Indirect tax is a type of tax where the incidence and impact of taxation does not fall on the same entity. In the case of indirect tax, the burden of tax can be shifted by the taxpayer to someone else. Indirect taxes are often used by governments to raise revenue but it can also be used to influence consumer behavior by making certain goods or services more expensive or cheaper. It may causes for inflation too.Customs Duty Customs Duty is levied when goods are transported across borders between countries. It is the tax that governments impose on export and import of goods Import duty is not only a source of revenue from the government but also have also been employed to regulate trade. The purpose of the customs duty is to ensure that all the goods entering the country are taxed and paid for. It is regulated by the Customs Act, 1962, and the Customs Tariff Act, 1975.* Anti-Dumping Duty (ADD) is a trade remedy used by governments to protect domestic industries from being harmed by imported goods that are sold at prices below their normal value in the exporting country. * This practice, known as dumping, can significantly undercut domestic producers and lead to job losses, decreased production, and lower profits.* Countervailing Duty (CVD), also known as anti-subsidy duty, is a trade tool used by governments to offset the unfair advantage gained by foreign producers who receive subsidies from their governments. * CVD has been imposed on imports of steel products from China and Korea in the past. * Currently, an investigation is ongoing for CVD on imports of Atrazine Technical from China.* An excise duty is in the true sense is a commodity tax because it is levied on production of goods in India. * Excise duty is explicitly levied by the central government except for alcoholic liquor and narcotics. * it is applicable only to things produced in India and is also known as the Central Value Added Tax or CENVAT. * However, with the implementation of the Goods and Services Tax (GST) from 1st July 2017, Excise Duty has been subsumed under GST.Goods and Services Tax (GST) * Goods and Services Tax (GST) is an indirect tax system in India that was introduced on July 1, 2017, replaced multiple indirect taxes such as excise duty, service tax, VAT, and other local taxes. * It is a single, comprehensive tax levied on the supply of goods and services across India, with the aim of creating a uniform tax system across the country.. * Itis a destination-based taxation system.It has been established by the 101st Constitutional Amendment Act. It is an indirect tax for the whole country on the lines of “One Nation One Tax” to make India a unified market. It is calculated only in the “Value addition” at any stage of a goods or services. There is a provision of GST Council to decide upon any matter related to GST whose chairman in the finance minister of India. A value-added tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.Central taxes: * Central Excise Duty (CED) * Service Tax * Additional Duties of Excise (CVD) * Additional Duties of Customs (SAD) State taxes: * Value Added Tax (VAT) * State Sales Tax (SST) * Entertainment Tax * Luxury Tax * Entry Tax * Octroi* This is a tax levied on the Center and the states together, on equal basis. * Import of goods or services will be treated as inter-state supply and will be subject to Integrated Goods and Services Tax (IGST) in addition to applicable customs duty.* Mutually decided GST rates: CGST, SGST and IGST are levied by the Center and the states at mutually agreed rates. The rates are notified on the recommendation of the GST Council. + Multiple Rates: GST is levied at four rates (5%, 12%, 18% and 28%). The schedule or list of items falling under these slabs is prepared by the GST Council. * In this, a special rate of 0.25% on coarse precious and semi-precious stones and 3% on gold has been fixed under GST separately.eas Ser rors or Sear eY OVS A Pascind oo SSIES a S| nn east 77 mee CC ° £ - WAY BILL SYSTEM https://www.ewaybillgst.gov.in/ ae Help « eine Thank you Taxpayers & Logistics Operators, 4. «GST E Way Bill Journey Ay pacts E-Way bill syote pereon in charge relation to supply or for reasons ymencement of movement of goods exceeding the value of Re. 60,000 in ther than supply or due to inward supply from an unregistered person a Latest Upeatee: o7710 Ways bases on day to 200 KM per oauizz0z sysem + Temporary Ven. Nos with 7* An e-Way Bill is an electronic document that is required to be generated by a registered GST (Goods and Services Tax) taxpayer for the movement of goods worth more than Rs. 50,000 from one place to another within the country. * The e-Way Bill system was introduced as part of the GST regime in India in order to facilitate the movement of goods across state borders and to ensure the proper payment of GST on such transactions.* The e-Way Bill contains details of the consignor, consignee, and the goods being transported, such as the name and address of the parties involved, the GSTIN (Goods and Services Tax Identification Number), the HSN (Harmonized System of Nomenclature) code of the goods, the quantity and value of the goods, the vehicle number, and the date of dispatch and delivery.Cascading Effect * It is a tax on tax. It makes the tax rate much higher than the original rate. Tax Expenditure/ Revenue Forgone * It is the opportunity cost of taxing at concessional rates like giving exemptions, deductions, rebates, etc. to the tax payers.Tax Buoyancy’ * There is a strong connection between the government’s tax revenue earnings and economic growth. The simple fact is that as the economy achieves faster growth, the tax revenue of the government also goes up. * Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.Pigouvian Tax * It is the tax on companies that create negative externalities and adverse effects on the society. e.g.