This section allows deduction from gross total income for contributions made to pension schemes of the Central Government. However, to avail the benefits under this section, there are certain conditions that one must satisfy.
In India, the three government bodies collected direct and indirect taxes until 1 July 2017 when the Goods and Services Act (GST) was implemented. GST incorporates many of the indirect taxes levied by states and the central government.
Some of the taxes GST replaced include:
- Sales Tax
- Central Excise Duty
- Entertainment Tax
- Service Tax
- Purchase Tax
It is a multi-stage destination-based tax. Multi-stage because it is levied on each stage of the supply chain right from purchase of raw material to the sale of the finished product to the end consumer whenever there is value addition and each transfer of ownership.
Destination-based because the final purchase is the place whose government can collect GST. If a fridge is manufactured in Delhi but sold in Mumbai, the Maharashtra government collects GST.
A major benefit is the simplification of taxation in India for government bodies.
GST has three components:
- CGST-Stands for Central Goods and Services Act. The central government collects this tax on an intrastate supply of goods or services.
- SGST:Stands for State Goods and Services Tax. The state government collects this tax on an intrastate supply of goods or services.
- IGST:Stands for Integrated Goods and Services Tax. The central government collects this for inter-state sale of goods or services.