Report No. 61

Chapter 9

Section 8 and The Rate of Tax

9.1. Introductory.-

We now come to a question pertaining to the rate of tax. The rate of tax under section 8 is to be calculated according to a complicated scheme; and the rate differs according (1) as the sale is to the Government or a registered dealer, (2) or as the sale is to any other person. The rate also differs, in the first case (sale to Government or registered dealers) if the goods are meant (a) for re-sale, as distinguished from the case where (b) they are meant for use in manufacture. In the second case, (sale to a person other than Government or a registered dealer), the rate differs (i) as regard to sale of "declared goods," as distinguished (ii) from sale of other good; and, in both cases, there is a special concession in the case of goods which enjoy exemption under the State law, or goods, which, under the State law, are taxable at a rate lower than 3 per cent.

9.2. The tax structure is thus somewhat complicated. The scope for simplification is limited, so long as the present structure is maintained.