Value Added Tax
Issues:
» Impact of VAT on sales
» Need to reform traditional tax regime
» Hurdles in implementing new reforms
Discuss how implementing VAT will impact various sectors in India.
Implementation of VAT drugs Due to implementation of VAT there is a decrease in the price of the drug so the chemist who wanted to avoid incurring losses by having to sell the drugs at cheaper rates in case the purchased be before april 2005, were not sol by that date. Resorted to purchasing very low qty of drugs from stockist.
Consumer durable-suffered sluggish growth despite of having incr promotional activity thro discount sale etc..and heavy advertisimng to attract customer but this activity doesn’t improved their sales. Same with the consumer durable product.
Cement, metals etc. sector – implemention of VAT in this sector is less significant.
Fmcg & Electronic goods and paints- the tax rate reduced from 20% to 12.5%
Automobile and auto parts sectors- this sectors would attract VAT at the standard 12.5%. while under the earlier tax sustem the tax rate ranged from 8-15%
Impact on consumer
The implementation of VAT on fmgc product and electronic goods this enables the consumer to purchase the goods at lesser price.
Consumer durable and car- despite of heavy advertisement the consumer pereferd to wait for VAT implemenataion before making any purchase…
2)
Trader with annual income exceeded Rs. 1 million has two option, They could pay a composite tax of 0.25% on their gross turnover and forgo input tax credit or they could pay VAT .
The input tax credit enable dealer to claim credit for the tax period on the goods purchased from registered dealers. This required traders to maintain records of every transaction as the accounts audited for checking the validity of their claims.
No I don’t agree with the trader who oppose VAT because VAT is the key to develop common domestic market through removal of trade barriers and simplification of indirect taxes and VAT
» Impact of VAT on sales
» Need to reform traditional tax regime
» Hurdles in implementing new reforms
Discuss how implementing VAT will impact various sectors in India.
Implementation of VAT drugs Due to implementation of VAT there is a decrease in the price of the drug so the chemist who wanted to avoid incurring losses by having to sell the drugs at cheaper rates in case the purchased be before april 2005, were not sol by that date. Resorted to purchasing very low qty of drugs from stockist.
Consumer durable-suffered sluggish growth despite of having incr promotional activity thro discount sale etc..and heavy advertisimng to attract customer but this activity doesn’t improved their sales. Same with the consumer durable product.
Cement, metals etc. sector – implemention of VAT in this sector is less significant.
Fmcg & Electronic goods and paints- the tax rate reduced from 20% to 12.5%
Automobile and auto parts sectors- this sectors would attract VAT at the standard 12.5%. while under the earlier tax sustem the tax rate ranged from 8-15%
Impact on consumer
The implementation of VAT on fmgc product and electronic goods this enables the consumer to purchase the goods at lesser price.
Consumer durable and car- despite of heavy advertisement the consumer pereferd to wait for VAT implemenataion before making any purchase…
2)
Trader with annual income exceeded Rs. 1 million has two option, They could pay a composite tax of 0.25% on their gross turnover and forgo input tax credit or they could pay VAT .
The input tax credit enable dealer to claim credit for the tax period on the goods purchased from registered dealers. This required traders to maintain records of every transaction as the accounts audited for checking the validity of their claims.
No I don’t agree with the trader who oppose VAT because VAT is the key to develop common domestic market through removal of trade barriers and simplification of indirect taxes and VAT