Difference Between VAT and GST(Goods and Service Tax)

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GST(Goods and Service Tax) 
VS 
  (Value Added Tax)
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Brief Summary of Both the Taxation Policy

• After the introduction of GST, indirect taxation
  policy of India will be subsumed under GST
  because a line of various taxes will be included
  in a single tax law which is GST (Goods and
  Service Tax).
• Before GST, the main indirect taxations were VAT,
  Service Tax, Excise etc. 
• Where VAT is a tax which is added at every point,
  from production to the time of sale. 
• Tax is added at every stage when the value is
  added that is why it is called value added tax.

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Return to be Filed

• Under the GST, taxable person will be expected to
  file the details of all the sales electronically
  by 10th day of each month in GSTR-1 succeeding
  the taxable month and later on by the mid of
  month he will have to  file the details of all
  the purchases  in GSTR-2 succeeding the taxable
  month  And annual return should be filed up to
  31st December in GSTR- 8 of next financial year.
• Although In present VAT system the dealer has to
  file quarterly VAT returns and at the same time
  assessee has to file Sales register and purchase
  register. And at the end of the year, the
  assessee is liable to file annual return too.

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Input Tax Credit

• After the introduction of GST Law, this cascading
  impact will be eliminated because in GST we can
  get Cenvat Credit of interstate sales purchase as
  well as in GST we can get credit even after sales
  of Services.
• While under VAT system tax credit for CST cannot
  be taken against VAT payable so it leads to
  cascading effect i.e. tax on tax.

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Cost Reduction

• The implication of GST law will ultimately result
  in cost reduction of goods as there will be a
  single tax levied that is goods and service tax.
• While under VAT law a trader cannot use the
  credit of other indirect taxes similar service
  tax credit etc. For payment of VAT liability so
  it will result in a rise in the value of goods.

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Tax on Interstate Sales

• Under GST law IGST will be levied in case of
  inter-state sale and purchases. 
• While under VAT Law CST is levied on inter-state
  purchase and sales of goods.

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Input Tax Credit Mismatch

• According to GST law the biggest problem of ITC
  mismatch will get solved as all the details of
  sales will be filed till the 10th day of next
  month and all the details of purchases will be
  filed by 15th of next month and monthly return
  will be filed by 20th of next month.
• While under VAT system there is a very big
  problem of ITC mismatch as there is no such
  system for filing details of sales and purchase
  by few specified date before filing the VAT
  return which gives increase to Input tax credit
  mismatch.

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Conclusion

• In my opinion GST will be a probable solution for
  different problems in VAT and other taxation
  structures.
•    Read More _at_ Diifference between VAT and GST

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The Team