This chapter covers the following topics:
The GST is a Value added Tax (VAT) is proposed to be a comprehensive indirect tax levy on manufacture, sale, and consumption of goods as well as services at the national level. It replaces all indirect taxes levied on goods and services by the Indian Central and State governments.
Goods and Service Tax (GST) is considered the largest indirect tax reform in India and replaces multiple indirect taxes that are administered by the Central and State Governments. GST is expected to bring in systematic tax administration with significant process and compliance requirement changes, including tax calculations, liability accounting, recovery, settlement, and reporting.
The main objective of GST implementation is to transform India into a uniform market by breaking the current fiscal barrier between states and facilitate a uniform tax levied on goods and services across the country.
GST is a consumption based tax or levy. It is based on the Destination principle. GST is applied on goods and services at the place where final or actual consumption happens. GST is collected on value-added goods and services at each stage of sale or purchase in the supply chain.
GST is one indirect tax for the whole nation, which makes India one unified common market. GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage.
The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
The GST solution now provides the flexibility by providing to configure options for defining Tax types and in determining the functional behavior for every tax type and by introducing unified tax configuration procedures across every tax regime.
Follow the steps in the following chart to set up your Oracle financials for India tax system.
The chart shows you where to read in detail about the setup step. The Window Name(s) column shows you in which window(s) you perform the step, and if the window is available only if you use a specific responsibility or product. The Required column shows you if the step is required, optional, required with defaults, or conditionally required.
Good and Services Tax is categorized into the following:
CGST – Includes Intrastate transactions. This is applicable for Intrastate Supply of Goods and Services.
SGST – Includes Intrastate transactions. This is applicable for Intrastate Supply of Goods and Services.
IGST – Includes Interstate transactions. This is applicable for Intrastate Supply of Goods and Services and Import of Goods and Services to India.
Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage.
TDS is simply Tax Deducted at Source. As per the Income Tax Act – persons responsible for making payments are required to deduct tax at source at prescribed rates. Instead of receiving tax on your income from you at a later date, the government wants the payers to deduct tax before hand and deposit it with the govt.
Tax Deducted at Source or TDS is a means of collecting income tax in India. The provisions related to TDS are governed by the Income Tax Act of 1961. The law states that any permissible payment shall be paid after deducting prescribed percentage as tax – usually over a range of 1% to 10%.
| Income Tax Slab | TDS Deductions | Tax Payable |
| Up to Rs.2.5 lakhs | NIL | NIL |
| Rs.2.5 lakhs to Rs.5 lakhs | 10% of (Rs.5,00,000-Rs.2,50,000) | Rs.25,000 |
| Rs.5 lakhs to Rs. 6.33 lakhs | 20% of (Rs.6,33,000-Rs.5,00,000) | Rs.26,600 |
TCS is a short form for Tax Collected at Source. This tax is payable by the seller who collects in turn from the lessee or buyer. The goods are as specified under section 206C of the Income Tax Act, 1961.
Tax Collected at Source (TCS) is income tax collected by seller in India from payer on sale of certain items. It is provided in section 206C of Income Tax Act 1961. The seller has to collect tax at specified rates from the payer who has purchased these items : category a. Alcoholic liquor for human consumption 1%.
TDS = Tax Deducted at Source i.e. deducted by PAYER or BUYER. e.g. Employer making salary payment or buyer of immovable property or person paying interest or commission or rent would deduct TDS and pay to the IT department. TCS = Tax Collected at Source i.e. collected by RECEIVER or PAYEE or SELLER. e.g. Jeweller selling jewellery would collect TCS and pay to the IT department.
Both, TDS and TCS are NOT taxes but are deducted from payment (TDS) or received more (TCS) and paid to the IT department on your behalf.
The person whose money was deducted (in case of TDS) or had to pay more (in case of TCS) would consider the TDS / TCS as income tax paid and would adjust the amount against his income tax liability while filing tax return.
If his income is below taxable limit (<250000), he would get the refund of TDS and TCS. The TDS and TCS details are available in the Form 26AS in the IT website.
Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. Import of goods means bringing into India of goods from a place outside India.
The levied rates may be standard or preferential as per the country of import. Additional Customs Duty (Countervailing Duty (CVD)): This duty is levied on imported items under Section 3 of Customs Tariff Act, 1975. It is equal to the Central Excise Duty that is levied on similar goods produced within India.
An excise or excise tax (sometimes called an excise duty) is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country). It is a tax on the production or sale of a good. This tax is now known as the Central Value Added Tax (CENVAT).
It is a tax on manufacturing, which is paid by a manufacturer, who passes its incidence on to the customers. The term "excisable goods" means the goods which are specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 , as being subject to a duty of excise and includes salt.
Excise taxes are taxes paid when purchases are made on a specific good, such as gasoline. Excise taxes are often included in the price of the product. There are also excise taxes on activities, such as on wagering or on highway usage by trucks, Jul 19, 2016.
Excisable Goods as. 'Goods specified in the First and Second Schedule to Central Excise Tariff Act,1985. as being subject to a duty of excise. and includes salt'.
An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer. Excises are typically imposed in addition to another indirect tax such as Goods and Services Tax (GST).
Both of these taxes are levied by the government but there is a distinct difference between the two. Excise is levied by the government and the goods and products that are manufactured in the country, and customs duty is applied for goods imported from foreign countries.
Superficially, both excise and custom duty are taxes levied by the government but the major difference between the two is that excise is the tax levied by the government on the goods manufactured in the country while customs duty is a tax levied upon goods imported in to the country from foreign countries.
There are many provisions that are common to both excise and customs duty. The procedures of administration, settlement and tribunal are same in both the taxes. The principles of valuation, refund search, confiscation and appeal are almost same in the case of the two taxes.
Bill of Entry (BOE - plural bills of entry) An account of goods entered at a customhouse, of imports and exports, detailing the merchant, quantity of goods, their type, and place of origin or destination. It is issued by the customs presenting the total assigned value and the corresponding duty charged on the cargo.
A bill of lading is a document from a shipper of goods that describes the goods being shipped and notes the quantity. It resembles a standard store receipt. The bill of lading serves as a receipt when the goods being shipped arrive at their destination. The destination of the goods is also noted on the bill of lading.
A Bill of Entry is normally filed by an importer or a Custom House Agent. It is filed to undergo necessary import customs clearance formalities to take the goods out customs.