturing & production of Petroleum, Gas, Aviation turbine fuel, Tobacco products.

Article 249

• Parliament has been rested with the power to make laws pertaining to GST on behalf of state legislature in circumstances of national interest. Resolution need to be passed by council of states by not less than two third majorities in the voting & presence of the states.
• Power of the parliament can make law in subject to state list in the case of emergency.

Article 250

Parliament has been vested with the power to make laws pertaining to GST on behalf of SL when there is a proclamation of emergency.

Article 279A (GST Council)

President shall constitute GST council within sixty days from the commencement of GST act.

Article 279B

GST council dispute settlement authority. (DSA)

• Chairperson (only three members.)
• Field of law, public affairs, economics
• Chairperson appointed by president who has been a sup court judge or chief justice of high court referred by CJ of India. Other two members referred by GST council (Experts in law, public affairs and economics).
• Only Supreme Court shall exercise jurisdiction over such a dispute or complaint.