Most of the states adopted VAT on April,2005.

VAT replaced sales tax levied by the states.

VAT is a tax on sale of goods within a state.
Only centre can impose tax on sale of goods
from one state to another.

CENTRE, STATE AND VAT

 Concept of VAT applies to all kinds of goods

and services
Excise and sales tax are with the centre and
these are distinct from sale tax, which is levied
by the states on a sale within a state.

QUANTUM OF VAT
The range of tax can vary from complete
exemption to high rates.
eg. Books, newspapers and maps are totally
exempted from VAT.
Items such as drugs, medicines, agricultural
and industrial inputs are taxed in the lowest
slab of 4%.

SERVICE TAX

Introduced in 1994.
Definitions:
assessee
Authorized service station
Banker to an issue
Banking
Banking company
Banking and other financial services
Courier agency etc