About system of the indirect taxation in India.
About system of the indirect taxation in India.
N. V.Galishcheva, post-graduate student MGIMO the Basis of budgetary funds
The federal government of India tax revenues are,
Making in 1991 - 2000 on the average more than 60 % of incomes
The budget. Indirect taxes provide a considerable part
Receipts in the country budget. From them the most important (with
Fiscal position) the customs duties and excises are. In
The period 1993 - 2000 incomes of these sources indirect
The taxation fluctuated within 62,5 - 73,5 % of receipts
The regular budget of the federal government. During this period
The Indian government, pursuing the fiscal aims, aspired
Also to balance processes of internal and external liberalisation
Economy. State regulation easing in 90th years,
Strengthening of the competitive beginnings and improvement of conditions
Enterprise activity in the country advanced process
Opening of the Indian economy for an external world. The government not
Supposed ruins of national firms by the uncontrollable
Import of the foreign goods and rendering of services, buying up of the Indian
The companies foreigners and the massed leak of capitals from India.
The customs duties. Receipts from the customs
Duties in 1990 - 2000 made from 28,2 to 34,4 % of the profitable
Parts of the regular budget, and the basic volume of the goods in the present
Time is assessed mainly with the fiscal purposes. Data about
Receipts from the customs duties and their share in the budgetary
Receipts federal pravitelstvapredstavleny below (billion
And. rup.):
Receipts in the budget from the customs duties
(Billion and. rup.) Incomes regular the Share of the customs
The budget (billion and. Duties in the regular
rup.) the budget (%)
1993 - 1994 221,90
(7,08 bln. dollars) 754,50
(24,06 bln. dollars) 29,4
1994 - 1995 267,90
(8,53 bln. dollars) 910,80
(29,01 bln. dollars) 29,4
1995 - 1996 357,60
(10,78 bln. dollars) 1101,30
(33,21 bln. dollars) 32,5
1996 - 1997 428,50
(12,07 bln. dollars) 1262,80
(35,57 bln. dollars) 33,9
1997-1998 525,50
(12,37 bln. dollars) 1528,40
(35,96 bln. dollars) 34,4
1998 - 1999 454,00
(10,61 bln. dollars) 1545,70
(36,15 bln. dollars) 29,4
1999 - 2000 503,70
(11,71 bln. dollars) 1828,40
(42,5 bln. dollars) 28,2
Source: "п conomy probe annual: India macro-economic data",
Probity, October, 1998, table 8.3, "India Union Budget 1999 -
2000 ". The Customs duties in liberalisation Indian
Economy (1991 - 2001) carried out the fiscal purposes and protected
The national industry, promoting its development. Customs
Duties in India are raised by the federal government in
Conformity with the Customs law of 1962, and the duty
It is raised from all goods imported to India, and also
Partially - exported from it (small group of the goods).
Import duties are subdivided on basic and compensatory.
On a calculation method basic happen specific and
advalornymi. Compensatory, entered according to
izmennnym in 90th years the law on custom duties, are raised with
The aggregated cost of the imported goods c.i.f. and
The basic basic import duty. A countervailing duty
It is actually equivalent to the excise with which the similar is assessed
The goods made in territory of India. It is raised for
Prevention of a possible negative effect from liberalisation
External economic relations and protection of local manufacturers, and
Also taxation of the goods imported to India from the countries,
Subsidising their manufacture and export. From these customs duties
It is paid to the VAT. For the purpose of protection of interests of the national
The industries in 1997-1998 fin. It has been entered "Special
The additional customs duties "on all import goods in
The size of their cost of 8 %. From this tax are released a number of the raw
The goods, in particular crude oil, the capital-intensive goods, gold and
Silver (in ingots), and also the goods imported for the purpose of them
Re-export.
Rates of import duties are resulted in the law on the customs
The tariff in which the goods are subdivided into 99 groups. Also
There is a list of names of the goods, partially or completely
Released from their payment, and to them concern the imported
The equipment for the industrial enterprises, a number of metals and
Chemicals. Thus, branches national are protected
The industries the admission on the internal also is gradually carried out
The market of the foreign goods. Decrease in import duties on
The capital-intensive goods and raw materials promoted an aggravation
Competition between manufacturers of the similar equipment inside
The countries also has raised competitiveness of the Indian goods on
The world market. The budget presented by the Minister of Finance JA.
Sinhoj in April, 1999, has reflected intentions of the government And.
