Value added tax(V.A.T.

PRESENTED BY:
HARSH JAIN, PGDM(FINANCE)
ROLL-5130
 WHAT IS V.A.T.?
 Majority of the states have already implemented
vat from 1.4.2005.

 Value added tax is a multi point sales tax with set

off for tax paid on purchases.

 A tax on the value addition on the product.

 Burden of tax is ultimately borne by the consumer.

 NEED FOR V.A.T.

 Encourage people to pay taxes.

 Avoid double taxation (cascading effect).

 Bringing uniformity in taxes(state/central).

 Avoiding additional taxes surcharge turnover

taxes.
 SALES TAX

 Levied on the total value of the goods.

 Increases tax burden on the final consumer.

 It is payable if there is processing.

 Registered users won’t pay sales tax again.

DIFFERENCE BETWEEN SALES TAX AND VAT

Central sales tax: VAT:

 Paid on total amount.
 Paid on value addition.
 Bourne be single dealer.
 Shared by all parties
 Double taxation possible.
 No cascading effect
 More burden on

consumer  Less burden on retailer

 High tax evasion possible 

Limited or no tax evasion
 Under central govt.
 Under state govt.
 Inter state tax.
 Intra state tax.
 BENEFITS OF VAT

 Reduction in tax evasion.

 Spreading of tax burden to all parties.
 Helps in boosting trade in particular state.
 Simplicity and transparency.
 Easy cross checking by government.
BENEFITS TO VARIOUS PARTIES
 Manufacturer:
 Will be for the tax paid on their purchases tax on tax and
surcharge etc.
 Distributor/retailer:
 Will have to pay tax on their instead of resale tax VAT
would of them.
 Consumer:
 Bears the final burden, would reduce and lower the price
and consumer would benefit.
 Government:
 And in tax revenue.
 VAT EVASION

 Evading of vat is difficult than cst.

 Overvaluing of purchases.

 Full cash transactions.

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