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Value-added tax (VAT)

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	Value-added tax (VAT) is a type of indirect tax levied on goods and services for value added at every point of production or distribution cycle, starting from raw materials and going all the way to the final retail purchase. VAT was introduced on April 1, 2005. Under it, the amount of value addition is first identified at each stage, and then tax is levied on the same. Ultimately, the end consumer has to pay the complete VAT while buying goods; buyers at earlier stages of production receive reimbursements of tax they have paid. Because the consumer bears the entire tax, VAT is also a consumption tax.</div>
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	State-wise VAT laws: Each state has its own VAT laws for proper implementation and levying. Different states apply different VAT rates according to their implied laws.</div>
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	<strong>Why was VAT introduced?</strong></div>
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	The main aim behind the introduction of VAT was to eliminate the presence of double taxation and the cascading effect from the then existing sales tax structure. A cascading effect is when there is tax levied on a product at every step of the sale. The tax is levied on a value which includes tax paid by the previous buyer, so the consumer ends up paying tax on already-paid tax.</div>
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	No exemptions can be made under the VAT system. Levying tax at each stage of the production process ensures better compliance and fewer loopholes to exploit.</div>
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	<strong>Disadvantages of VAT</strong></div>
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	VAT also has some disadvantages. Though it was brought in to eliminate the cascading effect of taxes, it has not been able to do so fully. It is not possible to claim input tax credit (ITC) on service under VAT. Different VAT rates and laws in states made it one of the most complex taxation systems.</div>
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	<strong>Has GST totally subsumed VAT?</strong></div>
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	To completely eliminate the cascading effect of taxes and to make the indirect tax structure simpler, the union government introduced the Goods and Services Tax (GST) in July 2017. Though GST replaced VAT on most goods, some goods are still not covered under the new regime. VAT continues to be the tax levied on such goods.</div>

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Learn what is Value-added tax, Value-added tax Definition, VAT tax and more Value-added tax news here at Business Standard.

What is Value-added tax, What is VAT, Budget News, Value-added tax Definition

What is Value-added tax (VAT)?

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	The Goods and Services Tax (GST) is a uniform indirect tax levied on goods and services across the country. GST, as an umbrella tax, replaced central taxes like central excise, service tax, additional duties of excise &amp; customs, special additional duty of customs, besides cesses and surcharges, on supply of goods and services.</div>
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	<strong>Central GST and State GST</strong></div>
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	CGST is levied on intrastate supplies by the central government and SGST is levied on intrastate supplies by respective state governments.&nbsp;</div>
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	<strong>Integrated GST</strong></div>
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	IGST is levied on interstate supplies by the Centre (equal to CGST + SGST combined on supplies made within the state).</div>
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	Any supply of goods or services or both on interstate basis typically attracts IGST on the consideration thereof.</div>
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	<strong>Key features of GST</strong></div>
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	* GST envisages all transactions and processes to be done only through the electronic mode, to achieve a non-intrusive administration. This minimises the taxpayer&#39;s physical interaction with tax officials.</div>
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	* GST provides for the facility of auto-populated monthly returns and annual return.</div>
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	* It also facilitates taxpayers by prescribing grant of refund within 60 days, and provisional release of 90 per cent refund to exporters within 7 days.</div>
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	* Further facilitation measures include interest payment if refund is not sanctioned in time, and refund to be directly credited to bank accounts.</div>
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	* Comprehensive transitional provisions for ensuring smooth transition of existing taxpayers to GST regime, credit for available stocks, etc.</div>
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	* Other provisions include system of GST compliance rating, etc.</div>
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	* Anti-profiteering provisions for protection of consumer rights: Any benefit by way of reduction in rate of tax or increase in input tax credit arising due to introduction of GST are passed on to customers (through reduction in sale price) by way of commensurate reduction in prices.&nbsp;</div>
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	* Under the GST regime, exports are zero-rated in entirety, unlike the earlier system where refund of some of the taxes did not take place due to fragmented nature of indirect taxes between the Centre and states.</div>
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	* GST is largely technology-driven and reduces the human interface to a great extent</div>
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	* GST is believed to have improved ease of doing business in India.</div>
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Learn what is meant by Goods and Services Tax, GST definition and more Goods and Services Tax news here at Business Standard.

What is Goods and Services Tax, GST Meaning, GST Definition, Goods and Services Tax News

Goods and Services Tax

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	Service tax was an indirect tax levied by the government on services offered by service providers. Introduced under Section 65 of the Finance Act, 1994, service tax was on July 2017 replaced by Goods and Services Tax (GST), which subsumed the various types of indirect taxes.</div>
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	Service tax was paid to the government in exchange for different services received from service providers. Though the tax was paid by service providers, it was recovered from customers who bought or availed of the taxable services. It was set, more recently, at 15% for transactions that occurred on or after June 1, 2016.</div>
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	<strong>Rollout of service tax: </strong>Service tax had been introduced in Union Budget 1994, and rolled out with effect from July 1, 1994. Following this, services that were included under the service tax were increased gradually from 1994. Services provided by air-conditioned restaurants, lodging (both long and short term), guest houses and other amenities were included under the tax. Going by regulations, the tax was levied on companies as well as individual service providers. While companies paid it on the basis of accrual, individuals paid the tax via cash. However, it was paid only if the total value of the service provider by an entity exceeded Rs 1 million in a given financial year. The erstwhile state of Jammu &amp; Kashmir was exempt from this addition to the service tax rules.</div>
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	The service tax payment was made via GAR 7, which was the erstwhile TR6 Challan. Designated banks&rsquo; branches accepted the payments for service tax. Another option of making the service tax payment was through the e-payment facility.</div>
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	<strong>The tax invoice would have the following:</strong></div>
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		Serial number</li>
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		Name and address of the service receiver</li>
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		Name, address and registration number of the service provider</li>
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		Classification, description as well as taxable service value of the service that is rendered</li>
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		Payable service tax amount to be mentioned on the invoice</li>
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	<strong>Abolition of service tax: </strong>Service tax was abolished with the rollout of GST on July 1, 2017, as the new tax subsumed service tax in addition to many other indirect taxes.</div>

Learn what is meant by Service tax, its definition and more tax related news here at Business Standard.

What is Service tax, Service tax Meaning, Budget News, Service tax Rules

Service Tax

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	Taxation is the primary source of income for the government. The most important revenue receipts for the government, taxes are involuntary fees levied on individuals and corporations to finance government activities. Revenue receipts can be of two types &mdash; non-tax revenue and tax revenue. Tax revenue is the income gained by the government through taxation.</div>
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	Tax revenue forms a part of the Receipt Budget, which in turn is part of the Annual Financial Statement of the Union Budget.</div>
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	Tax revenue is the result of the application of a tax rate to a tax base. Total tax revenue as a percentage of GDP indicates the share of the country&#39;s output collected by the government through taxes. Tax revenue can be regarded as one measure of the degree to which the government controls the economy&#39;s resources.</div>
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	Taxes collected from both direct tax and indirect tax are the government&rsquo;s tax revenue. It includes collections from income tax, corporation tax, customs, wealth tax, tax on land revenue, etc.</div>
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	Direct tax is the tax that is paid directly to the government by the person or company on whom it is levied. Income tax, wealth tax, corporation tax and property tax are some examples of direct tax. Indirect taxes are those that are collected by intermediaries from individuals and corporations who bear the burden of the tax and passed on to the government. Goods and Services Tax (GST) is an example of indirect tax. Corporation tax forms a large chunk of the government&rsquo;s tax revenue.</div>
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Value-added tax (VAT)

What is Value-added tax (VAT)?

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