Meaning of MODVAT (modified value added tax)

What is MODVAT (modified value added tax)

 

This post explains about MODVAT (modified value added tax). 

MODVAT (modified value added tax)

MODVAT (modified value added tax) was introduced in India in 1986 (MODVAT was re-named as CENVAT w.e.f. 1-4-2000). The system was termed as MODVAT, as it was restricted upto manufacturing stage and credit of only excise duty paid on manufacturing products (and corresponding CVD paid on imported goods) was available.

System of VAT was introduced to service tax w.e.f. 16-8-2002. VAT was not extended to sales tax, as sales tax is under jurisdiction of State Governments. However, State Governments have agreed to introduce sales tax VAT and it is likely to be introduced from April 2005. Haryana Government has introduced sales tax VAT in April 2004 and the experience is reported to be good.

Integration of goods and service tax - A task force was formed under Chairmanship of Shri Vijay Kelkar on Implementation of Fiscal Responsibility and Budget Management Act. The Kelkar Committee submitted its report in July 2004. The Committee has strongly recommended ‘Goods and Service Tax’ (GST).

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