India’s Move from Sales Tax to VAT: A Hit or Miss?

Sattwik Santra and Koushik Hati

MPRA Paper from University Library of Munich, Germany

Abstract: Government of India introduced Value Added Tax (VAT) across all its states in subsequent stages in the early years of this millennium. The main motive behind this move was to make the commercial tax collection more transparent, accountable and revenue enhancing. The purpose of this paper is to analyze if the introduction of VAT has indeed served its purpose or not. We find that in terms of the effective change in the rate of taxation and in terms of a change in the overall tax base, the number of states affected adversely by the new VAT regime is greater than the number of states that have been affected positively. Also the sum of the average tax collected, as well as the sum of the average state domestic product of the negatively affected states far outweighs those of the states affected favorably.

Keywords: Sales Tax; Value Added Tax; Revenue; India (search for similar items in EconPapers)
JEL-codes: C23 C51 H20 H21 H71 (search for similar items in EconPapers)
Date: 2014-01-01
New Economics Papers: this item is included in nep-acc
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Citations: View citations in EconPapers (1)

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