Revenue Implications of introducing Value Added tax at the State-level States on Introduction of Value Added Tax
Publication dateOct, 2004
DetailsReport submitted to the Twelfth Finance Commission, Government of India
AuthorsPinaki Chakraborty, Ujjaini Datta
The study analysed the possible revenue loss in the event of introduction of value added tax at sub-national level in India for two states, viz., Andhra Pradesh and West Bengal. The study suggested that, under the proposed implementable VAT design, the revenue loss to both the states is insignificant when the reform envisages intra-state VAT. However, when the reform includes phasing out of the Central Sales Tax, there would be revenue losses and it is necessary to find appropriate mechanism to compensate the loss.