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India before after vat


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India before after vat

  1. 1. INDIA BEFORE AND AFTER VAT Garima Kalpesh Rathod Prasasthi Tandon Pooja Kumari Sachin Katudia Sushant Verma
  2. 2. contents Definition of TAX.  Types.  India Before VAT.  India After VAT.  Pros Cons.  Exemptions.  Conclusion. 
  3. 3. Definition of TAX.  A fee charged by a government on a product, income, activity.
  4. 4. Types.  Direct Taxes. Income Tax  Indirect Taxes. Sales Tax Excise Duty VAT(Modvat, Cenvat)
  5. 5. India Before VAT. Modvat introduced in 1986. (Modified)  It was introduced to give some relief to the final manufacturers of goods on Excise Duties borne by their suppliers.  Cenvat introduced in 2000.  Simplified Tax System.  Removes Cascading effect of TAX.  Additional types of goods introduced.  (Central)
  6. 6. India After VAT. 1st April 2005.  Similar to sales tax.  Tax on estimated market value at stages of manufacturing, distribution and passing to customer.  Helps in development of domestic market through removal of trade barriers and simplification of indirect access. 
  7. 7. Pros Removes the defects of TAX credit system and avoids the cascading effect. Exports can be freed from domestic taxes. Neutrality with minimum distortion in tax structure as there are few variations in tax rates and exemption from tax rates are very few.
  8. 8. Cons  VAT is regressive.  VAT is too difficult to operate from the position of both the administration and Business.  VAT is inflationary.  VAT favors Capital intensive firm.
  9. 9. Exemptions  Liquor, Lottery Tickets, Petrol, Diesel, Aviation fuel and other motor spirits since their prices are not fully market determined.
  10. 10. Conclusion Benefit of VAT cannot be fully enjoyed unless Sales TAX payment is stopped being levied.  No Uniformity in the rates of VAT over products.  Possibility of TAX evasion. 
  11. 11. Your Opinion Do you think VAT increases Prices now?  Will Uniformity in rates of VAT over different products benefit? 