Despite the various reforms carried out in the past few years, the prevailing Indirect tax regime in India is still in a state of evolution. The system is quite complex, with multi-layered levies both at the Federal and State level.
The Federal government levies tax on goods at the point of import (Customs duty), manufacture (Excise duty), inter-state sales (Central sales tax or CST), and on provision of services (Service tax).
The states, on the other hand, have been vested with powers to levy tax on sale of goods within the state (Sales tax/Value Added Tax or VAT), and on the entry of goods into the state (Entry tax), under the respective state laws.
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