FREQUENTLY ASKED QUESTIONS ON VALUE ADDED TAX (VAT) 1. What is
VAT? A. Unlike the name suggest, VAT is NOT a tax on the margin
of the business. VAT is a Consumption Tax, meaning, tax on
consumption of goods by the consumers. VAT is to be borne by the
consumers. 2. What is the similarities and differences between
Sales Tax and VAT? A. Both Sales tax and VAT are Consumption
tax. To take an example, if a consumer consumes a goods worth
Rs. 100 on which tax rate is 10%, the objective of both the
system is to collect Rs 10 (i.e. 10% of Rs 100) to the
Government. Both are Indirect Tax, meaning the consumer does not
pay the tax to directly the government, but to the business from
whom he has purchased the goods. The business remits it to the
Government. In Sales tax, the entire tax collected from the
consumer by the dealer is paid by one of the dealer (out of the
chain through whom the goods have passed). Chain meaning Chain
of business comprising of Manufacturer -Wholeseller –
Intermediate – Retailer etc. To take t