VAT

The Value Added Tax (VAT)

VAT is based on the value addition to the goods, and the related VAT liability of the dealer is calculated by deducting input tax credit from tax collected on sales during the payment period. The essence of VAT is in providing set-off for the tax paid earlier, and this is given effect through the concept of input tax credit/rebate. This input tax credit in relation to any period means setting off the amount of input tax by a registered dealer against the amount of his output tax. In the prevailing sales tax structure in several states, a multiplicity of taxes, such as turnover tax, surcharge on sales tax, additional surcharge etc. With introduction of VAT, these other taxes will be abolished.