VAT basically means the tax likely to be levied on the value added by an organization, at each stage of its rendering services or producing goods. It is a simple transparent tax collected on sale, transfer of goods or services; and has the unflinching capacity to augment the economic development of a society through better tax mobilization. VAT will help common people, traders, industrialists and also the government. It is indeed a move towards more efficiency, equal competition, and fairness in the taxation system.
In
trying to cope with today's business environment, firms face
numerous unprecedented challenges. They are expected to continually
and simultaneously excel in managing cost, quality, innovation,
flexibility, deliver and performance. They are impelled to
re-examine critically their existing structure, functions,
and processes towards redesigning around customer needs and
expectations. They need to be able to keep pace with continuous
change on the one hand and meet its challenges effectively
on the other.
In
the recent past, the Government of India has introduced various
measures for reviving the economy and reforming taxation.
As part of this exercise, the Union Government has initiated
rationalization and the reforms in the state level taxes by
introducing uniform Sales Tax floor rates and switch over
to Value Added Tax (VAT) from the existing levy of Sales Tax.
Sales Tax was a single point levy on the first sale by the
manufacturer / importer within the state. Many, who are dealers
effecting second and subsequent sales, do not pay tax. Thus,
it has led to narrow tax base with high rates and scope for
evasion. The present system has numerous tax rates with differing
commodity classifications between states and unhealthy competition
and diversion of trade between the states induced by various
tax incentives and concessions. |
