Indian Taxation System

The GST is an indirect tax that will replace existing levies such as excise duty, service tax and value-added tax (VAT). The states and the federal government will impose the tax on almost all goods and services produced in India or imported. Exports will not attract GST. The GST will not cover goods like crude oil, diesel, petrol and alcohol. These goods are major sources of revenues for most states. Exports would be zero-rated and imports would be levied the same taxes as domestic goods and services adhering to the destination principle. 

The taxes are levied, collected and retained by the Centre include Customs Duty, Corporation Tax, Taxes on Capital (other than Agricultural Land), etc. Some taxes are levied and collected by the Centre, but the proceeds are to be distributed among States. Tax on sale or purchase of newspapers and ads is one such tax.

DTC removes most of the categories of exempted income. Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Unit Linked Insurance Plans (ULIPs), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will lose tax benefits.

Small service providers were exempt from Service Tax if their aggregate taxable services didn't exceed Rs. 10 lakhs in a financial year. This threshold was designed to support small businesses and reduce compliance burden. The limit has been revised over time but was Rs. 10 lakhs in the relevant period.

The 2007-08 Union Budget (presented by Finance Minister P. Chidambaram) officially announced the implementation of Goods and Services Tax (GST) from April 1, 2010. This was a landmark announcement for India's tax reform, though actual implementation got delayed and eventually happened in 2017. Budget 2009-10 was after this announcement, and Budgets 2002-03 and 2005-07 were too early.

Statement 1 is correct: STT was reduced from 0.125% to 0.1% in Budget 2012-13. Statement 2 is incorrect: the tax exemption was for Rs. 5,000, not Rs. 10,000. Statement 3 is correct: Rs. 10,000 crores were allocated to NABARD for refinance to RRBs. Therefore, only statements 1 and 3 are correct.

Increased customs duty on gold and platinum to 4% from 2%.

Statement 1 is correct: 12% excise duty was imposed on branded retail garments (raised from 10%). Statement 2 is correct: 5% customs duty exemption was granted on equipment for fertilizer plants. Statement 3 is incorrect: customs duty on rail equipment was reduced to 5%, but this was from 10%, making it a reduction, not a cut to 5% from 10%. Only statements 1 and 2 are correct.

It is progressive tax. The progressive tax is the tax in which the rate of tax increases with the increase in income. Hence, if the person's income increases, he or she knows that a large part of income will have to be paid as tax to government. Thus, it has an adverse effect on the willingness to earn and there is reluctance to work more.

The corporate tax is narrower in scope in India. The corporate tax is charged on the annual income of the domestic as well as foreign companies operating in India. Thus, only the corporate companies contribute to the Corporate Tax and the general public does not contribute to this tax.

It is the regressive tax. The regressive tax is the tax in which the rate of tax decreases with the increase in income. Thus, the poor with less income pays a proportion of income as tax and are left with little money. So, it may be said to be the most unjust tax for the poor to pay.

This tax is not to be paid on transferring ownership of property. This tax is not to be paid on transferring ownership of property. But municipal tax is levied by the municipal corporate body of the city on the property owned by a person. It is not concerned with transferring ownership of property.

It is professional tax. The professional tax is paid by persons who are professionals like chartered accounts, advocates, and doctors. It is a direct tax and is paid on income earned through their profession and it cannot be shifted to any other person. Hence, the professional tax burden is felt by the person who pays it in the first instance.

It is not applicable on gift tax. The education cess is not to be paid on gift tax payable. The gift tax is to be paid on the gift received from another person, if it exceeds a certain limit.