Question

Miss Catherine ordered raw cotton from New Zealand to manufacture cotton shirts in India and sell them in India and abroad.

Identify the indirect taxes that Miss Catherine will have to pay.

• A. Excise duty on cotton imported, customs duty on shirts manufactured, and sales tax on shirts sold in India
• B. Excise duty on shirts manufactured, customs duty on cotton imported, and sales tax on shirts sold in India
• C. Excise duty on shirts sold in India, customs duty on shirts manufactured, and sales tax on shirts imported
• D. Excise duty on shirts imported, customs duty on shirts sold in India, and sales tax on shirts manufactured

Answer 1

The correct option is B Excise duty on shirts manufactured, customs duty on cotton imported, and sales tax on shirts sold in India

When we buy certain goods and services, as customers, we pay sales tax on them. Excise duty is a tax levied on goods manufactured within India, while customs duty is a tax levied on goods imported from abroad. A service tax is charged on services availed like mobile service, restaurant service, etc.