This document discusses India's taxation system before and after the introduction of VAT. It defines tax and outlines the main types - direct and indirect. It describes India's pre-VAT system of MODVAT and CENVAT which aimed to reduce cascading taxes. VAT was introduced nationwide in India on April 1, 2005 to simplify taxation and reduce the cascading effect of taxes. The document notes some pros of VAT like removing trade barriers and defects of the previous credit system. It also lists some cons such as VAT being regressive and potentially inflationary. Certain goods are exempted from VAT like liquor and petrol. In conclusion, it states the benefits of VAT may not be fully realized without stopping sales tax and ensuring uniform VAT rates

1. INDIA BEFORE AND AFTER
VAT
Garima
Kalpesh Rathod
Prasasthi
Tandon
Pooja Kumari
Sachin Katudia
Sushant Verma

2. contents
Definition of TAX.
 Types.
 India Before VAT.
 India After VAT.
 Pros Cons.
 Exemptions.
 Conclusion.


4. Definition of TAX.

A fee charged by a government on a
product, income, activity.

5. Types.

Direct Taxes.
Income Tax

Indirect Taxes.
Sales Tax
Excise Duty
VAT(Modvat, Cenvat)

6. India Before VAT.
Modvat introduced in 1986. (Modified)
 It was introduced to give some relief to
the final manufacturers of goods on
Excise Duties borne by their suppliers.

Cenvat introduced in 2000.
 Simplified Tax System.
 Removes Cascading effect of TAX.
 Additional types of goods introduced.

(Central)

7. India After VAT.
1st April 2005.
 Similar to sales tax.
 Tax on estimated market value at stages of
manufacturing, distribution and passing to
customer.
 Helps in development of domestic market
through removal of trade barriers and
simplification of indirect access.


8. Pros
Removes the defects of TAX credit
system and avoids the cascading effect.
Exports can be freed from domestic
taxes.
Neutrality with minimum distortion in tax
structure as there are few variations in tax
rates and exemption from tax rates are
very few.

9. Cons
 VAT
is regressive.
 VAT is too difficult to operate from the
position of both the administration and
Business.
 VAT is inflationary.
 VAT favors Capital intensive firm.

10. Exemptions

Liquor, Lottery Tickets, Petrol, Diesel,
Aviation fuel and other motor spirits
since their prices are not fully market
determined.

11. Conclusion
Benefit of VAT cannot be fully enjoyed
unless Sales TAX payment is stopped
being levied.
 No Uniformity in the rates of VAT over
products.
 Possibility of TAX evasion.


12. Your Opinion
Do you think VAT increases Prices
now?
 Will Uniformity in rates of VAT over
different products benefit?
