abhishreshthaa
Abhijeet S
Effects of the VAT System
This design of the State-level VAT has been carefully worked out by the Empowered Committee after repeated interactions with the States and others concerned and striking a balance between the needed convergence and federal flexibility as well as ground-level reality.
If now all the components of the VAT design are taken together, then it will be seen that the total effect of this VAT system will be to rationalize the tax burden and bring down, in general, the price level.
This will also stop unhealthy tax-rate “war” and trade diversion among the States, which had adversely affected interests of all the States in the past.
Moreover, this VAT design will also significantly bring in simplicity and transparency in the tax structure, thereby improving tax-compliance and eventually also the revenue growth, as mentioned in the beginning.
This design of the State-level VAT has been carefully worked out by the Empowered Committee after repeated interactions with the States and others concerned and striking a balance between the needed convergence and federal flexibility as well as ground-level reality.
If now all the components of the VAT design are taken together, then it will be seen that the total effect of this VAT system will be to rationalize the tax burden and bring down, in general, the price level.
This will also stop unhealthy tax-rate “war” and trade diversion among the States, which had adversely affected interests of all the States in the past.
Moreover, this VAT design will also significantly bring in simplicity and transparency in the tax structure, thereby improving tax-compliance and eventually also the revenue growth, as mentioned in the beginning.