Value Added Tax (VAT)

1. Welcome
to the Presentation of
Presented by:
Edwin Makeu
Presented to:
Mrs Shweta Miglani & BCA 2
DT 4th Oct 2016

2. Content
• What is VAT?
• How a VAT works?
• Why VAT?
• Relevance of VAT
• Who Collects VAT?
• Advantages and Disadvantages of VAT
• Rate of VAT collection in India
• Challenges faced by VAT collection

4. •Value Added Tax
•Consumption Tax
•It represents a tax on the “value”
added to the production
throughout its production process
•VAT is “Indirect Tax”
VAT?

5. How the VAT Works
VAT
charged
on sales
VAT paid
on
purchase
VAT Due
or
Creditable
Output
Tax
Input Tax
Minus

6. Day to Day example of VAT
Nokia
phone
VAT @
12.5%
(Rs. 1750)
Rs15750
Rs. 14000
Government

7. Why VAT….???
• VAT is a tax money paid by people to the
government, which is used to provide public
service.
• Instrument of fiscal policy to stimulate economic
growth and to maintain economic stability in the
country

8. Relevance of V.A.T
1. To Collect Sales Tax on added value
whenever the sale transaction is
conducted
2. To Enhance Economic Growth
3. To enhance savings and investments

9. Who Collects VAT?
• The Government collect such Tax from all sectors that
is importer, manufacturing whole sale, and retailer
sector
• When an eligibility Business is registered for VAT, Only a
VAT registered business is authorised to charge and
collect VAT
• VAT registered Business collect Tax on behalf of the
government

10. Advantages of V.A.T
• Easy to Administer and Transparent
• It is neutral
• It Enhances exports
• It avoids Cascading Effects

11. Disadvantages of V.A.T
•Detailed Records
•Causes inflation
•It requires
advance economic
structure

12. Rates & Amount of VAT Collection in
India

13. Challenges faced by VAT collection
•VAT payment deadline
•Working out the Correct rate
VAT
•Facing Tax Penalties

14. Thank You