VAT imposition needs Clear thinking.

aaquraishi — Thu, 24 Feb 2005 22:06:22 +0530

< ?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />India is a developing nation and to make India a developed nation we slowly need to impose taxes. If all the taxes are imposed at once then the development comes under the pressure of inflation, which may also result in the collapse of the economy. The Indian government has planned to impose a Tax Called VAT (Value Added Tax). This tax would make living impossible for the people living under poverty line who earn less and have to spend more.

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VAT is something that is going to cause a great amount of loss to the traders because when people start investing more in the essential commodities they will never think of buying the other commodities like the electronic goods etc. This is something that will bring a very high loss to both the producer and the distributors. The next affected are the traders who will not be able to sell the products. This is all because the consumers will think of their savings instead of the commodity.

The whole process goes something like this. First the goods are prepared which are already come under the scan of the VAT in the purchase of their raw material. Next to fall in line is the distributor who shares the VAT. This is then gets transferred to the Trader who brings the product into the market and the consumer has to bear the load of VAT.

When the consumer is to bear the VAT he will not dare to spend on the commodity. This will cause a major disturbance in the business standards. Because as the demand would decrease certainly the supply of the commodity will increase, this will result in the sharp dropdown of prices. When the prices decrease there is bound to be a loss either to the trader or to the distributor or to the producer himself.

To minimize these loses we need to cut down the VAT.

In this regard I urge the Finance Minister to kindly look through the intricacies of the application of VAT and come up with a better strategy to enhance India