Why did vat rate on goods?

value added taxes (vat) india
vat indirect tax on consumption of goods, paid original producers upon change in goods or upon transfer of goods ultimate consumers. based on value of goods, added transferor. tax in relation difference of value added transferor , not profit.

on world, vat payable on goods , services form part of national gdp.

means every seller of goods , service providers charges tax after availing input tax credit. form of collecting sales tax under tax collected in each stage on value added of goods. in practice, dealer charges tax on full price of goods, sold consumer , @ every end of tax period reduces tax collected on sale , tax charged him dealers whom purchased goods , deposits such amount of tax in government treasury.

silent features of vat

a.rate of tax vat proposes impose 2 types of rate of tax mainly:
◦4% on declared goods or goods commonly used.
◦10-12% on goods called revenue neutral rates (rnr). there no fall in such remaining goods.
◦two special rates imposed-- 1% on silver or gold , 20% on liquor. tax on petrol, diesel or aviation turbine fuel proposed kept out vat system continued taxed, presently applicable cst act.
b.uniform rates in vat system, commodities exempted tax. taxable commodities listed in respective schedule rates. vat proposes keep these rates uniform in states goods sold or purchased across country suffer same tax rate. discretion has been given states when comes finalizing rnr along restrictions. rate must not less 10%. ensure doing there level playing fields avoid trade diversion in connection different states, particularly in neighbouring states
c.no concession new industries tax concessions new industries done away in new vat system. done creates discrepancy in investment decision. under new vat system, tax fair , equitable all.
d.adjustment of tax paid on goods purchased tax payable on goods of sale tax, paid on goods purchased within state, adjusted against tax, payable on sale, whether within state or in course of interstate. in case of export, tax, paid on purchase outside india, refunded. in case of branch transfer or consignment of sale outside state, no refund provided.
e.collection of tax seller/dealer @ each stage. seller/dealer collect tax on full price of goods sold , shows separately in sell invoice issued him
f.vat not cascading or additive though tax on goods sold collected @ each stage, not cascading or additive because net effect follows: - tax, paid on sale of goods, adjusted. levying tax on goods, sold in last state or @ retail stage.

advantages of vat
1.simplification under cst act, there 8 types of tax rates- 1%, 2%, 4%, 8%, 10%, 12%, 20% , 25%. however, under present vat system, there 2 types of taxes 4% on declared goods , 10-12% on rnr. eliminate disputes relate rates of tax , classification of goods usual cause of litigation. helps determine relevant stage of tax. necessary cst act stipulates tax levies @ first stage or last stage differ. consequently, question of stage of tax falls under becomes reason litigation. under vat system, tax levied @ each stage of goods of sale or purchase.
2.adjustment of tax paid on purchased goods under present system, tax paid on manufactured goods adjusted against tax payable on manufactured goods. such adjustment conditional such goods must either manufactured or sold. vat free such conditions.
3.further such adjustment of purchased goods depend on amount of tax payable. vat not have such restrictions. cst not have provisions on refund or carry on upon such goods except in case of export goods or goods, manufactured out of country or sale registered dealer. similarly, on interstate sale on tax-paid goods, no refund admissible.
4.transparency tax levied @ first stage on goods or sale or purchase not transparent. because amount of tax, goods have suffered, not known @ subsequent stage. in vat system, amo

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