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The Accounting World Magazine:
 
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This article offers views on the newly implemented Value-Added Tax and its impact on various industries such as Pharmaceutical, Steel, Automobile, Cement, Sugar, Consumer Electronics and Appliances, Tobacco, and finally on the Tea Industry.

Value-Added Tax (VAT) is a type of sales tax. It is collected in each stage of transactions involving sales of goods. Tax paid on purchases (input tax) is substracted from tax payable on sales (output tax). VAT is charged on sales of all taxable goods. Thus, we can say that Value-Added Tax [VAT] is a multi-point taxation system.

VAT is paid on the net value added to each stage of the value chain. While calculating the amount to be paid to the government, the net tax on each stage is collected and every amount is credited to the government (net tax = tax paid on purchase- tax paid on sales).

The basic difference between VAT and Sales Tax is that Sales Tax is a single-point tax, while VAT is a multi-point tax. Sales tax is origin-based (sellers pay tax), but in VAT, the customers pay. Sales tax does not offer input tax credit; VAT provides input tax credit on purchase of raw material. Goods for exports are not taxed.

 
 

 

Value-Added Tax, industries such as Pharmaceutical, Steel, Automobile, Cement, Sugar, Consumer Electronics and Appliances, Tobacco, Tea Industry,Value-Added Tax (VAT).