Answers:
4. Entertainment Tax: The state government levies tax on entertainment industry such a cinemas
In India, various indirect taxes are levied by central government, state government and local government.
Central government taxes
1. Central Excise Duty: This is a tax charged on production of goods like beverages, sugar, cloth etc. The tax is mainly for the producers of the commodities who later pass it on to the consumers. The Central Excise Act was passed in the year 1944 by the central government and by 1978 more than 100 goods were included in the excisable category. There are three basic conditions for levy of Central Excise duty. They are: (1) The duty should be only on goods. (2) The goods must be excisable and included in the list. (3) The goods must be manufactured or produced in India.
2. Customs Duty: These are taxed on goods that are imported or exported in India. Import duties are for the goods that are imported into India from various countries and export duties are for the goods exported out of India to other countries. This helps in increasing revenue and also earns foreign exchange. The Customs Duty Act was introduced in 1962 and it was enforced in the year 1963. Customs Tariff Act was introduced in 1975 to consolidate and amend the law relating to customs duties.
3. Central Sales Tax: This is an indirect tax levied on sales of goods from various states. Interstate sales or purchase of goods from other states were taxable. The Central Sales Tax Act was passed in the year 1956.
CST is also levied in the union government and the revenue made is shared with the state government. Also, CST Act is administered by the state government.
4. Service Tax: In India, service sector is the most important of all. All service providers in India, except those in Jammu and Kashmir are required to pay service tax. In 1993-94, three service sectors were made taxable. Services like electricity, water, telephone, banking, travel and many more came under this category. Sales tax was imposed on these services in order to fetch more revenue.
State government taxes
1. State Sales Tax: This is imposed on buyer and seller of goods within the state limit. There is no import or export taking place, no uniformity in the rates charged by a state. The tax rates vary from state to state. The tax is levied as turnover tax, single point tax or multi point tax.
2. Value Added Tax (VAT): This tax is imposed on the value addition made by the seller. It is different from sales tax as it is split up into stages. It is a multipoint turnover tax and is expected to improve state finance and bring down the prices of goods. In India, VAT was implemented from 2005-06 for better administration of tax system.
3. State Excise Duty: This is a tax charged by the state government on liquors, opium, and other narcotic drugs that comes under state list. The revenue from alcoholic drinks is very significant. Several states have prohibition on liquors.