How will the government benefit from VAT?
The two-tier system will bring in new entities, which would be taxed. The compliance level at this stage is about 30 per cent. This would increase to 50 to 60 per cent under VAT. Also by bringing in more accountability, the government can curb the ‘black economy,’ which will in turn boost growth. What will the earning of the national exchequer post VAT? I cannot actually quantify it in monetary terms, but it will definitely increase as it has in many foreign countries which have implemented VAT. What benefit will it bring to customer and traders? Customers will be at the receiving end as the burden is transferred to the them, as VAT is destination based. While the prices of some articles will go up, the prices of some will come down as well. As for traders, input tax credit will be a great advantage. What will be the impact of VAT on various sectors? The big corporates burdened by corporate tax as high as 35 per cent and high sales tax will benefit hugely. The 4 per cent tax will reduc
