Monday, April 25, 2005

Traderspeak on VAT

Why VAT will increase prices. This priceless quote is from a trader who now has more paperwork due to VAT. "If the trader evaded some tax, he did pass some benefit to the end customer. Say, an article that cost 200 as MRP, with say 25 being the retailers margin was passed on to the consumer at about 190 would now cost 200 plus tax because the retailer has to pay tax and wont take a cut on his margins. Ultimately consumers will have to pay for a movement of goods into the tax net."

He estimates that operating expenses of business would increase since maintaining good accounts and proper billing mean more administrative overheads which will be passed on to the consumer, as usual.

But, he also says, the VAT will slowly push more and more of Indias trade into the tax net because now if someone in the chain evades tax someone else will have to pay it.

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