Vadzhpaji to make changes to a country tax policy. Structure
The customs duties it has been optimised, quantity of the existing
Before 7 basic rates of the customs duties it is reduced to 5 (5, 15,
25, 35 and 40 %). Also partially or have been completely released from
Payments of export duties the goods designated in the scheme
"Advancements of export of the capital-intensive goods", and the goods,
Made eksportoorientirovannymi zones and the enterprises. In
Same time the export-import policy from encouragement positions
Export provides wider privileges in case
The goods are imported into India for manufacture of the products exported
Further. Following schemes are for this purpose applied:
Encouragement of export of means of production which can
To be imported in the presence of the licence on zero or very much
To insignificant tariffs, under condition of their use for
Manufactures of the export goods; clearing of payment
Custom charges. Under this scheme import of raw materials, half-finished products,
Accessories, spare parts, accessories (not exceeding on
Costs of 3 %), packing materials and the software
Computers for manufacture of products exported subsequently
It is released from custom charges at presence at the importer
The "special" licence; exporters of jewels can
To import into India components and materials of the future ornaments at
Presence of the additional licence from competent bodies in
Addition to usual procedure of licensing; products,
Intended for export, have special privileges, in that
Number free import without the taxation of their accessories,
Reduced rates for rent of sites of the earth under the industrial
Objects, clearing of payment of taxes to any 5 years during
The first 8 years of job of the enterprise, investment possibility
The foreign capital in the enterprise (up to 100 % of all volume
The capital).
Export duties stimulate development of export branches,
But are of secondary importance as the tool
The fiscal policy. For the purpose of encouragement of export the state
Subsidises export branches in full or in part, releasing
Them from taxes, including income. Thus,
The state reduces the incomes, renouncing the fiscal
Interests in advantage obshcheekonomicheskih. According to the law about
Custom duties the government of India has the right to assess
The antidumping duty the goods imported to the country under the price
Below the world. Except the given duties are applied also
Preferential, extending on the states entering in
SAARK (Association of regional cooperation of Southern Asia), -
Bangladesh, Pakistan, Butane, Maldivian Republic, Nepal and
Sri Lanka. In the end of 1997 India has agreed to lower tariffs on
106 names of the goods imported from these countries. On 96
To names of the goods decrease in tariffs has made more than 50 % and on
13 they have been cancelled. However India reluctantly flies lower or
Cancellation of tariff and not tariff barriers as has
Positive trading balance with the region countries. Exist
Also fears, that after decrease (or cancellations) tariffs a situation
In trade with India for them can worsen, as less
Developed and diversifitsirovannye economy of these countries cannot
Successfully to compete to it.
Federal excises. Excise taxation is
The form of indirect taxation second for the importance, and it
Effectively use in India the federal government and
The governments of states. Flexible application of these excises promotes
To establishment of rational structure of public consumption.
Besides, fixing the sizes of excises, the state actually
Carries out the control over the prices. Now in India
Excises assess about 20 kinds of the goods, including alcohol,
Cigarettes, sugar, matches, kerosene and other goods of the mass
Consumption. Thus, imposing the excise tax, the state
Provides stable inflow of incomes to the budget. In parallel goes
Process of optimisation of rates of excises. So, according to
The budget 1999 - 2000 fin. Quantity existing earlier 11
The basic rates of excises it has been reduced to three. Were also
Are established the central rate at a rate of 16 %, the lowered rate in
The size of 8 % and the raised rate at a rate of 24 %. According to the Indian
Economists, use of the given system of excises will be
To promote increase in a profitable part of the budget and will facilitate them
Gathering (at preservation of social stability).
Receipts from duties.
Receipts from duties Their share in the profitable
(Billion and. rup.) parts of the budget (%)
1993 - 1994 317,00 (10,12 billion 42
Dollars)
1994 - 1995 373,50 (11,89 billion 41
Dollars)
1995 - 1996 401,90 (12,12 billion 36,5
Dollars)
1996 - 1997 450,10 (12,68 billion 35,6
Dollars)
1997 - 1998 522,00 (12,28 billion 34,2
Dollars)
1998-1999 534,00 (12,48 billion 34,5
Dollars)
1999 - 2000 638,70 (14,85 billion 35,7
Dollars)
Source: "Economy probe annual: India macro-economic data",
Probity, October, 1998, table 8.3, "India Union Budget 1999 -
2000 ". Receipts in the budget from excise taxation gradually
Decrease. In 90th years of receipt in the federal budget from
Excise taxation fluctuate within 1 (2 - 1 (3 profitable
Parts of the regular budget. Excises are raised by the federal
The government according to the law on the federal excise,
Come into force in 1944 Actually they are taxes on
Manufacture of the goods on territories of India, and this type of tax
Extends on manufacturers and consumers of the given goods
(Excises are switched on in their price). Excises happen three various kinds:
The basic, specific and additional. According to
The law on the federal excise tariff aktsizooblagaemye the goods
Are distributed on 96 groups. Size of rates of specific excises
Is based on quantity of the goods, while advalornye excises
Are estimated from goods cost. Last years it was observed
Transition from specific excises on advalornye, which
Promote VAT introduction (on a level of production). In a case
advalornyh as goods excises in cost in India usually consider
The "normal" price on which the goods are on sale its manufacturer.
