VAT - What is that ?
Finally VAT is being implimented in 21 of 29 states and most of Union
territories of India from today (April 1 2005). BJP-ruled states such
as Rajasthan, Jharkhand, Gujarat, Chhattisgarh, Madhya Pradesh and
other states like Uttar Pradesh, Tamil Nadu, Meghalaya will not
implement VAT now. The Union Territories like Pondicherry, Daman &
Diu will also impliment VAT from today.
In Asia, a large number of countries from China to Sri Lanka have
introduced VAT. But VAT is implemented in India from only today the
April fools day and it is not an April Fool !
Value Added Tax or VAT as it is commonly referred to is a tax levied
on the difference between a commodity's price before taxes and its
cost of production. In other words it is a method of taxation whereby
the tax is levied on the value added at each stage of the
production/distribution chain.
VAT implemented in India essentially replaces, sales tax while other
taxes like octroi, excise duties, etc remain as they are. In foreign
countries, all the taxes are unified under VAT. In India VAT is
restricted to goods, whereas in foreign countries, it is applicable
for both goods and services. In future, Indian too can adopt similar
steps to make the VAT structure more effective.
VAT has the provision to tax 0% on Exempt goods, 1% on Gold, bullion,
precious commodities, 4% on items of common or daily use, 20% on
demerit, luxury goods and 10-12.5% on the rest of the commodities
called the Revenue Neutral Rates.
It was Chanakya (c.350 - c.275 BC) who first wrote that a government
should tax its people like a shepherd shears his flock or a bee gets
nectar from a flower. But apparently that fiscal wisdom died with
him. The 'Arthashastra' of Chanakya is a classic of statecraft and is
reverently studied even in Europe and elsewhere. Chankya is the
personification of statesmanship, political craft, spirit of
adventure and unyielding perseverance.
India has been taxing its people like the French get perfume from
flowers - by the time they are through, nothing much of the flower
remains. By the time the state is through with the taxpayer, nothing
much was left of him.
This kind of taxation system has given rise to the black economy
which is half as big as the white money. In the same manner revenue
collection mechanism of the state was also totally corrupted.
Though VAT is been implimented in 21, the rates of taxation,
definition of terms, and other matters will not be uniform across all
states. Although in an ideal VAT regime, the rates are uniform, it is
unlikely that it will be so in the Indian scenario. However, it is
possible that items under the exempted category and 4% category may
be broadly similar across all states. Each state will have its own
VAT Act, Rules, Schedules, and Forms. Infact, one can notice that
there are differences even in definitions among various Draft Acts.
VAT will cover 550 goods but liquor, lottery tickets, petrol, diesel,
aviation turbine fuel and other motor fuels are not covered under
VAT. The largest number of items (about 270) would be subject to the
merit rate of 4 per cent. It is a general tax applied at each point
of exchange of goods or services on increases in their value. A
credit is given for input tax as well as tax paid on previous
purchases. A cursory reading of VAT rates in various states revealed
that the number of items on which tax incidence would cut would be
smaller than what the committee and the finance ministry had claimed.
This is because, for fear of revenue loss, states began to notify
larger number of items under the highest VAT rate of 12.5 per cent.
Under VAT, the existing system of inspection will be replaced with a
system of self-assessment.
A day before introduction of Value Added Tax, the chairman of the
empowered committee on VAT, Asim Dasgupta on Thursday (July 31) said
that the new taxation regime would actually lower the prices of
commodities of mass consumption. Tax on most commodities like soap,
paste, tea and others had been lowered from the existing rate of
sales tax, he said. There was no reason to fear that VAT would raise
prices of commodities, he said, adding that certain commodities like
vegetables, salt and fish had been kept outside its purview. Dasgupta
said that although tax rates would be lower under the VAT regime, the
government would be able to realise more revenue as evasion would be
totally eliminated since traders would have to produce cash memo of
purchases to get input tax credit. He said that central sales tax
(CST) would be gradually phased away once the taxation information
exchange system was put in place.
But analysts say that traders accustomed to an informal economy are
also wary because the VAT makes income more visible to tax
collectors.
Some useful links on VAT:
Download white paper on Vat from:
http://www.laws4india.com/indiantaxlaws/st/r2005011704.pdf
Frequently Asked Questions with answers on VAT:
http://www.laws4india.com/acts/salestax/vatfaq.asp
Draft of Delhi Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/delhi/vat/chapter-1.htm
Karnataka Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/karnataka/VATAct.doc
Karnataka Value Added Tax Rules 2003:
http://www.laws4india.com/acts/salestax/karnataka/VATRules.html
Goa Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/goa/VATGoa.doc
Maharashtra Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/maharashtra/proposed/vatindex.htm
West Bengol Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/WestBengal/VATWBengal.html
West Bengol Value Added Tax rules 2003
http://www.laws4india.com/acts/salestax/WestBengal/VATRulesBengal.html
Article: Mischievous provisions of MVAST Act 2002 By Nikita R. Badheka
http://www.laws4india.com/acts/salestax/article/nrbadheka1.asp
Gist of VAT (Maharashtra) By Nikita R. Badheka
http://www.laws4india.com/acts/salestax/article/nrbadheka2.asp
Union Budgets 2005 : Finance Bill - Central Sales Tax
http://www.laws4india.com/indiantaxlaws/budget2005/bill6.pdf
Central Sales Tax - an analysis by Laws4India.com
http://www.laws4india.com/indiantaxlaws/budget2005/other.asp
By Ancy Paladka
"salusoz" <[EMAIL PROTECTED]>
Finally VAT is being implimented in 21 of 29 states and most of Union
territories of India from today (April 1 2005). BJP-ruled states such
as Rajasthan, Jharkhand, Gujarat, Chhattisgarh, Madhya Pradesh and
other states like Uttar Pradesh, Tamil Nadu, Meghalaya will not
implement VAT now. The Union Territories like Pondicherry, Daman &
Diu will also impliment VAT from today.
