Experiences in hyderabad

VAT ... VAT ..traders / tax evaders and the poor .. The sufferings shall come to an end

ajayg | 24 February, 2005 14:24

I disagree with what Aziz had said about the VAT. Instead its going to be a boon in disguise.. How? is the obvious question that would arsie in ur mind. LEt me explain VAT.

Farmer fams wheat...he sells it for 100 .. Pays a tax on the revenue @ 20% = 20 Rs.

Baker buys the wheat makes it into bread .. sells it for 150 pays a tax on the revenue @ 20% = 30 Rs/-

Retailer buys the bread and sells it to you at 200 Rs/- and incurs a tax on the reveune @ 20% = 40 Rs/-


The total cost of the wheat @ 100 becomes 200 and the tax on that wheat is 20+30+40 = 90 Rs/-. So eventually for a 100 Rs/- wheat the tax is 90 Rs/- And who is paying for the entire tax ? the people like u and me !!

During the VAT regime how it works

VAT = Value Added Tax

Wheat - 100 Rs  - Value Added 100 Rs   Tax @ 20% = 20 Rs

Bread -  150 Rs -  Value added 150 (Selling price) - 100 (Cost Price) = 50 Rs/ Tax @ 20% on 50  = 10 Rs/-

Bread to customer - 200 Rs/- value added 200 - 150 = 50 Rs/- Tax @ 20% = 10 Rs/-

Total Tax paid = 20+10+10 = 40 Rs/- . So the savings goes to the trader and the baker and so effectively the consumers will survive.

Why do people then say VAT is going to kill us ?

India is a land of Tax evaders .. Where the tax evasion is higher the tax what the baker and the retailer collects does not go to the government, inturn who loses the money ? its not the salaried class or the rich but the poor for who has to pay the TAX which is not paid to the Govt and enjoyed by the traders. So the traders make a huge hue and cry.

State govt makes a hue and cry coz until today the tax collection goes to state govt. Now it goes to the central govt.

Think...People Think when you say VAT is going to kill us.. Its not VAT its the no payable of this is going to kill us. LEt us not pay for what we did not do.. But lets pay for what we earn..



[No Subject]

Anotherday | 24/02/2005, 15:24

I agree with you that VAT will make administration quite easy. Infact this uniform rate of taxation will help entrepreneurs also bud as it gives a clear structure of what taxes will apply. Having them across all states makes it easier for manufacturers to have a larger spread across regions. Most importantly, this will reduce the disparities between states and ensure that they all have a level playing field.

[No Subject]

Ajay | 01/03/2005, 12:22

yeah!! thats right!! this level playing field means more competetion and more better service. Yes!! There wud be a oligopolistic nature in the business but it would be for good. Coz this market is full of low entry and low exit barriers so whosoever servers better would have the better market share

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