Value Added Tax (VAT) is a tax levied on the value added at each stage of production and distribution. It was first introduced in France in 1954. VAT is calculated by taxing the sale price and allowing credits for taxes paid on inputs. This avoids double taxation. The document outlines the key aspects of VAT including how it operates, goods covered, variants, merits, demerits, input tax credit, schemes for small dealers, incentives, and relevant timelines. It concludes by noting the upcoming transition to Goods and Services Tax (GST) in India.