It is a tax on consumers of goods and is a form of consumer tax. From a seller’s perspective, it is tax on the extra value that is added to any goods. From a buyer’s perspective, it is the tax on cost price. VAT stands for value added tax and is levied on the consumers of goods for generating revenues that are similar to income tax. VAT is decided by subtracting material costs from sale price to customers. Different VAT rates are prescribed for different category of products. Some have 10% VAT some have 5% and so on. VAT started in India from April 1, 2005. India has fixed VAT rates of 5% and 12.5% all over the country. Tamil Nadu state introduced VAT Act in 2006 which came into existence from 2007. It is also called TNVAT.
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What is VAT?
