/** * The main template file * * This is the most generic template file in a WordPress theme * and one of the two required files for a theme (the other being style.css). * It is used to display a page when nothing more specific matches a query. * E.g., it puts together the home page when no home.php file exists. * * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ * * @package WordPress * @subpackage Tally * @since 1.0.0 */ ?>
The indirect taxation regime in India has undergone many transformations over the past 5 to 6 decades. Introduction of the MODVAT scheme in 1986, fungibility of credit between Excise and Service Tax in 2004, rollout of VAT in 2005 - have over the years increased transparency in tax administration, reduced hassles to tax payers, and eliminated the cascading effect, thus benefitting the consumer.
However, the federal structure of India has resulted in tax being administered by both Centre and State. Lack of facility to utilize credits across these two entities has resulted in partial cascading still being left in the system. Added to this, the burden of compliance has also increased due to involvement of multiple agencies.
GST precisely addresses these concerns by driving uniformity across India through a single tax and ensuring an unrestricted flow of tax credit. Conceptually, GST is similar to VAT, meaning tax will be applied only on the value addition at each point in the supply chain. However, the basic difference between VAT and GST still remains – and it is important to understand the various aspects of VAT vs GST, to appreciate how the taxation scenario is bound to improve under GST .
In the year 2005, VAT was introduced with the similar objective to overcome cascading affect (tax on tax). While VAT did eliminate the cascading tax effect on the indirect taxes within a state, the cascading effect of other indirect taxes across the country, still remained. For example, the Central Sales Tax (CST) applicable on interstate trade was non-creditable, leading to a break in the input credit chain. Similarly, a manufacturer charging Excise Duty on sale to a dealer caused the chain to break. This uncreditable tax found its way into the product cost.
GST on the other hand, allows for seamless flow of tax credit, and eliminates the cascading effect of all indirect taxes across the supply chain from manufacturers to retailers, and across state borders. If one does a quick comparison of the taxes one paid in the previous regime and in the current regime, one would understand the aspect of GST vs VAT clearly.
In short, understanding the difference between VAT and GST will help businesses as well as the household consumer to not only understand the seamlessness of the GST tax regime, but also appreciate the advantage of the GST vs VAT regime.
Privacy of Business Data – A Case Study from Tally Solutions
Guide to Business Management Software for Start-ups & Small Businesses