abhishreshthaa
Abhijeet S
Nature Of Value Added Tax.
In VAT system, the first seller will pay the first point tax and subsequent sellers will pay tax only on the value addition done by them – resulting into a total tax burden usually equal to the last point tax. The tax will be charged on sale and purchase of goods.
It would be payable on turnover of sales or purchase.
It would be charged at every point.
It would be charged at the specified rate for the relevant goods.
For Example:
If the first seller sells the commodity at Rs.100 to the Second Seller, and the second seller Sells the commodity at Rs.150 to the Third seller, and the Third seller finally sells the commodity to the consumer at Rs.200, then according to VAT the First seller will pay Tax on Rs.100 but the Second and the Third seller won’t pay tax on entire Rs.150 or Rs.200 instead they would pay on only the value added i.e. Rs.50.
Thus, VAT is charged and collected at each stage of the trading on the portion of the value added in the goods sold. The value addition is the difference (not just the profit) on the sale and purchase value of all taxable supplies.
VAT leads to avoidance of multiple taxation and lowering of taxes for manufacturers and traders. It lowers the price of final goods for the consumer.
VAT will be implemented from 1April 2005. VAT will replace sales tax and other local taxes. Introduction of VAT will lead to abolition of local taxes like turnover tax, surcharge, additional surcharge, and special additional taxes. All the States except Uttar Pradesh ready to implement VAT from April 1 2005.
More than 550 items will be covered under the new tax regime of which 46 natural and unprocessed local products will be exempted from VAT. About 270 items, including drugs and medicines, all agricultural industrial inputs and capital goods will attract 4 % VAT. Considering the difficulties faced by tea industry, tea will be taxed at 4% subject to review in 2006.
Precious metal like Gold will be taxed at 1%, Food grains are exempted for the first year. VAT will not be imposed on liquor, petrol, diesel, lottery tickets, because their pries are not fully market determined. They will continue to attract the present Sales tax.
STATE will get 100% compensation of revenue loss if any in the first year, while 75% of the loss will be compensated in the second year
In VAT system, the first seller will pay the first point tax and subsequent sellers will pay tax only on the value addition done by them – resulting into a total tax burden usually equal to the last point tax. The tax will be charged on sale and purchase of goods.
It would be payable on turnover of sales or purchase.
It would be charged at every point.
It would be charged at the specified rate for the relevant goods.
For Example:
If the first seller sells the commodity at Rs.100 to the Second Seller, and the second seller Sells the commodity at Rs.150 to the Third seller, and the Third seller finally sells the commodity to the consumer at Rs.200, then according to VAT the First seller will pay Tax on Rs.100 but the Second and the Third seller won’t pay tax on entire Rs.150 or Rs.200 instead they would pay on only the value added i.e. Rs.50.
Thus, VAT is charged and collected at each stage of the trading on the portion of the value added in the goods sold. The value addition is the difference (not just the profit) on the sale and purchase value of all taxable supplies.
VAT leads to avoidance of multiple taxation and lowering of taxes for manufacturers and traders. It lowers the price of final goods for the consumer.
VAT will be implemented from 1April 2005. VAT will replace sales tax and other local taxes. Introduction of VAT will lead to abolition of local taxes like turnover tax, surcharge, additional surcharge, and special additional taxes. All the States except Uttar Pradesh ready to implement VAT from April 1 2005.
More than 550 items will be covered under the new tax regime of which 46 natural and unprocessed local products will be exempted from VAT. About 270 items, including drugs and medicines, all agricultural industrial inputs and capital goods will attract 4 % VAT. Considering the difficulties faced by tea industry, tea will be taxed at 4% subject to review in 2006.
Precious metal like Gold will be taxed at 1%, Food grains are exempted for the first year. VAT will not be imposed on liquor, petrol, diesel, lottery tickets, because their pries are not fully market determined. They will continue to attract the present Sales tax.
STATE will get 100% compensation of revenue loss if any in the first year, while 75% of the loss will be compensated in the second year