Introducing VAT in Madhya Pradesh - A quantitative analysis
By: Singh, S.B.
Contributor(s): Vyas, R.K.
Material type:
ArticlePublisher: 2003Description: p.41-54.Subject(s): VAT | Taxation - India - Madhya Pradesh | Taxation
In:
Indian Journal of Public AdministrationSummary: Sales taxes are an important source of revenue for the states in India. While the taxes vary in their design, they are generally levied at the first point of sale within the states. Their structure is complex, irrational, and flawed from an economic efficiency perspective. They are subject to poor tax compliance, and the tax administration is weak and ineffective in enforcing proper compliance. In this article, we have analysed the important aspects of the current system like growth of revenue and its buoyancy, change in the pattern in numbers of dealers and their contribution to revenue. We have also analysed the impact of taxes on inputs and on final consumer goods. The extent of tax cascading under the present system of single stage taxation and a partial VAT on wholesalers has also been evaluated. We have concluded that the present system of commodity taxation in Madhya Pradesh is very complex, causes economic distortions and is difficult to administer and comply. Therefore, there is an urgent need to change over to a system which does not suffer from these efficiencies. Several experts who have reviewed this system have come to the conclusion that a full-fledged VAT which is fair, simple and inherently high complaint, is the only option that could address the problems of current system in a satisfactory manner. - Reproduced.
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Articles
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Indian Institute of Public Administration | Volume no: 49, Issue no: 1 | Available | AR58284 |
Sales taxes are an important source of revenue for the states in India. While the taxes vary in their design, they are generally levied at the first point of sale within the states. Their structure is complex, irrational, and flawed from an economic efficiency perspective. They are subject to poor tax compliance, and the tax administration is weak and ineffective in enforcing proper compliance. In this article, we have analysed the important aspects of the current system like growth of revenue and its buoyancy, change in the pattern in numbers of dealers and their contribution to revenue. We have also analysed the impact of taxes on inputs and on final consumer goods. The extent of tax cascading under the present system of single stage taxation and a partial VAT on wholesalers has also been evaluated. We have concluded that the present system of commodity taxation in Madhya Pradesh is very complex, causes economic distortions and is difficult to administer and comply. Therefore, there is an urgent need to change over to a system which does not suffer from these efficiencies. Several experts who have reviewed this system have come to the conclusion that a full-fledged VAT which is fair, simple and inherently high complaint, is the only option that could address the problems of current system in a satisfactory manner. - Reproduced.
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