Limitations of VAT

VAT is costly to implement as it is based on full billing system. VAT is relatively complex to understand. The calculation of value added in every stage is not an easy task. To implement the VAT successfully, customers, need to be conscious, otherwise tax evasion will be widespread. The Best of Brian Tracy Cause Inflation

Dear Uma > Limitations of VAT -- VAT was to be applied in all states but it failed to do so. -- Inflation rate has been increased due to VAT. -- VAT has complicated both tariff in customs and excise and Overburdend with more exemptions -- VAT is regressive :- It’s burden falls disproportionately on Poor people since the poor are likely to spend more of their incomes -- VAT is too difficult to operate from the position of both the Administration and business. -- Monthly Return : The manufacturer is required to pay CenVAT on a fortnightly basis and submit a monthly return (ER1) to the Superintendent of Central Excise by the 10th of the month Thanks

LIMITATIONS OF VAT There are different vat rates in different cities There is no input credit for interstate purchases. For complying with the VAT provisions the accounting cost will increase. There is increase in other costs like working capital and interest There will be more administrative burden The rate of vate is generally high. Thanks

dear uma, following are the limitation of VAT : - VAT is costly to implement as it is based on full billing system. - VAT is relatively complex to understand. The calculation of value added in every stage is not an easy task. - To implement the VAT successfully, customers, need to be conscious, otherwise tax evasion will be widespread. The Best of Brian Tracy - Cause Inflation - Refund of Tax(VAT credit can not be availed if no tax is payable on final product being exempt or taxable at lower rate.) - Non-availability of credit for tax paid on interstate purchases in initial years.