Types of Indirect Taxes in India

Sales Tax

The tax that levies on the sales of goods. Union Government imposes the sales tax on the Inter-State sale, while the sale tax on Intra-state sale is levied by the State Government.

This tax is divided into three segments as Inter-State Sale, Sale during import/export and Intra-State sale.

Service Tax

This tax is an indirect tax that taxpayers have to pay service tax on paid services. Paid services are the telephone, tour operator, architect, interior decorator, advertising, health center, banking and financial service, event management, maintenance service, consultancy service.

The Interest on the service tax is 15%.

Value Added Tax

This type of tax is collected by the state government. For an example, if we purchase a good then we must pay an additional tax as Value Added Tax to the government.

VAT rate is decided based on nature of item and state.

Custom Duty and Octroi Tax

This tax is levied on those goods that are imported into India from outside.

The Custom Duty tax is paid at the port of entry in the country as the airport. This tax rate also varies over the nature of goods.

While the Octroi tax is charged on the goods entering the municipality.

Excise Duty

The is also an indirect tax that levies on the goods which, are produced within the country.

This tax is not related to the Custom Duty.

Excise Duty is also known as Central Value Added Tax