 Taxation - Value Added Tax (VAT)
Meaning
of VAT | Necessity
of VAT in India | Advantages
of VAT | Disadvantages
of VAT | Items
Covered in Indian VAT | The
Impact of VAT in India |
States Welcoming VAT in
India | FAQs for VAT in
India | Quotes &
Unquotes for VAT in India
The Impact of VAT in India VAT is most
certainly a more transparent and accurate system of taxation. The
existing sales tax structure allows for double taxation thereby
cascading the tax burden. For example, before a commodity is produced,
inputs are first taxed, the produced commodity is then taxed and finally
at the time of sale, the entire commodity is taxed once again. By taxing
the commodity multiple times, it has in effect increased the cost of the
goods and therefore the price the end consumer will pay for it. The transaction chain under VAT assuming that a profit of Rs 10 is retained during each sale.
Tax implication under Value Added Tax Act
*Note: CST Paid cannot be claimed for credit. CST is assumed to remain the same though it could to be reduced to 2% when VAT is introduced and eventually phased out. VAT can be considered as a multi-point sales tax with set-off for tax paid on purchases (inputs) and capital goods. What this means is that dealers can actually deduct the amount of tax paid by him for purchase from the tax collected on sales, thereby paying just the balance amount to the Government.   About
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