Question

Which of the following is true about Value Added Tax (VAT)?
A. It is a consumption tax levied on value added to the product on every stage of its production.
B. VAT is levied by the Union Govt and only a small part goes to State Govts.
C. The income tax on retailers is now decided on the basis of their VAT collection in a year.

• A. Only (A)
• B. Only (B)
• C. Only (C)
• D. All (A), (B) and (C)

Answer 1

The correct option is A Only (A)

VAT stands for Value Added Tax. It is an indirect tax, that means, the burden of tax can be shifted to different persons. By definition, VAT is a consumption tax levied on value added to the product on every stage of its production.