Pratibha (CA Final) (67 Points)
31 October 2010I have a query regarding the premise of Taxation-
When we earn like from salary, PGBP, other sources etc. we pay Direct Taxes to the govt.
Now when we spend this income on which we already paid direct taxes, on goods and services then also we pay indirect taxes like service tax, sales tax, VAT etc. to the govt.
Isn't this a situation of Double taxation as we pay the tax on earning as well as spending ????
Plz Help/Reply....
CA Konfused
(Chartered Accountant & CFA Level 1)
(302 Points)
Replied 31 October 2010
seriously i agree with you,like if a company has sales of 300 and purchases of 150 then it pays direct tax at the rate of 30 % on 150 ie 45 and then again pays VAT suppose it is 10% on the value added ie 150 making it 15 so the total tax liablity is 60 on Rs 150 making it 40 %.Its quite unfair.
gaurav
(trainee ca final and cfa student)
(80 Points)
Replied 16 December 2010
There are two revnue authorities in india 1st is CBDT and 2nd is CBEC, CBDT makes provisons relating to direct tax ,,which is directly charged on assessee's income ,for preventing double taxation from assessee CBDT makes double taxation avoidance agreement with different countries,,,
But inn the case of CBEC it makes provision relating to sales/sercice/exise tax ,,which is charged from ultimate customer,not directly paid by co. in invoice co. charge indirect tax from customer,,so that means co. do not pay from there own pocket
regards
gaurav
CAclubindia
