Value Added Tax - This much awaited tax reform finally happened in April 2005. Each of the stakeholders viz. State Governments, Trade and Industry and Consumers had different experiences to share. The survey was designed to document the experience of the respondent companies and to identify the unfinished agenda for making the VAT regime more industry friendly.It was heartening to note that fully 84% of the respondents believed that the overall experience of transitioning from the sales tax regime to the VAT regime was smooth.
As to the preparedness of the State Governments in addressing the transition, only a small percentage of the respondents felt that the State Governments were fully prepared for the switch over to VAT. The survey respondents also indicated the areas where further improvements in the
VAT regime were required. These were as follows:-
- Introduction of uniform product classifications
- Extension of input tax credits to Central Sales Taxes paid on procurement
- Adoption of a practical approach to VAT audits of assesses
- Introduction of single window assessment processes for all State taxes
- Change in the mindset of VAT administrators
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