- carbon emissions tax or a tax on plastic bags. Tax Evasion * It is an illegal activity in which a person/entity deliberately avoids paying a true tax liability.Tax Elasticity * % change in adjusted tax revenue + % change in income. Tax Avoidance * It is the use of legal methods to minimize the amount of income tax owed by an individual or a business by claiming as many deductions and credits as are allowable.Cess It is a form of tax levied or collected by the government for the development or welfare of a particular service or sector. It is charged over and above direct and indirect taxes. Cess collected for a particular purpose cannot be used for or diverted to other purposes. It is not a permanent source of revenue for the government, and it is discontinued when the purpose levying it is fulfilled.Cess Rate is Fixed. te The surcharge rate varies-as-perthe brackets in which the people fall. Authorities calcukite cels on the surcharge and the f6tal tax: Asurcharge is calculated on the total tax amount only. Cess is levied on everyo Only higher income brackets face Surcharge. Cess is used for a specific purpose only. It cannot be used for any other reason. The surcharge can be used for any reason that the government finds fit. Cess is aimed af public welfare. Surcharge aims to tax high earning individuals.Shobhia 4 rae @) SPOT a 4d (aa Ss a al -) Ca a Co an a a (ree 1S rica ras ST aa Ce a hire —bs Case] Ta» a) ae aan . Sec & Cy eee DtCustom a 4 LL Bape ed ce aa @) ee rar | ee ars GS prow = ee a aeLease ae Coa dubia oyCess in India: * Cess on tobacco and tobacco products: 18% on the value of tobacco products, funding the National Tobacco Control Programme. * Cess on pan masala and similar products: 135% ad valorem on the retail sale price, funding the National Oral Health Programme. * Cess on luxury goods: 25% on the value of luxury goods, funding the National Welfare Fund for Senior Citizens. * Cess on petroleum products: Rs. 3 per litre on petrol and Rs. 2.50 per litre on diesel, funding the Clean Energy cess and the Road and Infrastructure Cess.eevee aCe aaa Fy Comal One STS a Gntldionly, eT | rv a 4 Pol (of tre) as —————<> iam i co Lar wry eG Sale : Neu Pwell eA soon AN (6) 5 AQ . Avra i E Sees a aed SS ————— vies ; ae Ret : | , one =r +e gal aCe A v oy - = ree a a a S 5)* Inflation refers to the general increase in prices of goods and services inan economy overtime. ~— * Inflation measures the average price change in a basket of commodities and services over time. * Inflation is indicative of the decrease in the purchasing power of a unit of a country’s currency.le Rising or constant inflation rate]e Decrease in the inflation rate. |* — Negative inflal + Inciease inthe price level Je Increase in tfié price level unti|e Decrease in the price level ———— ; the inffation rate is zero pinata Inflation Intation Infation Ms rate rete ‘Time Time TimePy ich * Disinflation is a term that describes a temporary slowing of price inflation. It is used to describe situations where the inflation rate has decreased marginally over a short period of time. * Disinflation is the rate of change in the rate of inflation, as opposed to inflation and deflation, which refer to the direction of prices. * A moderate amount of disinflation is required to keep the economy from overheating.T=ViF-LiCey a It is a situation when price of goods and services decreases from general prise and purchasing power of money increase.a eR ee) a AT) a oa valle Se rT ee Bat 7a ond eos i Aico Rw Tara Tt = Vas sas Relation)=e tal akon Cn 40 SNe aE dar © fo blvak on (Cate aa ou me ra (cael cess oe oe Ee GD) CR LanneThe Phillips curve shows & ps Curve the relationship between unemployment and inflation in an economy. Since its ‘discovery’ by New Zealand economist AW Phillips, it has become an essential tool to analyse —_macro- economic policy. Inflation rate % Phillips Curve a ‘Unemployment Rate %“ (arerareta Prefers a) (arafy 344) (arecerei fates am) (staf 1.42) x Cematers ex) atrormrtt at ee fem : thtaretts Referer oarStagflation Qwhich an economy experiences stagnant growth (or contraction), high unemployment, and high inflation simultaneously. OStagflation poses a significant challenge for policymakers because traditional economic policy tools may be less effective in addressing both inflation and unemployment simultaneously. Olf policies aimed at stimulating economic growth and reducing unemployment (such as lowering interest rates or increasing government spending) may worsen inflationary pressures.Causes of inflationTYPES OF INFLATION Creeping (moderate) inflation Galloping inflation HyperinflationImpact Of Inflation Producer Positive Consumer Negative Salaried Employees Negative Import Increase Export Decrease Creditor Negative Debtor Positive[yet Creeping Inflation * When prices are gently rising, it is referred as Creeping Inflation. When prices rise by not more than (upto) 3% per annum (year), it is called Creeping Inflation. Walking Inflation * When the rate of rising prices is more than the Creeping Inflation, it is known as Walking Inflation. When prices rise by more than 3% but less than 10% per annum (i.e between 3% and 10% per annum), it is called as Walking Inflation. Galloping Inflation: * If prices rise by double or triple digit inflation rates like 30% or 400% or 999% per annum, then the situation can be termed as Galloping Inflation.yperinflat * Hyperinflation refers to a situation where the prices rise at an very high rate. However, in quantitative terms, when prices rise above 1000% per annum. it is termed as Hyperinflation. * During a