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What is Value Added Tax (VAT) ?
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- A simple, transparent, easy to pay tax imposed on consumers
- A new initiative taken by the Government to increase the tax-burden of high income groups
- A single tax that replaces State taxes like, surcharge, turnover tax, etc.
- A new tax to be imposed on the producers of capital goods
- A simple, transparent, easy to pay tax imposed on consumers
Correct Option: C
A value added tax (VAT) is a form of consumption tax. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. VAT comes under the single tax system based primarily or exclusively on one tax, typically chosen for its special properties. Most of the Indian States have replaced Sales tax with Value Added Tax (VAT) from 1 April, 2005. VAT is imposed on goods only and not services and it has replaced sales tax.