At wholesale trade is the price ex work, i.e. The established
"On collars" the enterprises. For specially designated in it
The list of the goods the excise is raised from their maximum retail prices,
But on a number of the goods there are privileges.
Owing to decrease in rates of import duties all imported in
India the goods are assessed with a compensatory levelling-up duty, in
Communications with what they began to have tax privileges concerning the VAT. In
Process of reforms in 90th years the procedural have been made some
Improvements and as a result the invoice became the basic document
For an establishment of tax rates. There were some attempts
To expand base of the taxation by means of cancellation of clearings from
Payment and privileges. However in connection with pressure of opposition and
Lobbying of various influential financial and industrial groups
The government has been compelled to refuse inclusion big
Quantities of the goods in system of the taxation, which
Unreasonably are exposed to clearing of their payment (umbrellas,
Bicycles, etc.). For avoidance of the double taxation in
Frameworks of the law on the federal excise the system has been entered
The modified tax to the added cost (MODVAT),
According to which the manufacturer aktsizooblagaemyh the goods can
To receive privileges on this type of tax paid at purchase
Half-finished products and the materials used for manufacture
End-product. MODVAT it is used, when an end-product and
Expenses for its manufacture are fixed by the country government
(As proved for this purpose). The manufacturer intending
To receive privileges within the limits of system MODVAT, should fill
The declaration in which in details shows the suffered expenses on
Manufacture of end-products. According to the given scheme size
Privileges it is equal to size of the excise really paid with
Expenses. Privileges are not given, if the final goods not
Are assessed with excises. However the scheme of the preferential taxation
Remains in force, if the final goods (assessed or not
By excises) are exported without payment of duties.
The major lack of system of indirect taxes of India to
The beginnings of 90th years absence of the tax to sphere production was
Services, i.e. The added cost created in this sector,
It was not taxed. At introduction of the differentiated VAT,
Begun in 1993-1994 fin., the tax to a number of services was
Part of the given system. In the beginning 1993 - 1994 fin. Was
5 %-s' tax to telephone services, to insurance is established
Jewels, services of brokers, real estate and
Cars. Now this tax is raised from services,
Given by advertising and insurance agencies, auditor
The companies and firms on rendering inzhiniringovyh, accounting and
Building-finishing services. The tax has been established also on
Expenses which is raised now under the rate of 10 %,
Paid under an abacus of the hotels which are switching on a payment for residing and
A food (hotels of a low class are released from its payment).
The government counted, that in the future the majority of types of service
Will be taxable. When they will be switched on in this system,
The tax to services will unite with federal excises, that
Manufacturers of the goods could receive indemnification for taxes,
Paid at fee, and manufacturers of services could
To receive indemnification for the taxes paid by them at payment
The goods. The indirect taxation is used by the state in
Quality of the tool of the external economic policy. For
Maintenance of competitiveness of a small-scale business to it
Privileges are given at excise taxation. Indirect taxes in
Last years began to carry out function of regulators
vosproizvodstvennogo process in economy of India. Its experience can
To be useful at realisation of tax reform in Russia.
System of the indirect taxes raised by the federal government,
It is still insufficiently effective. Such indirect taxes, as the tax with
Sales and the city tax (oktroj), are the basic hindrances on
Ways to formation in the country of effectively functioning uniform
The market and to increase of economic activity. Therefore, continuing
Reforms at federal level, the government of India stimulates
The governments of states for the purpose of activization of carrying out of reforms
Local and shtatovskogo the taxation that promotes development
Internal and foreign trade. Some Indian states in 1993 -
2000 have already cancelled the city tax that has influenced on
Improvement of an economic situation in the country also promoted
To domestic trade revival.
As to the local tax from sales it is raised
The Indian states from sellers and only from transaction,
Carried out in states and to tax the import
The goods of the government of states are no by the rights. Collection of this tax
At level of states needinoobrazno. So, in some states it
The one-stage tax, in others - the tax from sales is
Multistage, i.e. It is raised as the tax from a turn, entrance
The tax, etc., and in a number of states is already applied VAT system.
The federal tax is raised from sales by the federal government with
The goods realised outside of staff-manufacturer (trade
Between states). Some kinds of the goods used as raw materials in
Manufacture of other goods, are represented federal
To the government especially important from the point of view mezhdushtatovskoj
Trade. The tax from sales is raised from such goods under the rate of 4 %;
Concerning others the rate of 4 %, if the buyer also is established
Will show to the seller the declaration confirming, that the goods
Are bought by it for resale or for use in quality
Raw materials for production. If the declaration is absent (t.
e. The buyer is the end user), the tax rate
Makes 10 %. In case of difference of the rate of the federal tax with
Sales from the local tax it is raised under the lowered rate.
Indirect taxes in India carry out fiscal problems and function
Regulators vosproizvodstvennogo process in economy.
//* an information Source: BIKI, 5.04.01
//* Reg. Nom. - 1110400228.17-------------------------------------------
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