It has been announced by the Finance Minister that by 2012 a scheme of Goods and Service Tax will be implemented . With the implementation of GST it is a expected that there will be a unified taxation regime and excise duty , VAT and service tax will be merged to a single scheme of GST . Keeping this in view , the CST is already started to be phased out .
4.7.1 Customs Duty
Customs duty is levied on commodities imported into India . Duty drawbacks are possible if the imported items are re-exported or used in manufacture for export . Customs duty is also imposed on the value of certain exports . Peak rate of Customs Duty and Education Cess maintained at 10 and 3 per cent respectively in case of non- agricultural products .
The rates are prescribed under the Customs Tariff Act , 1975 and are revised from time to time by the annual Finance Act or through various notifications . Customs duties , particularly on imports , may be a significant cost factor in an Indian project due to the generally high rates of duties , unless corresponding drawbacks are available upon export .
An overview of the Custom Tariff Act is given below
( i ) Three types of customs duties are levied on imported goods i . e .
• Basic custom duty ( BCD )
• Additional custom duty ( ACD ) and
• Special additional duty ( SAD )
In addition to the above , countervailing duty and / or anti dumping duty may be levied by the Central Government by notifying in the official gazette .
4.7.2 Excise Duty
Excise duty is imposed on the manufacturer of products and is levied on a variety of commodities . This duty is an important source of revenue for the central government . Rates vary depending on the type of commodity . Even in case of similar commodities , the rates often vary depending on circumstances such as end-use . Although generally ad-valorem 15 , the rates may also be specific or a combination of ad-valorem and specific , based on the value of goods . The rates are prescribed under the Central Excise Tariff Act and are revised from time to time by the annual Finance Bill or through notifications .
Cenvat rate and Education cess maintained at 12 and 3 per cent respectively .
Excise duty is to be paid as the goods are cleared from the factory . Small-scale Industries ( SSI ) enjoy exemption from excise duty up to the specified value of goods cleared . All industries irrespective of their investment or number of employees are eligible for concession . In fact , even a large industry will be eligible for the concession for annual turnover upto ` 40 million . The SSI unit need not be registered with any authority . SSI units availing this benefit are denied cenvat credit although a federal tax , the state governments are also empowered to levy excise duty on certain commodities , such as liquor . Furthermore , in case of goods manufactured and exported , there is provision for duty drawback of the excise duty paid on such goods .
4.7.3 Service Tax
Service tax is levied at 12 per cent 16 ( plus an education cess of 3 per cent ) on the value of taxable services . The service provider will charge this to the service receiver . On collection , this is to
15
Duty which is payable , based on the value of goods
16
Applicable for the Financial Year 2012-13
40