Are they two names for the same thing?
Value Added Tax was introduced in the year 2005 as replacement for the earlier Sales Tax System. VAT is an indirect tax which is issued at each and every stages of the supply chain and is applicable to some key products like petrol, diesel, and alcohol for the consumption of human which is not taxable under the GST Act.
VAT was introduced to make India a single integrated market so that a combine tax rate for products and service as possible. The taxation system had a few drawbacks due to many indirect taxes that includes VAT being abolished and uniting with GST.
The Constitution of India’s 122nd Amendment Bill was put forth in the 16th Lok Sabha on 19th of December 2014, in order to address widespread issues in taxation. GST is also called as the Goods and Service Tax and it is regarded as an indirect tax that has replaced many indirect taxes in India like VAT, Service tax, excise duty etc. The GST was passed on 29th March 2017, in the Parliament but came into effect on 1st July 2017.
In keeping the federal structure of India, it is proposed that the GST will be issued both by the Central Government (CGST) and the State Government (SGST). Prime Minister Narendra Modi introduced GST in India on the midnight of 1st July 2017.The development of GST took many negotiations as well as revisions before getting launched in India in its final form in the year 2017.
Some advantages of VAT are as follows:
As VAT is a consumption tax the revenue that are generated remains constant.
As compared to other indirect taxes VAT is easy to manage.
A huge amount of revenue is collected on a low tax rate through VAT.
As VAT is collected in small instalments so the consumers have minimum burden.
VAT is regarded as a neutral tax so it can be charged on all sorts of business.
Some advantages of GST are as follows:
GST abolishes the cascading tax effect.
GST is the scheme of composition for small scale businesses.
GST improves logistics efficiency.
GST has easy as well as simple online procedure.
GST has lesser number of compliances.
The purpose of GST is to reduce corruption.
With the introduction of GST, it has reduced taxes on certain goods by 2% and on other items by 7.5%.
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