CENTRAL EXCISE SERIES 2

Central Excise Series 2
Before going into details of central excise, we need to understand both Direct Taxation and Indirect Taxation
Direct Taxation: Direct taxes are collected directly from tax payers. The government collect direct taxes i.e. Income tax are collected from Individuals, corporate, firms, proprietor concern, multinational companies.
Income tax: One of the major source for government revenue collection is Income tax. It is governed by the Income tax Act, 1961 and it came into effect from 1.4.1962. The basis of amendment shall come from Finance Act. Basically Income tax act provides
× determination of taxable income,
× Tax liability and
× Procedure for assessment, dispute redressal mechanism includes appeal, penalties and prosecutions.
Finance Act: Every year Finance Minister present Finance bill both houses of Parliament.
Finance bill includes
Part A includes proposed policies of the Government of India
Part B contains detailed tax proposals. The tax proposal for both Direct and Indirect taxation.
Once the Finance Bill approved by both Houses of Parliament subsequently gets assent from Hon’ble President, it Becomes the Finance Act.
The Central Board of Direct taxes (popularly known as CBDT) administer the Direct tax act. According to Section 295 of Income tax Act, CBDT empowered to make rules from time to time in order to carry out purpose and proper administration of the Act.
Wealth Tax: It is one of the Direct tax revenue. The revenue from wealth tax is not high revenue. The wealth tax payable on net wealth on valuation date. As per section 2(q) the valuation date is 31st March of every year. The tax rate is 1% of net wealth exceeds Rs.30 lakhs w.e.f Assessment year 2010-11.
The following entity are exempted from wealth tax

1) Companies incorporated under Section 25 of the Companies Act, 1956
2) Any co operative society
3) Any social club
4) Any political party
5) A Mutual fund specified under section 10(23D) of the Income-tax Act [section 45]
Gift Tax : Gift tax act came into effect 1st April 1958 and it covers entire country except Jammu and Kashimir. Initially the exemption is Rs.25000. The Finance Act, 1998 has abolished Gift tax w.e.f. 1.10.1998 consequently all gifts made on or after 1.10.1998 free from Gift tax. Neither donor or donee are required to pay gift tax. The government partially revived the Gift tax w.e.f Finance Act, 2004 and it is based on donee based income tax with certain exceptions.
However from October1, 2009, individuals receiving shares or jewellery, valuable artifacts, valuable drawings, paintings or sculptures or even property valued over Rs 50,000 as gifts from non-relatives, shall have to start paying tax.
Individuals and Hindu undivided families are liable to pay gift tax. Whereas , if gift is received by a trust or AOP then it is not liable to income tax as income from other sources.
Direct Taxation:
Interest Tax: It came into effect from 1974. It extends whole of India. The Income tax authorities specified in Section 116 of Income tax act shall be the interest tax authorities for the purpose of the act. The Interest Tax Act, 1974 discontinued w.e.f. 31.3.1985.
Indirect Taxation: Collections from indirect taxation is one of major source revenue for the government. It is basically charge that are levied on goods and services. In general indirect tax in India is complex systems which involves various state government act also. The levy of vat differs from one state to another. The stamp duty is also differs from one state to another. There is no uniformity in levying taxes across states in respect of VAT. VAT is one of the constituent of Indirect taxation.The indirect taxation will include the following major activities
1) Levy on manufacture of goods
2) Levy on services
3) Levy on Import of goods
4) Levy on entry of goods into local territory
5) Levy of purchase of goods
The levy will be collected indirectly from tax payers. That is why it is called indirect taxation. How to levy indirectly ? When a company manufacture goods before selling they are adding excise duty on those goods. Consumers while purchasing goods, they need to pay taxes also which is already included in the cost of goods. The goods coming to market inclusive of taxes along with cost plus margin. Thus indirect taxation is levied from consumers or tax payers.
Different kinds of indirect taxes are as follows
1) Excise duty
2) Customs duty
3) Value added tax
4) Expenditure tax
5) Stamp duty
6) Octori
7) Service tax
8) Purchase tax
9) Consignment tax
10 Luxury tax