Key Differences Between VAT and Service Tax
The following are the major differences between VAT and Service Tax:
Tax imposed on the production and sale of a commodity is known as Value Added Tax (VAT). Tax on services rendered is known as Service Tax.
VAT is a multi point tax, whereas Service Tax is a single point tax.
VAT is charged on physical items i.e. goods while Service Tax is charged on non-physical items i.e. services.
VAT is imposed by the State Government but Services Tax is imposed by Central Government.
VAT is governed by the statute of the respective state. On the other hand, Service Tax is governed by the Finance Act, 1994.
VAT was introduced in the year 2005, all over the country. Conversely, Service Tax was introduced for the first time in the year 1994.
The VAT rate is different for different category of commodities. In contrast to Service Tax, has a flat rate.
VAT is applicable within the jurisdiction of the state, whereas Service Tax is applicable all over the country except in Jammu & Kashmir