Macroeconomic Impact of Implementation of Vat in Odisha
PROJECT REPORT
ON
Macroeconomic impact of implementation of vat in Odisha
PREPARED & SUBMITTED BY
MR. SAGAR NAYAK
U212049
ABSTRACT
Value added tax (VAT) is a type of indirect tax that is imposed on goods and services. A question that arises is whether value added tax has been a boon or misery for a developing country like India. Around 136 countries in Asia have recognized the importance of value added tax. In one of the most large scale reforms of the country’s public finances in over the past 50 years, India has finally agreed the launch of its much delayed value added tax from 1st April,
2005 at a rate varied from 1% to 12.5%. The tax rate is fixed by meeting of different state level
Finance Minister, in New Delhi, designed to make accounting more transparent, to cut short trade barriers and boost tax revenues.
THE MECHANISIM OF VALUE ADDED TAX
Value Added Tax (VAT) means the tax which is payable only on value-added. It is multi-point tax system but without the effect of double taxation. Value is added to the products, which an organization buys from other organizations such as raw materials, partly finished goods etc. After buying the organization applies its own labor and machine to manufacture the final products. VAT is a tax, which is imposed at every stage of production i.e.., from production level to retail level. Under VAT tax is calculated on value Added where value added is the difference between sales value and purchase value.
“A government should tax its people like a shepherd shears a flock or a bee gets nectar from a flower” -Chanakya
A
• PRODUCTION+PROFIT=100
• SELLING PRICE WITH VAT @10%=110
• TAX TO BE PAID BY A =10
B
• BUYING PRICE WITH OUT TAX(100)+PROFIT ON PROCESS(50)=150
• SELLING PRICE WITH VAT @10% =165
• TAX TO BE PAID BY B =15-10(ALREADY PAID BY A)=5
C
• BUYING PRICE WITH OUT TAX(150)+PROFIT ON PROCESS(40)=190
• SELLING PRICE WITH VAT @10% =209
• TAX TO BE PAID BY C
ON
Macroeconomic impact of implementation of vat in Odisha
PREPARED & SUBMITTED BY
MR. SAGAR NAYAK
U212049
ABSTRACT
Value added tax (VAT) is a type of indirect tax that is imposed on goods and services. A question that arises is whether value added tax has been a boon or misery for a developing country like India. Around 136 countries in Asia have recognized the importance of value added tax. In one of the most large scale reforms of the country’s public finances in over the past 50 years, India has finally agreed the launch of its much delayed value added tax from 1st April,
2005 at a rate varied from 1% to 12.5%. The tax rate is fixed by meeting of different state level
Finance Minister, in New Delhi, designed to make accounting more transparent, to cut short trade barriers and boost tax revenues.
THE MECHANISIM OF VALUE ADDED TAX
Value Added Tax (VAT) means the tax which is payable only on value-added. It is multi-point tax system but without the effect of double taxation. Value is added to the products, which an organization buys from other organizations such as raw materials, partly finished goods etc. After buying the organization applies its own labor and machine to manufacture the final products. VAT is a tax, which is imposed at every stage of production i.e.., from production level to retail level. Under VAT tax is calculated on value Added where value added is the difference between sales value and purchase value.
“A government should tax its people like a shepherd shears a flock or a bee gets nectar from a flower” -Chanakya
A
• PRODUCTION+PROFIT=100
• SELLING PRICE WITH VAT @10%=110
• TAX TO BE PAID BY A =10
B
• BUYING PRICE WITH OUT TAX(100)+PROFIT ON PROCESS(50)=150
• SELLING PRICE WITH VAT @10% =165
• TAX TO BE PAID BY B =15-10(ALREADY PAID BY A)=5
C
• BUYING PRICE WITH OUT TAX(150)+PROFIT ON PROCESS(40)=190
• SELLING PRICE WITH VAT @10% =209
• TAX TO BE PAID BY C