What are the limitations of VAT?

Answer 1

Limitations of VAT

• VAT was to be applied in all states but it failed to do so.
• Inflation rate has been increased due to VAT.
• VAT has complicated both tariff in customs and excise and Overburdend with more exemptions
• VAT is regressive :- It’s burden falls disproportionately on Poor people since the poor are likely to spend more of their incomes
• VAT is too difficult to operate from the position of both the Administration and business.
• Monthly Return : The manufacturer is required to pay CenVAT on a fortnightly basis and submit a monthly return (ER1) to the Superintendent of Central Excise by the 10th of the month