What is the Taxes Subsumed Under GST In 2024

Taxes subsumed Under GST refer to indirect taxes previously levied by the central and state governments but have now been replaced or merged into the goods and services tax (GST) system. Under GST, many previous taxes have either been subsumed or consolidated into a single, comprehensive tax structure.

What Does Subsumed Tax Meaning?

A Subsumed Tax Meaning is a tax subsumed into a larger or more elaborate tax system. When a tax is subsumed, it means that it is no longer used separately but is incorporated into a new or existing tax structure. For example, Central Excise Duty and Service Tax have been subsumed under GST, which means they are no longer levied separately; instead, they have been subsumed into the GST system.

What are the Benefits of Taxes Subsumed Under GST?

There will be many benefits of subsuming various taxes under the Goods and Services Tax (GST) system.

1. Simplified tax structure: Multiple taxes are subsumed into one, reducing confusion.

2. Targets cascading results: Allows credit for taxes on inputs, thereby reducing the overall tax burden.

3. Increased transparency: Disguised processes and rates increase accuracy and reduce theft.

4. Boosting inter-state trade: Barriers have been removed by subsuming CST and state-specific levies.

5. Economic efficiency: tax costs are reduced and business competitiveness is improved.

6. Better revenue collection: The tax base is broadened and revenue increases.

7. Encourages compliance: Uses technology for easier filing and management.

8. Fair tax distribution: Balances tax responsibilities between the central and state governments.

What are the Indirect Taxes Subsumed in GST?

The Goods and Services Tax (GST) subsumes several indirect taxes previously levied by the central and state governments. These include

Taxes Not Subsumed Under GST?

Some taxes have not been subsumed into GST and continue to be levied separately by the central and state governments.

Central Taxes Not Subsumed:

1. Basic Customs Duty (BCD): Levied on imports to protect domestic commerce.

2. Excise duty on specific products: Applicable to petroleum products, alcohol for human consumption and tobacco.

State Taxes Not Subsumed:

1. Stamp Duty: Levied on property transactions and legal documents.

2. Property Tax: Levied on real estate by local municipalities.

3. Electricity Duty: Levied on electricity consumption and sale.

4. Excise Duty on alcohol for human consumption: Regulated by state governments.

Taxes Subsumed and Not Subsumed Under GST?

Taxes Subsumed Under GST

Central Taxes:

1. Central Excise Duty (except on petroleum products, alcohol, and tobacco)
2. Service Tax
3. Additional Customs Duty (Countervailing Duty or CVD)
4. Special Additional Duty of Customs (SAD)
5. Central Sales Tax (CST) (for inter-state sales)

State Taxes:

1. Value Added Tax (VAT)
2. Luxury Tax
3. Entry Tax (except on goods entering local areas)
4. Entertainment Tax (except those levied by local bodies)
5. Purchase Tax
6. Octroi and Local Body Taxes
7. State Cesses and Surcharges related to the supply of goods and services

Taxes Not Subsumed Under GST

Central Taxes:

1. Basic Customs Duty (BCD) on imports
2. Excise Duty on petroleum products, alcohol for human consumption, and tobacco

State Taxes:

1. Stamp Duty on property and legal documents
2. Property Tax levied by local municipalities
3. Electricity Duty
4. Excise Duty on Alcohol for human consumption

Taxes Subsumed Under GST Example?

Here are some examples of taxes subsumed under GST.

1. Central Excise Duty:

Before GST: The manufacturer had to pay Central Excise Duty on the manufacture of the goods.

After GST: This tax has been replaced by GST, except for certain items like petroleum products and tobacco.

2. Service Tax:

Before GST, Service providers like hotels, restaurants, and consultancy firms had to reclaim service tax on their services.

After GST: Service tax is now present in it, and GST applies uniformly on goods and services.

3. Value Added Tax (VAT):

Before GST: States used to levy VAT to sell goods within the state.

After GST: VAT has been subsumed, and now GST will be levied at a uniform rate across India on the same transaction.

4. Entertainment Tax:

Before GST, State governments used to levy entertainment tax on activities like movie tickets and amusement parks.

After GST: It has been subsumed into GST, leading to a uniform tax rate on entertainment services.

Number of Taxes Subsumed Under GST?

In India, 17 indirect taxes were subsumed under the Goods and Services Tax (GST), simplifying the tax structure. These include 8 central taxes, namely central excise duty, service tax, additional excise duty, compensation duty (CVD) and central sales tax (CST), and 9 state taxes, namely value-added tax (VAT), luxury tax, entertainment tax (excluding taxes levied by local bodies), acceptance tax, octroi and purchase tax. By merging these taxes into GST, India has replaced multiple layers of taxation with a single integrated system, simplifying tax treatment and reducing the cascading effects of taxes.

Taxes Not Subsumed Under GST UPSC?

For the UPSC exam, it is important to focus on the major taxes that do not come under GST, which are levied separately by the central and state governments:

Central Taxes Not Subsumed:

1. Basic Customs Duty (BCD): Levied on imports to protect domestic industries.

2. Excise duty on petroleum products: Applicable on petroleum products like petrol, diesel, aviation turbine fuel etc.

3. Excise Duty on Tobacco Products

State Taxes Not Subsumed:

1. Stamp Duty: Levied on property transactions and legal documents.

2. Property Tax: Levied on real estate by local municipalities.

3. Electricity Duty: Applicable on electricity consumption and sale.

4. Excise Duty on Alcohol for Human Consumption: Remains with state governments, as alcohol is outside the GST purview.

Conclusion

Implementing the Goods and Services Tax (GST) in India is necessary to transform the country’s indirect tax landscape. By subsuming various central and state taxes, GST has streamlined the taxation process and created a harmonized system that reduces complexity and enhances transparency. Taxes such as central product duty (except on petroleum products), service tax, value-added tax (VAT) and luxury tax have been subsumed into GST, providing a more efficient and transparent tax structure. This subsuming aims to eliminate tax implications, promote inter-state trade and improve overall economic efficiency. However, certain taxes, including basic customs duty, stamp duty, property tax and excise duty on petroleum products, remain outside the GST framework and continue to be levied separately due to their specific nature and revenue considerations. GST is a major step towards modernizing India’s tax system and promoting a more integrated and equitable economic environment.

FAQ’s