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An Accountant Explains The Excise Tax

05th February 2011
By Phil Salazar in Taxes
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Both have suggested for consumption type GST, that is, there should be no distinction between raw materials and capital goods in allowing input tax credit. The tax base should comprehensively extend over all goods and services upto final consumption point.

There had to be a time in history when people didn't pay out their taxes but slightly with the formation of tribes into villages and formation of something similar to government in these villages led to taxing people and slowly citizen started to pay their taxes to get basic amenities like roads, security and various other services. Governments taxed their citizen for a variety of reasons like the Roman Emperors did not tax their citizen but instead taxed conquered peoples in lieu of harmony. It can be said that tax system evolved quite a bit since Roman Empire and now we have different categories of taxes for variety of services for example
-Income tax - which is a progressive tax, means that the tax rate increases as the amount subject to taxation increases.

-Real estate taxes - are imposed by local government for providing basic facilities like sewage, hospitals, schools, roads and hospitals.
-Sales taxes - is mainly imposed at state level of the government which goes towards the State's budget and will vary from state to state

Credit of service tax is availed under Cenvat Credit Rules, 2004. Thus we have to examine these Rules to ascertain whether credit of service tax paid on outward freight is available to the manufacturer or not. Rule 3(ix) of the Cenvat Credit Rules,

States permit the creation of special assessment districts (typically for provision of water or removal of sewage, or for parks, public transit or schools) whose boundaries may be independent of other boundaries and whose income may be from one or more of service assessments, property taxes, parcel taxes, a portion of road or bridge tolls, or an additional increment upon sales taxes in addition to the non-tax fees for services provided (such as metered water). State government is financed mainly by a mix of sales and/or income taxes and to a lesser extent by corporate registration fees, certain excise taxes, and automobile license fees.


The cost of the Civil War prompted Congress to restore the excise taxes and to impose a tax on personal income. The tax rate at that time was 3% and proved inadequate for the war needs, so Congress passed new excise taxes on a broader range of items and began taxing licenses, professions, and trades. Following the Civil War the need for revenue declined and Congress abolished the income tax in 1872. For the next 30 years nearly all revenue was collected from the various excise taxes.

The Government has been consistently raising the cost of vehicles with high CO2 emissions. The top vehicle excise band (VED) has an annual rate of 425 for road fund licence renewals. If you also include the cost of "first year rates", also known as showroom tax at 950 you are adding a considerable amount to the contract. Over a three year contract you will be adding 1800 to the cost of the contract, on a typical 3+35 agreement this will be in the region of 50 a month. First year rates were introduced from April 2010 in a government drive for CO2 emission awareness.

Instead, private e-file companies exist independently, and you can log into their sites and pay a small fee to get up to date on your responsibilities as a taxpayer. Not all Excise tax papers can be filed on the internet'the only ones with this available option are the Form 2290, the Form 720, and the Form 8849. All others must be filed in the traditional manner.

Both options have their benefits. By doing a double closing, this isolates your tenant buyers from the owners, and the owners never know how much is actually being paid for the property. This is helpful because sometimes there are hard feelings at the end if the owner feels you are making too much on the deal. Of course like I mentioned before, there is that pesky double excise tax as the downfall to this.

There is some good news, the deduction is available whether or not you itemize deductions on your tax return. If you are unable to itemize, then you can add this additional amount to the standard deduction on 2009 tax return. In addition, to use this special deduction, your must file either Form 1040 or Form 1040A. It is unavailable to individuals who use Form 1040EZ.
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What is Tax Penalty Abatement. Visit http://www.scltaxlaw.com/. Can a Tax Attorney Really Help When You Are In Trouble With The IRS. Visit http://www.scltaxlaw.com/.
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