What do you mean by VAT? Why it is mandatory?  

Each commodity passes through different stages of production and distribution before finally it reaches the Consumer. Some value is added at each stage of the production and distribution chain. Value Added Tax (VAT) is tax on value addition at each stage. Under VAT system, a dealer collects tax on his sales, retains the tax paid on his purchase and pays balance to the Govt. Treasury. It is a consumption tax because it is borne ultimately by the final Consumer. The tax paid by the dealer is passed on to the buyer. It is not a charge on the dealer. Hence, VAT is a multipoint tax system with provision for set off of tax paid on purchases at each point of sale.

Answered by nirmal at 10:25 PM on September 01, 2007

Value added tax (VAT), or goods and services tax (GST), is tax on exchanges. It is levied on the added value that results from each exchange. It differs from a sales tax because a sales tax is levied on the total value of the exchange. For this reason, a VAT is neutral with respect to the number of passages that there are between the producer and the final consumer. A VAT is an indirect tax, in that the tax is collected from someone other than the person who actually bears the cost of the tax (namely the seller rather than the consumer). To avoid double taxation on final consumption, exports (which by definition, are consumed abroad) are usually not subject to VAT and VAT charged under such circumstances is usually refundable.

Answered by pathu at 1:51 PM on September 01, 2007

Value Added Tax. It is an indirect tax on consumption that is assessed on the increased value of goods at each point in the chain of production and distribution, from the raw material stage to final consumption. The tax on processors or merchants is levied on the amount by which they increase the value of the items they purchase and resell.

Answered by @ at 2:23 AM on September 01, 2007

VAT stands for Value Added Tax.It is the tax imposed as remuneration to govt.for value addtion by particular buyer in chain on production to usage by end user of any certain product.It is 4% on most of the items in INDIA.It is a compliment to sales tax even in some of the cases.

Answered by MANMOHAN at 12:56 AM on September 01, 2007

VAT means Value Added Tax.This Tax is mandatory for those who sales.

Answered by Weclub at 12:54 AM on September 01, 2007

VAT means Value Added Tax charged by government on selling of goods. It is mandatory because earns revenue from taxes and spends on our infrastructure, medical facilities etc..........

Answered by param24 at 12:47 AM on September 01, 2007

VALUE ADDED TAX

Answered by dinesh at 12:45 AM on September 01, 2007