Details
Mini Case Code : CLIBE057
Publication date : 2005
Subject : International Business Environment
Length : 04 Pages
Price : Rs. 100
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Key words:
Value Added Tax (VAT), taxation in India, central sales tax, state taxes, pre-VAT, commodities, tax evasion, Empowered Committee of State Finance
Note
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
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Abstract
The caselet discusses about the apprehensions of different sections of the society regarding implementation of VAT in India. It explains the scenario in India after the implementation of VAT. It also explains how VAT system of taxation is different from the earlier system of taxation in India. It specifically emphasizes on the efficacy of VAT in India.
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Issues:
» Apprehensions regarding implementation of VAT in India.
» Can VAT replace central sales tax in India.
» Benefits of VAT to various sections of the society.
Introduction
Value Added Tax (VAT) came into effect in India on April 1, 2005. The first few days of its implementation saw protests from different sections of society.
Even after two months of implementation of VAT, traders are worried and confused
over whether they have to pay more tax; consumers are afraid that they will have
to pay higher prices for commodities; and companies are unsure of whether they
stand to gain or lose.
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Certain states in India which have implemented VAT and those which are yet to
take it up have a common concern – whether there will be an increase in prices
of products after implementation of the new tax system. There are thus a lot of
misconceptions and misinterpretations regarding VAT.
VAT is actually a tax structure intended to replace central sales tax and other
state taxes. Under VAT, which is a method of indirect taxation, a tax is levied
on the value added at each stage of a product being produced and sold and not on
the gross sales price.....
Questions for Discussion:::
1. Suggest ways to effectively implement the VAT system in India.
2. Do you think implementation of the VAT system would result in an increase in prices of commodities?