Direct and Indirect Tax Notes
Subject Overview
Direct and Indirect Tax gives working knowledge of India's tax laws — the Income Tax Act (residential status, computation of income under all five heads, deductions, assessment of individuals and HUFs, e-filing), and GST and Customs law (the CGST/
Subject at a glance
4
Units
35
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Historical background and Finance Bill overview
- important definitions under the Income Tax Act 1961
- residential status and scope of total income
- tax rates and exempted incomes
- computation of income from salary/house property/business or profession/capital gains/other sources
Resident and ordinarily resident
Taxed on global income
Resident but not ordinarily resident
Taxed on Indian income, plus foreign income from an Indian business
Non-resident
Taxed only on Indian income
Study guide
This unit covers income tax fundamentals: the background and Finance Bill overview, key definitions, residential status, scope of total income, tax rates and exempt incomes and the computation of income under each head. The syllabus follows the Income Tax Act, 1961; the Income-tax Act, 2025 replaces it from 1 April 2026 with a single tax year concept, so confirm with your faculty which law applies to your exam.
- Aggregation of income
- set-off and carry-forward of losses
- deductions from gross total income
- rebate and relief
- assessment of individuals and HUFs
- PAN
- TDS/TCS
- advance tax and self-assessment tax
- return filing and e-filing
- 1
Income under five heads
- 2
Clubbing and set-off of losses
- 3
Gross total income
- 4
Less deductions
Chapter VI-A, e.g. 80C, 80D (old regime)
- 5
Total income
- 6
Tax on total income
Less rebate and relief
- 7
Less TDS, TCS and advance tax
Balance payable or refund
Study guide
You study aggregation of income, set-off and carry-forward of losses, deductions, rebate and relief, assessment of individuals and HUFs, PAN, TDS and TCS, advance tax, self-assessment and e-filing. Practise a full return computation for an individual.
- Pre-GST tax structure and deficiencies
- administration of indirect taxation
- GST constitutional framework
- the CGST/IGST/SGST/UTGST model
- taxable event and concept of supply
- levy and collection
- composition scheme and reverse charge
- exemptions
- input tax credit and GST liability computation
- procedural compliance
Intra-state supply
CGST + SGST (or UTGST)
Inter-state supply
IGST
Net GST payable
Output tax − eligible input tax credit
Reverse charge
Recipient pays instead of supplier
Composition scheme
Small taxpayers pay a flat rate on turnover
Study guide
You study the pre-GST structure and its deficiencies, administration of indirect tax, the constitutional framework of GST, the CGST, IGST, SGST and UTGST model, supply, levy, composition scheme, reverse charge, exemptions, input tax credit and compliance. Practise a net GST liability computation.
- Overview of customs law
- levy and collection of customs duties
- types of duties
- classification and valuation of goods
- exemptions
- customs administration
- import/export procedures
- transportation and warehousing
- duty drawback
- demand/recovery
- confiscation and refund
Basic customs duty
Main duty on imports
IGST on imports
In place of countervailing duty
Safeguard duty
Against import surges
Anti-dumping duty
Against goods sold below fair value
Export duty
On a few specified exports
Study guide
You study customs law: levy and collection, types of duty, classification and valuation, exemptions, administration, import and export procedures, warehousing, duty drawback and recovery, confiscation and refund. Learn how customs value is determined.
Why Direct and Indirect Tax Matters
Taxation is a high-demand specialisation, with careers in accounting, taxation, GST practice and consulting, and it is a significant part of CA, CMA and UGC-NET Commerce.
How to Prepare for Direct and Indirect Tax
- Practise computations for every head of income and for GST liability.
- Check the latest Finance Act changes before every exam.
- Learn due dates and compliance steps in a calendar.
Direct and Indirect Tax: Frequently Asked Questions
What is the difference between direct and indirect tax?
Direct tax, such as income tax, is paid by the taxpayer on their own income, while indirect tax, such as GST and customs duty, is collected on goods and services and passed on to the consumer.
What is customs duty?
Customs duty is a tax levied on goods imported into or exported from India.