In Asia, a large number of countries from China to Sri Lanka have
introduced VAT. But VAT is implemented in India from only today the
April fools day and it is not an April Fool !
Value Added Tax or VAT as it is commonly referred to is a tax levied
on the difference between a commodity's price before taxes and its
cost of production. In other words it is a method of taxation whereby
the tax is levied on the value added at each stage of the
production/distribution chain.
VAT implemented in India essentially replaces, sales tax while other
taxes like octroi, excise duties, etc remain as they are. In foreign
countries, all the taxes are unified under VAT. In India VAT is
restricted to goods, whereas in foreign countries, it is applicable
for both goods and services. In future, Indian too can adopt similar
steps to make the VAT structure more effective.
VAT has the provision to tax 0% on Exempt goods, 1% on Gold, bullion,
precious commodities, 4% on items of common or daily use, 20% on
demerit, luxury goods and 10-12.5% on the rest of the commodities
called the Revenue Neutral Rates.
It was Chanakya (c.350 - c.275 BC) who first wrote that a government
should tax its people like a shepherd shears his flock or a bee gets
nectar from a flower. But apparently that fiscal wisdom died with
him. The 'Arthashastra' of Chanakya is a classic of statecraft and is
reverently studied even in Europe and elsewhere. Chankya is the
personification of statesmanship, political craft, spirit of
adventure and unyielding perseverance.
India has been taxing its people like the French get perfume from
flowers - by the time they are through, nothing much of the flower
remains. By the time the state is through with the taxpayer, nothing
much was left of him.
This kind of taxation system has given rise to the black economy
which is half as big as the white money. In the same manner revenue
collection mechanism of the state was also totally corrupted.
Though VAT is been implimented in 21, the rates of taxation,
definition of terms, and other matters will not be uniform across all
states. Although in an ideal VAT regime, the rates are uniform, it is
unlikely that it will be so in the Indian scenario. However, it is
possible that items under the exempted category and 4% category may
be broadly similar across all states. Each state will have its own
VAT Act, Rules, Schedules, and Forms. Infact, one can notice that
there are differences even in definitions among various Draft Acts.
VAT will cover 550 goods but liquor, lottery tickets, petrol, diesel,
aviation turbine fuel and other motor fuels are not covered under
VAT. The largest number of items (about 270) would be subject to the
merit rate of 4 per cent. It is a general tax applied at each point
of exchange of goods or services on increases in their value. A
credit is given for input tax as well as tax paid on previous
purchases. A cursory reading of VAT rates in various states revealed
that the number of items on which tax incidence would cut would be
smaller than what the committee and the finance ministry had claimed.
This is because, for fear of revenue loss, states began to notify
larger number of items under the highest VAT rate of 12.5 per cent.
Under VAT, the existing system of inspection will be replaced with a
system of self-assessment.
A day before introduction of Value Added Tax, the chairman of the
empowered committee on VAT, Asim Dasgupta on Thursday (July 31) said
that the new taxation regime would actually lower the prices of
commodities of mass consumption. Tax on most commodities like soap,
paste, tea and others had been lowered from the existing rate of
sales tax, he said. There was no reason to fear that VAT would raise
prices of commodities, he said, adding that certain commodities like
vegetables, salt and fish had been kept outside its purview. Dasgupta
said that although tax rates would be lower under the VAT regime, the
government would be able to realise more revenue as evasion would be
totally eliminated since traders would have to produce cash memo of
purchases to get input tax credit. He said that central sales tax
(CST) would be gradually phased away once the taxation information
exchange system was put in place.
But analysts say that traders accustomed to an informal economy are
also wary because the VAT makes income more visible to tax
collectors.
Some useful links on VAT:
Download white paper on Vat from:
http://www.laws4india.com/indiantaxlaws/st/r2005011704.pdf
Frequently Asked Questions with answers on VAT:
http://www.laws4india.com/acts/salestax/vatfaq.asp
Draft of Delhi Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/delhi/vat/chapter-1.htm
Karnataka Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/karnataka/VATAct.doc
Karnataka Value Added Tax Rules 2003:
http://www.laws4india.com/acts/salestax/karnataka/VATRules.html
Goa Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/goa/VATGoa.doc
Maharashtra Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/maharashtra/proposed/vatindex.htm
West Bengol Value Added Tax 2002:
http://www.laws4india.com/acts/salestax/WestBengal/VATWBengal.html
West Bengol Value Added Tax rules 2003
http://www.laws4india.com/acts/salestax/WestBengal/VATRulesBengal.html
Article: Mischievous provisions of MVAST Act 2002 By Nikita R. Badheka
http://www.laws4india.com/acts/salestax/article/nrbadheka1.asp
Gist of VAT (Maharashtra) By Nikita R. Badheka
http://www.laws4india.com/acts/salestax/article/nrbadheka2.asp
Union Budgets 2005 : Finance Bill - Central Sales Tax
http://www.laws4india.com/indiantaxlaws/budget2005/bill6.pdf
Central Sales Tax - an analysis by Laws4India.com
http://www.laws4india.com/indiantaxlaws/budget2005/other.asp
By Ancy Paladka
"salusoz" <[EMAIL PROTECTED]>
- Forwarded by http://www.goa-world.com/
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