Single or multiple rates : Value Added Tax (VAT) India
Single or multiple rates : Value Added Tax (VAT) India
Some countries have gone in for adoption of single rate of value added tax, as it is administratively easy to handle.
Most of the countries including India have gone in for multiple rates as VAT taxes. Multiple rates give more flexibility in meeting the social and political ends. Low rates can be fixed for necessities and higher rate can be fixed for luxuries.
In the end, we conclude that VAT has following special features.
1. VAT is collected on each sale or resale.
2. No difference is made for sales to registered persons i.e. sale to both registered and unregistered persons are taxable.
3. Only registered persons are allowed to take input tax credit. Which means a final consumer of goods is not allowed to take credit of tax paid on earlier stages of sale.
4. VAT is levied only on Value added at each stage of transaction.