Though the Income-tax Act does not define the term “indirect tax”, Clause 4 gives examples of the same as excise duty, service tax, sales tax, GST, and customs duty.
The levy of indirect taxes on various transactions may differ from State to State. Thus, it is recommended that the auditor should obtain from the assessee the list of indirect taxes applicable to him. Once the auditor obtains this management representation, he is required to obtain a copy of the registration certificate clearly mentioning the registration number under that relevant law. When the auditor is of the opinion that any indirect tax laws are applicable to the business or profession of the assessee, but he is not registered under the said law, he should report the same appropriately.