worst case scenario of hyperinflation, value of national currency (money) of an affected country reduces almost to zero. Paper money becomes worthless and people start trading either in gold and silver or sometimes even use the old barter system of commerce.. ret Co Cem TC It measures average changes in the prices of goods sold in wholesale. Published by the Office of Economic Adviser, Ministry of Commerce and Industry. Headline Inflation The base year of All-India WPI has been revised from 2004-05 to 2011-12 in 2017. WPI includes three components viz, WPI 4 dia wee Ente €, 697 Goods — Manufactured products - 64.2% 564 — Primary articles - 22.6% 117 — Fuel and power - 13.1% 16 Major criticism for this index is that the general public does not buy products at wholesale price.Consumer Price Index It measures average changes in price of goods and services It is released by the National Statistical Office (NSO). The CPI has several sub-groups including food and beverages, fuel and light, housing and clothing, bedding and footwear. Base Year for CPI is 2012. The Monetary Policy Committee (MPC) uses CPI data to control inflation. In April 2014, the Reserve Bank of India (RBI) had adopted the CPI as its key measure of inflation.CPI Categories in four types — CPI for Industrial Workers (IW). — CPI for Agricultural Labourer (AL). — CPI for Rural Labourer (RL). — CPI (Rural/Urban/Combined). Of these, the first three are compiled by the Labour Bureau in the Ministry of Labour and Employment. Fourth is compiled by the NSO in the Ministry of Statistics and Programme Implementation.Groups of Basket of Goods & Services under CPI Pra Dad i oa ce ens rs Ce tes EEE) Cerid eed Fuel and Light 9.49 (rare Uns earner) Communication, Recreation and Amusement, Personal care Me eee Mas ete Health(Medical) Education Meee eo (eee eae Certs eeProducers Price Index? It is an index that tracks price changes in the manufacturing process. It tracks the average change in selling prices received by producers for their goods and services. The main goal of the Producer Price Index (PPI) is to address price increases at the producer level before they are passed on to consumers, and it excludes indirect taxes, transportation, trade margins, and so on. However wpi includes some taxes and distribution costs. The Producer Price Index has not yet been used in India, but Niti Aayog has developed a plan to implement it soon.Housing price index (HPI The Reserve Bank of India publishes a quarterly house price index (HPI) for ten major cities: Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur, and Kochi. The base year for calculation of HPI is 2010-2011. HPI = (Current price of property)/(Base price of property) * 100 The latest data for the RBI HPI shows that housing prices in India have been rising steadily in recent years.Cost Inflation Index (CIl) * The Cost Inflation Index (Cll) is a tool used in India to calculate the long-term capital gains tax on assets such as land, property, shares, and securities. * It is calculated by the government and published annually in the Gazette of India. * The Cll for the financial year 2023-24 is 348. * The Cll is used to adjust the purchase price of an asset for inflation.Wunacademy * For example, if an asset was purchased in 2010 for Rs. 100,000 and sold in 2023 for Rs. 200,000, the long-term capital gains tax would be calculated as follows: * Indexed purchase price = Rs. 100,000 * 348 / 100 = Rs. 348,000 * Long-term capital gains = Rs. 200,000 - Rs. 348,000 = Rs. - 148,000 * Since the long-term capital gains are negative, no tax is payable.* Engel's law is an economic theory that states that as a household's income increases, the percentage of income spent on food decreases. * In other words, as people earn more money, they tend to spend a smaller proportion of their income on food and a larger proportion on other goods and services, such as housing, transportation, and entertainment. This is because food is a relatively basic necessity, and as people's incomes increase, they can afford to spend more on non-essential goods and services.{nflation tax is a tax on cash and cash-like assets that occurs when the rate of inflation rises faster than the interest rate on savings. Inflation tax, also known as an “implicit tax," refers to the reduction in purchasing power that individuals experience due to inflation. In simple words, it is the loss of value or buying power of money over time. When prices of goods and services rise over time, the same amount of money can buy fewer goods than before. This means that even if your income remains the same, you may find it more difficult to afford the same level of goods and services.* An inflationary spiral is a situation in which rising prices lead to demands for higher wages, which in turn lead to higher prices, and so on. This can create a vicious cycle that is difficult to break. * A deflationary spiral is a situation in which falling prices lead to lower production, which in turn leads to lower wages and demand, and continued price declines.* Bottleneck inflation is a type of inflation that occurs when there is a sudden decrease in the supply of goods or services, while demand remains the same. * This can happen due to a number of factors, such as natural disasters, labor strikes, or shortages of raw materials.* A double-dip recession refers to a situation in which an economy experiences two distinct periods of recession with a brief period of economic recovery in between. * It is characterized by a decline in economic activity followed by a short-lived period of growth, and then another downturn. Double-dip recessions are also known ‘as W-shaped recoveries. Busiesseyele peak ness yee peak Brie acovery pwerage GOP