ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Sales TaxSubscribe to Sales Tax

Calcutta Diary

Substitution of sales taxation by value added tax, it is being claimed, will reduce distortions in the economy caused by multiple rates of taxation of inputs and help the establishment of an integrated national market. What a pipe-dream. A seemingly fractured market which nonetheless promotes faster and more balanced development is to be preferred any day to an arrangement where the national market is technically integrated and yet overwhelmingly unfriendly to growth. Who will tell that though to the docile chief ministers and state finance ministers who have volunteered to sign their own death warrants?

National and Sub-National VATs

India's unique indirect tax system with the central government imposing a broad spectrum of excise duties on production and manufacture, and the states assigned the power to levy sales tax on consumption and on services has meant that the adoption of a European-style VAT has been slow in India. This paper examines the problems and prospects of introducing VAT taking account of the experience of states' experiments in adopting VAT in some form or other.
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