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What is VAT? What are advantages and disadvantages of VAT in India?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 asked

What is VAT? What are advantages and disadvantages of VAT in India?

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32 Answers
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Not only India, other countries in the world are subject to VAT, the advantage is economic promotion, increase income and interest rates, and consolidation of social welfare. The downside is that individuals incur additional costs

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After GST implementation in India, what do you think is better VAT or GST?

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Why are you thinking about VAT in India?

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

> Differences between Cost allocation and apportionment
Cost allocation means identifying a cost centre and charging its expenses in full.
Cost apportionment means allocation of cost to various cost centre using suitable basis
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• Allocation means the allotment of whole items of cost to cost centres or cost units.
• It deals with the whole items of cost.
• Cost is directly allocated to any cost centre or cost units.
• Cost is allocated when the cost centre uses whole of the benefits of the expenses.
**Cost Apportionment**:
• Apportionment means allotment of proportion of items of cost to cost centres or cost units.
• It deals with only proportion of items of cost.
• It needs a suitable basis for subdivision of cost by cost centres or cost units. Thus it is indirect process of allotment.
• Cost is apportioned when cost centres use only a proportion of the benefits of the whole expenses.
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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 answered

Value-Added Tax (VAT) is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of goods and services effected within the State, for consideration, to their customers. Generally, each such trader in the chain of supply from manufacturer through to retailer charges VAT on his or her sales and is entitled to deduct from this amount the VAT paid on his or her purchases. Advantages of VAT: 1. As compared to other taxes, there is a less chance of tax evasion. VAT minimizes tax evasion due to its catch-up effect. 2. VAT is simple to administer as compared to other indirect tax. 3. VAT is transparent and has minimum burden to consumers as it is collected in small fragments at various stages of production and distribution. 4. VAT is based on value added not on total price. So, price does not increases as a result of VAT. 5. There is mass participation of taxpayers. Disadvantages of VAT: 1. VAT is costly to implement as it is based on full billing system. 2. VAT is relatively complex tounderstand. The calculation of value added in every stage is not an easy task. 3. To implement the VAT successfully, customers, need to be conscious, otherwise tax evasion will be widespread.

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