VAT
TO BE IMPLEMENTED FROM APRIL 1ST
It's a big leap
forward. One of the biggest changes in the country' tax system
is the move towards value added tax. In simple terms, VAT
is a sales tax levied on the sale of goods and services. In
some countries, such as Singapore and Canada, the tax is known
as goods and service tax or GST. In India, the implementation
of this tax will begin from April 1, 2005.
The main difference
between the normal sales tax and VAT is that under VAT, the
cascading effect of taxes is eliminated because one can reimbursement
for taxes already paid on the inputs. In India, the finance
minister has released a white paper on VAT with the proposed
rates and at this stage, it will be interesting to look at
how the rates compare with the situation across the rest of
the world.
But a small word
of caution: The rates here refer to the standard rate for
the country. It has to be remembered countries have a clear
demarcation in the form of a standard rate for the country.
It has to be remembered countries have a clear demarcation
in the form of a standard rate and a reduced or concessional
rate for several items. Europe has adopted VAT with full strength
and this tax has become mainstay for several countries in
the continent. A common VAT system is compulsory for the European
Union. This is imposed by a series of directives, though members
have negotiated some exemptions or variable rates for specific
territories.
