A report on Value Added Tax Essay -- Economics

A compensate on evaluate Added TaxIntroduction cling to Added Tax originated in France in 1954 and is underimplementation in more than than hundred countries. Value Added Tax isperceived by many as means to levy neutrality and uniformity of appraiseburden and to provide incentives for increased productiveness andindustrialization. The spread of bath to the developed and the evolution countries alike certainly, incurs for an interesting study. pecuniary Times (London) too stressed the growing importance of VATwhen it sight in its centennial review The economic andtechnological changes of the second one-half of the century have made VATthe quintessential modern tax. It get out not be an exaggeration if onewere to say that the return of the VAT as an important and elasticsource of revenue over the last four decades is unpar alleled in thehistory of taxation.Despite the general proclamation of VAT, there have beendifficulties in implementing VAT in its dependable spirit li ke in the courtshipof Argentina, Brazil, Canada and India. VAT has been introduced inmore than 120 countries developed, developing and those economies,which are in transition. at that place have besides been attempts to introduceValue Added Tax in USA, which however has preferred to maintain theRetail Sales Tax system. Yet, those difficulties notwithstanding, it rear end be said that Value Added Tax system definitely has its advantagesand is certainly recommended for near economies, particularly thedeveloping ones.DefinitionValue Added Tax is a tax on the judge added at each stage ofproduction and distribution process and can be aptly defined as one ofthe forms of consumption taxation since the value added by a firmrepresents the difference between its taxation and cost of purchasedinputs.Need for VATValue Added Tax is one of the most radical reforms that have beenproposed for the Indian economy after years of policy-making and economicdebate. The reasons for advocating Val ue Added Tax is that it ordainreplace a conglomerate tax structure that will also do away with the deceitful practices. Following are some of the most importantbenefits if VAT is introduced. VAT will encourage and result in a better-administered system thatwill close avenues of tax evasion. The taxpayers will also becompelled to keep decent records of their sales and purchases. VAT... ...centerfor the revenue loss for states from the change over. The center hasensured that this will not be so and has assured compensation in caseof deficits. If VAT system is adopted there would be no exemptions orincentives. This can adversely affect some business houses. To crownall this there was also political opposition fearing disfavor of thetrading association and the resulting political fallout.VAT the way forwardIn order to make the VAT a thorough success following could be somesuggestions.* The deadline for all legislations and computerizations should be same across the states.* VAT should be utilize by all the states at the same time.* Laws regarding VAT should be uniform across all the states and there should be no disparity among the states.* There should be a monitoring mechanism at the central to expend the new system.* A lot of changes have to be made in ancillary legislation (income tax, company law etc.) to ensure VAT compatibility.Bibliography1. www.ciionline.org2. The Indian Express dt. June 24, 20043. The Economic Times dt. 10-03-04, 15-06-04, 18-06-04 & 27-07-044. Magazines & journals