Term Value-added tax (VAT) under Indian Tax

What is Value-added tax (VAT)under Indian Tax


The details about Value-added tax (VAT)under Indian Tax are explained here

Value-added tax (VAT):

Value-added taxation in India was introduced as an indirect value added tax (VAT) into the Indian taxation system from 1 April 2005. The existing general sales tax laws were replaced with the Value Added Tax Act (2005) and associated VAT rules.

VAT or Value Added Tax is a tax added to the goods at each stage of the production and distribution process. VAT tax however is ultimately paid by the end consumer, as dealers are allowed to collect VAT tax on their sales, retain the tax paid on their purchases and only pay the balance to the Government. Unlike service tax, VAT is still governed by the State Government by separate VAT act passed by each of the state in India under the guidelines issued by an Empowered Committee to ensure uniformity. Therefore, the procedure for VAT Registration, the VAT Rates, due date for VAT payment, deadline for VAT Return Filing and other modalities differ from State to State. In this article, we look at the VAT Rates prevalent in some of the major states in India and the relevant schedules:

A few states (Gujarat, Tamil Nadu, Rajasthan, Madhya Pradesh, Chhattisgarh, Jharkhand, Uttarakhand and Uttar Pradesh) opted to stay out of VAT taxation system during the initial introduction of VAT but adopted it later.

As of 2 June 2014, VAT has been implemented in all the states and union territories of India except Andaman and Nicobar Islands and Lakshadweep Island. VAT Rates in India

VAT Rates in India

The VAT Rates in India will differ based on the type of goods and from State to State. Therefore, it is important for the Entrepreneur to be conversant with the State’s regulation with respect to VAT. However, VAT Rates in India can be divided into three main categories, which are common for many states:

VAT Exempted Category / NIL VAT Rate

In many states, items that are sold by the unorganized sector in natural or unprocessed format and basic goods for the poor are listed under the VAT exempted category. Some of the items that may be VAT exempt in many state include: aids used by handicapped persons, glass or plastic bangles, condoms, firewood, khadi, salt, etc.,

1% VAT Rate

In many states, 1% or 2% VAT Rate is applied for precious stones, precious metals like silver, gold and platinum, bullions, jewellery, etc.,

4% or 5% VAT Rate

Many states have adopted a VAT Rate of 4% or 5% for a large number of basic necessity goods. Some of the goods included in this category in many of the States include coffee, coir, cotton, edible oils, medicines, drugs, agricultural implements, etc.,

General VAT Rate

In addition to the above VAT Rates, many states also have other levels of VAT based on the Goods. Very high VAT Rate of over 20% is usually levied for goods such as imported liquor, cigarettes, etc., Many states also have a General VAT Rate of around 12.5% which is meant as a catch-all for goods not falling in any of the listed category. These categories of goods not falling in any of the other category are usually taxed at 12.5% or 13.5% or 14% depending on the State.

The information on Value-added tax (VAT)under Indian Tax is detailed above.   Comment below your thoughts on Value-added tax (VAT)under Indian Tax.






Learn Exports Imports Free, Click here

Click here to know GST rate of your goods or service

TDS under GST, Frequently Asked Questions

Does Interest attract on GST Tax payment delay?

Mechanism of Payment of GST tax in India

Levy of late fee for GST Tax returns filing in India

Notice to GST return filing defaulters

When to file Annual Return of GST online?

Procedures to claim reduction in output tax liability of GST in India

Procedures to claim Input Tax Credit under GST in India

When to file first Return of GST tax in India?

GST Tax returns filing – Who, How and When?

How is time of supply accounted under GST Tax Calculation

Valuation of GST under special cases

Valuation of GST Taxable supply

Is GST registration required for homestays providing accommodation through an ECOs, below threshold limit

Compliances from ITC reversal point opting for composition levy under GST

Anti-Profiteering Measures to Benefit Consumers under GST

GST rate on Instant Coffee

Is NCCD leviable on tobacco products after GST?

Revised GST rate on goods, 21.07.2018

 How to book empty container for factory/CFS/ICD/port stuffing

 How to calculate CBM in LCL export shipments:

 How to calculate chargeable weight under airfreight in exports?

How to check the time of contract on high sea sale transaction?

How to Choose a product for export business

How to cover the risk of Cargo loss or damage

 How to customs clear Cargo arrived in a port where in import license obtained for another port

How to export from Rwanda?

How to Import to Rwanda?

How to import to India from Rwanda?

How to export from India to Rwanda?

Documents required for Export from Rwanda

Registration required to export from Rwanda





cypres: I have bought 2 x container Firewood from U.K for Dubai .I was told by the agent, that the cargo has been Held in Spanish custom and they told the agent that we have to pay custom fee plus VAT, and it is refundable once the cargo reaches its destination . Is this correct. Can the Spanish authority ask for such a fee.

Discussion Forum

You can also share your thoughts about this article.
Any one can answer on question posted by Readers