vat ppt presentation for BBA student

1. Dr. Harisingh gour vishwavidyalaya sagar (m.p.)
( A central university)
A presentation for “Indirect Tax”
TOPIC – Legislative background of concept of VAT
Department of business administration
BBA 6th sem.
SUBMITTED BY :
SUBMITTED TO :
ABHISHEK SHIVAHRE (Y19180503)
PRIYANKA PATHAK ADARSH YADAV (Y19180505)
MAM AASTHA JAIN (Y19180501)
ABHAY DODWANI (Y19180502)
ABHISHEK SONI (Y19180504)

2. What is VAT ( value added tax)
Value added tax (VAT) is in indirect tax on
goods. VAT is imposed only on the amount of
value addition. It is multi point tax levied as a
proportion of value addition, where the tax
burden can be shifted from one person to
another person till the ultimate the consumer
can consume the product.
 VAT is charged by state government
 VAT is a intra state sales tax (sales within the
state)

3. VALUE ADDED TAX
 Value added tax (VAT) is a general consumption tax
assessed on the value added to goods and services.
 Over 130 countries worldwide have introduced VAT
over the past three decades and India is among the
last few to introduce it.
 VAT has been introduced in Indian Taxation system
from April 1, 2005.
 It is considered to be multi-stage tax.
 VAT is administered by HM revenue and customs.
 550 items covered (270 basic need item)

4. - VAT is not applicable on following :
1. food ( with some exceptions)
2. newspapers
3. Magazines
4. Children’s clothing
- VAT was first suggested in Germany during
the world war 1 period.
- Each state and union territory has formulated
its VAT legislation except for “ ANDAMAN AND
NICOBAR”

5. WHY VAT ?
VAT comes in India in 1986, namely MODVAT
(modified value added tax ) in excise, that means it is
not a new scheme, it is very old. VAT is not a new
concept, it is a part of sales tax, but vat comes into
existence because the sales tax was causing couple of
problems, then to remove these problems the VAT (
which is the part of sales tax) applied by central govt.
of India.
 Now a days after some amendments in MODVAT
the name was changed into CENVAT (central value
added tax)
 Sales tax is also known as trade tax and turnover
tax.

6. The three type of VAT
 Consumption method
 Net income method
 Gross national product method of value –
added tax
 The VAT is applied to imported products.

7. VAT Applicability
 Below 5 Lakhs turnover – no tax required.
 5 – 40 Lakhs – TOT will apply and VAT is
optional.
 Above 40 Lakhs - VAT will apply.

8. VAT AND SALES TAX:
 Sales tax is imposed on the total retail price of
the item sold while VAT tax is imposed on the
value added at each stage of production and
distribution.
 Value-added tax system have more checks
against tax fraud because the tax is assessed at
more than one point in the distribution process.

9.  VAT RATES
There are four main rates for input and output vat tax.
• 0% on (exempted goods) agriculture products,
cotton and silk yarn, curd and butter milk, national
flag, salt
• 1% for Jewellery, bullion and specie, precious and
semi-precious stones.
• 4% on pharmacy, computers, soaps etc.
• 12.5% for FMCG, automobile

10. VAT Terminology – Input tax
 INPUT TAX
 Input tax is the tax shown in our purchase
bills.
 As per the norms, every trader need to show
tax separately and it is considered as input tax.
 apart from trade purchases, tax on capital
goods purchases like A.C., computers etc… is
also considered for this input tax.

11. VAT Terminology – Output tax
 OUTPUT TAX
 Output tax Is the tax charged on all the taxable
sales of a vat dealer.
 For ex. Tax shown by us our output tax and it
becomes input tax for our customers.

12. Ultimate objective of VAT
 Calculation easy and simple
 Transparency
 Increased tax base
 Competitive price
 Uniform Tax Structure
 More Revenue
 NO Revenue leakage
 Avoids double Taxtaion
 Co-ordination of VAT with direct taxation

13. Advantages of VAT
 Be based on consumption, and thus provide a
stable revenue base;
 Be “natural” since it would be imposed on all type
of business;
 provide stronger incentives for businessess to
control costs;
 Encourage, or at least not discourage, savings;
 Have the potential for raising large amounts of
revenue at a law tax rate;
 Be simple to adminidter;

14.  Reduce obstacles to exports, under certain
conditions;
 help bring about a better balanced tax system.

15. DISADVANTAGES OF VAT
 As the VAT is based on full billing system, VAT
implementation is expensive.
 it is not a simple task to calculate value added in
every stage is not an easy task. Thus VAT is
difficult to understand.
 VAT is regressive in nature. Thus it will affect the
poor people more than the rich people because
they spend more proportion of their income.
 All purchase and sales records should be
maintained which will cause increased
compliance cost.