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Value Added Taxation in the States-Challenges Ahead

Challenges Ahead M Govinda Rao J V M Sarma The need for co-ordinated development of domestic trade taxes in the Indian federal polity has shifted the focus to reforms in the states' sales tax systems. Detailed deliberation has led to a consensus on the need to transform the prevailing sales taxes into a destination based consumption type value added tax. Attempts to reform sales taxes, however, have not been always in the right direction and, in addition, have met with resistance from traders. Based on the experience gained so far, this paper attempts to set out the strategy and stages of reform towards evolving the value added tax which is less distortionary and more acceptable to traders.

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