Businessmen Perception About Vat
INTRODUCATION
Modern sales tax was evolved during the great depression and the post-world war II period, although sales tax existed even in the early period of the civilized society1. Spain adopted the general sales tax as a national tax in 1342 and retained it for about five centuries. France introduced the general sales tax in the fourteenth century for a short period. Again, in 1871 that country levied payments tax which was in effect, a low-rate general sales tax. In the European countries, sales tax was introduced as an emergency measure during world war I. Italy and Czechoslovakia initiated the payment tax in 1919. Hungary, Russia, Rumania, Belgium and Yugoslavia imposed it in 1921; Luxemburg in 1922; Poland and Austria in 1923. The Netherlands embarked upon sales tax in 1933 after the great depression.2 Canada launched the Canadian manufacturer’s sales tax in 1920. Australia adopted the sales tax in 1930 to offset the decline in revenue from the custom duties. Newzealand also entered the sale tax fields in 1933 for similar reasons. In Latin America, sequence: Cuba in 1922, Brazil in 1924, Ecuador in 1925, Uruguay in 1928, Argentina in 1931, Mexico in 1932, and Chile in 1943.3 In India, references to sales tax are found in Kautilya’s Arthasastra. Kautilya states that the superintendent of Merchandise (Panyadyaksha) was required to collect, inter alia, compensation fee (Vyaji) on the sale of royal merchandise which was imposed, according to the manner of sales, to the extent of 1/10th on the goods sold by weight and 1/11th on the goods sold by counting.4 The origin of modern general sales tax is traceable to the Government of India Act, 1935.5 In the white paper of 1933, taxes on the sale of commodities and on the turnover were mentioned as a possible source of provincial revenue. Entry 48 on list II (Provincial Legislative List) of the 7th schedule to the government of India Act 1935, granted exclusive power to the state government to impose
Modern sales tax was evolved during the great depression and the post-world war II period, although sales tax existed even in the early period of the civilized society1. Spain adopted the general sales tax as a national tax in 1342 and retained it for about five centuries. France introduced the general sales tax in the fourteenth century for a short period. Again, in 1871 that country levied payments tax which was in effect, a low-rate general sales tax. In the European countries, sales tax was introduced as an emergency measure during world war I. Italy and Czechoslovakia initiated the payment tax in 1919. Hungary, Russia, Rumania, Belgium and Yugoslavia imposed it in 1921; Luxemburg in 1922; Poland and Austria in 1923. The Netherlands embarked upon sales tax in 1933 after the great depression.2 Canada launched the Canadian manufacturer’s sales tax in 1920. Australia adopted the sales tax in 1930 to offset the decline in revenue from the custom duties. Newzealand also entered the sale tax fields in 1933 for similar reasons. In Latin America, sequence: Cuba in 1922, Brazil in 1924, Ecuador in 1925, Uruguay in 1928, Argentina in 1931, Mexico in 1932, and Chile in 1943.3 In India, references to sales tax are found in Kautilya’s Arthasastra. Kautilya states that the superintendent of Merchandise (Panyadyaksha) was required to collect, inter alia, compensation fee (Vyaji) on the sale of royal merchandise which was imposed, according to the manner of sales, to the extent of 1/10th on the goods sold by weight and 1/11th on the goods sold by counting.4 The origin of modern general sales tax is traceable to the Government of India Act, 1935.5 In the white paper of 1933, taxes on the sale of commodities and on the turnover were mentioned as a possible source of provincial revenue. Entry 48 on list II (Provincial Legislative List) of the 7th schedule to the government of India Act 1935, granted exclusive power to the state government to impose
References: 1. Buehler, A.G., General Sales Taxation, (1932). 2. Jacoby, N.H., Retail Sales Taxation, (1938). 3. Due, John, F. Sales Taxation, (1957). 4. Directorate of CPE, “The VAT Options,” The Charted Accountant (April, 1998). 5. Kumar, Ravi, “Value Added Tax Issues and Concerns,” The Charted Accountant (September 2002). 6. Mukerjee, Dilip Kumar, “introducing Value Added Tax in India, The Management Accountant (April 2003). 7. Dhand, Vipin, “Revenue will Fall,” The Tribune (April 16, 2003). 8. Grawal, N.S. “Inspector Raj to Go, The Tribune (April 16, 2003). 9. The Competition Master, “VAT or Not to VAT: The Dilemma of Value Added Tax, “(May 2008).