Value Added Tax in India :: VAT in India, India VAT, VAT Expert India

Consumption Type : Value Added Tax (VAT) India

In this kind of VAT, taxable income is calculated by deducting the purchases of raw materials and capital items from the Sales.

Consumption Type VAT is popular and is adopted by most of the countries in the world because of the following advantages:

1. It makes no distinction between capital intensive and labour intensive activities.
2. Tax avoidance by classifying capital item as revenue items is avoided.
3. Lesser disputes oriented as no distinction is made in Capital goods and Revenue goods.
4. Easy to administer.
5. It is in harmony with Destination principle (discussed later in the chapter).