VAT and its implementation in India

Value added tax is a consumption tax that is given on a product when some value is added at the production centre and at final sale. In other words, it is tax on the added value on goods as they move through the supply chain to the final consumer. The value added tax is assessed and collected at the each stage of the supply chain. All firms which have more than 5 lac of turnover in goods and services are liable to pay the value added tax. 

The biggest thing about the value added tax is that it is used on the consumption pattern of the individual rather than the income of the individual. More than 160 countries around the world use value added tax. The supporters of value added tax claim that it increases the income of the states government. The critics say that it puts additional burden on the economically lower sections of the society.

Features of value added tax in India –

Ø  Goods and services in the same category are taxed at rate. The television of one brand will have same tax as television from other brands.

Ø  Since tax is levied at the each stage of production, it makes process transparent and easier.

Ø  Value added tax reduces the chances of tax avoidance and encourages the sale of goods and services at the micro level.

Ø  The implementation of the values added tax is VAT Consultants in Delhi NCR different in different states; its collection processed is also different. The time lines, and return filling of the tax is different from state to state.

But still there are four subheads into which value added tax can be divided.

Nil values added rate -Many states do not levy any values added tax on the basic goods and services. These products are sold by unorganized sectors. The products range from salt, to khadi to condom.

One percentage VAT is levied on the items which are very expensive. This is done to ensure that the cost of the item does not increase much. Such items are gold, silver, precious stones etc.

4 -5 percentage of VAT is taken on large number of items, such as oil, coffee, medicines etc by all states.

General VAT rate is Auditing services in Delhi NCR levied on the all items which do not find any mention in the above mentioned categories. Some goods like liquor or cigarette are put under heavy tax rates of 12 – 15 percentages. So the general category goods are those goods, which are levied at different rates from 12 to 15 percents in different states.