Explanation : Value Added Tax (VAT) is a tax applied on the value that is added to goods and services at each stage in the production and distribution chain. It forms part of the final price the consumer pays for the goods or services. On the domestic market, VAT is collected in stages, by registered manufacturers, Wholesalers, retailers and services providers. It is only individuals and firms registered with the VAT Service who can charge VAT on their supplies. However, the collection of the tax at more than one stage does not lead to duplication of the tax. VAT is designed to ensure that most forms of consumer spending are taxed evenly and fairly. VAT is not a tax on the seller for it is the buyer who pays the tax. VAT will not be an additional tax, but a replacement for some existing indirect taxes. It will be a broad-based, comprehensive and Simplified system of taxation on transactions. VAT will improve, simplify and modernize tax system.
Presently GST has replaced many indirect taxes in India including VAT. The goods and service tax act was passed in the parliament on 29th March 2017. The act came into effect on 1st July 2017 which is a Comprehensive, multi stage destination based tax that is one every value addition. ....Read more