Net indirect taxes
Also called: NIT · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Net indirect taxes (NIT) are all indirect taxes minus all subsidies. Indirect taxes are taxes on goods, services and production, as opposed to taxes on income. NIT covers both product taxes (GST, excise, customs) and production taxes (land revenue, stamp duty, registration fees), each counted net of its subsidies. NIT is the gap between market-price and factor-cost measures.
Market price = factor cost + NIT, so factor-cost aggregate = market-price aggregate − NIT
Example
Suppose national income (NNP at factor cost) is ₹850 crore and NIT is ₹150 crore. Then NNP at market prices = 850 + 150 = ₹1,000 crore. For a single good: petrol is heavily taxed, so its market price is well above its factor cost. Cooking gas is subsidised, so its market price is below its factor cost.
Don't confuse with
- Net product taxes: these are only one part of NIT. Taking only net product taxes away from GDP gives GVA at basic prices, not GDP at factor cost.
Related concepts
- Factor cost
- Basic prices
- Market prices
- Production taxes
- Product taxes
- GDP at factor cost
- GVA at factor cost
- GVA at market prices