Advantages of VAT


Advantages of VAT


The major advantages of VAT will be achievement of simplification in the indirect tax system. The second advantage is easy administration since the dealers and manufactures will be issuing invoices which will be available for cross checking which in tern will reduce the propensity to evade tax. Yet another advantage of VAT is the tax transparency as all particulars will be clear from the transaction which in tern will serve as a basis of economic analysis of the tax.


Since the implementation of VAT will be felt all over the economy it will ultimately result in price effects distribution effect, overall efficiency and achievement of neutrality besides effects on growth of economy.


Finance Minister Remarks –union Budget 1996-97.


It is heartening to note that the finance minister while presenting the budget for the year 1996-97 on 22-7-96 maintained in his speech as under:



“A large number of countries in the world today have a value added tax system which has been recognized to be the most efficient from of commodity taxation. I am glad to note that some state governments are moving towards value added tax system. The last few years of reforms have taken us closer to having a central VAT, but there are still certain legal obstacles”


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