Querist : Anonymous
( Querist )
19 September 2011
I've not quite understood the following merit and demerit of VAT-
"As tax burden is rationalised, prices in general will fall"
"The merits accrue in full measure where there is only one rate of VAT and VAT applies to all commodities without any question of exemptions whatsoever. Once concessions like differential rates of VAT, composition schemes, exemption schemes, exemption category goods are built into the system, distortions are bound to occur and the fundamental principle that VAT will totally eliminate cascading effects of taxes will also be subject to qualifications."
The DEMERIT is a bit lengthy, sorry for that.
What do they really mean?
I'm very very thankful for your time and help.
Thanks a lot.