In India, businesses need to follow several crucial steps when dealing with indirect taxes. Firstly, they must identify which indirect taxes are applicable to their business, such as GST, customs duty, excise duty, or service tax. If the tax authorities issue a show cause notice, it is vital to take immediate action. This involves preparing a response to the notice with all the relevant information and evidence that supports the business’s position. Moreover, submitting supporting documents may also be necessary. This step requires guidance on the documents required and ensuring their accurate and timely submission.

Different Types of Indirect Taxes in India

After implementing GST in India, most indirect taxes were consolidated into one tax. However, prior to that, there were several different types of indirect taxes in India.

Let’s explore some of these taxes:

• Service tax: This tax was charged by service providers in exchange for their services, and the collected amount was deposited with the Government of India.
• Excise duty: The tax levied on goods produced by companies in India is called Excise Duty. The manufacturing companies paid the tax on their goods and recovered the amount from their customers.
• Value Added Tax (VAT): VAT is imposed on movable products sold directly to customers. It consists of Central Sales Tax, which is paid to the Indian government, and State Central Sales Tax, which is paid to the respective state governments.
• Custom Duty: A tax on imported goods is called Custom Duty. Sometimes, products exported from India may also be subject to Customs Duty.
• Stamp Duty: This is a tax charged by state governments on transferring immovable property within their jurisdiction. Stamp Duty is also levied on all legal documents.
• Entertainment Tax: This tax is imposed by state governments on various entertainment-related transactions such as movie shows, sports events, arcades, amusement parks, etc.

Types of Indirect Notices

Show Cause: This notice is issued by the tax authorities to a taxpayer to explain why they should not be held liable for a tax liability or penalty.

Assessment Order: This notice is issued by the tax authorities to determine the amount of tax that a taxpayer owes based on the information available to them.

Demand Order: This notice is issued when the tax authorities determine that the taxpayer owes a certain amount of tax that has not been paid.

Assessment Order: This notice is issued by the tax authorities to inform a taxpayer that they are entitled to a refund of excess tax that has been paid.