Ancient India
Chanakya was the first great economist and has written a treatise on economics in the name of Arthashastra. The first reference to indirect taxation in India is found in this book. A tax was levied on all manufactured articles and the date was stamped on them so that consumers could distinguish between old goods and new. The sale of merchandise was strictly supervised. Various factors such as the current price, supply and demand, and the expenses of production were considered by the superintendent of commerce, before assessing the goods. A toll was fixed at one fifth of the value of the commodity and in addition there was a trade tax of one fifth of the toll. He was more concerned with internal trade rather than the external trade. He recommended a minimal tax at every entry of goods just like ‘Value Added Tax’ today. He was votary of very low rates of taxes as he was of the view that low rate of taxes discouraged the evasion and he also advocated the mutual well being of taxpayer and state. To quote from the Arthashastra,
“Ideally, government should collect taxes like honeybee, which sucks just the right amount of honey from the flower so that both can survive.”
Medieval India
India got divided in smaller states and the identity as country was lost. During this period of strife and turmoil, possibility of collection of tax as revenue at the pleasure of the Indian Kings who ruled over smaller areas on Indian soil cannot be ruled out. Any record/evidence of organized methods of tax collection is lost with the passage of time. Smaller states were only robber bands and what were robber bands were little states. The villagers hid themselves behind mud walls and revenue officers handed over very little to their superiors and rule of force was universal and politically there was no hope.
Muslim Period
Before the British rule, Indians remained slaves for about seven hundred years under the Muslim rule, which was full of death and decimation of Indian population, Muslim Rulers in order to propagate their religion levied various taxes on non muslims like jaziyah so that people may convert to Islam. Rates of taxes were dependent upon Sultan’s will. A customs and import due on articles of trade, ranging from two and a half percent to ten percent of the value of the articles was also collected.
British Period
After Muslim rule the nation remained under the British rule for another hundred years till independence. English occupation of Delhi in 1803 and final annexation of Punjab in 1849 paved the way for implementation of English rules and regulations for taxation in the respective areas. It was the English rule that introduced the organized system for collection of Central Excise and Customs revenue in India.
we have seen that Excise duty has been a source of revenue since ancient times. In the Mauryan period, excise duty was collected on liquor and salt. The Moghuls and the British treated salt as a monopoly article for raising revenue. In the Moghul period, products like sugar, cloth, leather, and dairy products were subjected to excise. This continued during the early British rule.
The Central Board of Excise and Customs (CBEC) is the nodal national agency responsible for administering Customs, Central Excise & Service Tax in India. The Customs & Central Excise department was established in the year 1855 by the then British Governor General of India, to administer customs laws in India and collection of import duties / land revenue. It is one of the oldest government departments of India.
However, it was only in 1894 that a beginning was made towards a modern excise system when duty was imposed on cotton yarn for counts above 20 at 5 per cent.
Currently the Customs and Excise department comes under the Department of Revenue, Ministry of Finance. The agency is staffed by IRS officers who start their careers as Assistant Commissioners in the field and within 20–25 years rise to the post of Chief Commissioners, with a few senior most officers who become Members of CBEC / CESTAT / Settlement Commission.
Gradually, the base of excise was widened. It included motor spirit in 1917 and kerosene in 1922. Duties were levied on coffee, tea, and betel nuts in 1944
Excise duties were levied under different Acts prior to 1944, which were all consolidated into a single piece of legislation/ the Central Excises and Salt Act, 1944 (now called the Central Excise Act, 1944). The rules applicable to different commodities were all codified as Central Excise Rules, 1944.
The base of excise duties grew due to addition of new commodities from year to year. All this was, however, done on an ad hoc basis. Simultaneously, the rates of excise were also kept high for revenue reasons. The non-availability of adequate and reliable database was a major hindrance in streamlining the excise duty structure and widening the tax base.
In 1975, this was realized more than earlier when a residuary excise duty was imposed on all goods not subjected to excise duty, with a few exceptions. The rate duty, 1 per cent, was deliberately kept nominal, perhaps to avoid resistance from the industry and also to curb attempts to seek for exemptions. This was a major step in strengthening the database and for helping to identify new commodities as potential source of revenue for the future
At the same time, the government found the residuary levy itself attractive enough to raise additional revenues. The rate was raised from 1 per cent to 2 per cent in 1997-98.
Over the years, it was raised to 5, 8, 10, and eventually 12 per cent.
Disclaimer: In this note, we have attempted to summarise some of the significant aspects to be kept in mind by readers to ensure compliance of tax laws and regulations. Readers should ensure to verify specific provisions as applicable to each case before taking any business decisions. It would be pertinent to note that some changes are being made to the tax laws and rules and regulations on a continuous basis by way of notifications, clarifications etc issued by the department based on their practical experience in implementing the legislation.
It may be noted that nothing contained in this note should be regarded as our opinion. Professional advice should be sought for applicability of legal provisions based on specific facts. Though reasonable efforts have been taken to avoid errors or omissions in this note we are not responsible for any liability arising to readers directly or indirectly due to any mis-statements or error contained in this note. It must be noted that the views expressed in the note are based on our understanding of the law and regulations as published by the Government authorities and we may or may not agree or subscribe to such views.
No comments:
Post a Comment