Basic Principles for Determining Tax

Basic Principles for Determining Tax

Goods and Services Tax was implemented in India to simplify the taxation system as it was complicated before. GST was introduced to subsume the various taxes and instead form a single market taxation policy. The various central state and local levies of taxes were first analyzed and tested to find the possibility of being subsumed under GST. While identifying these factors the following mentioned principles were taken under consideration.

·    The nature of the taxes or levies that are to be encompassed or subsumed should be indirect taxes on either the supply of goods or services.

·    Those taxes or levies to be subsumed need to be part of the transaction chain that commences with the import, manufacture, or production of goods or the provision of services and ends with the consumption of those goods and services.

·    The result of subsumption of taxes or levies should be seen in the flow of tax credit at both intra and inter-state levels. The taxes, levies or other fees, should not be subsumed under GST that are not specifically related to the supply of goods and services.

·   There should be fairness implemented for both the union and the states respectively.

 

BY: Admin Tax4wealth

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