| Current Position Under VAT | Tax levied at the stage of the first sale (only for cotton, leather and natural gas at the final stage). |
| Tax levied and collected at every point of sale. | Tax levied and collected at every point of sale. |
| Successive sales (resales) of goods on which tax is already paid do not attract tax. | Tax collected at every point of sale and the tax already paid by the dealer at the time of purchase of goods will be deducted from the amount of tax paid at the next sale. |
| Dealers reselling goods on which tax has already been paid do not collect any tax on resale and file nill returns. | Dealers reselling tax-paid goods will have to collect VAT and file returns and pay VAT at every stage of sale (value addition). |
| On 19 goods used as raw materials there is no input tax credit on the tax paid on such goods and 2% tax is levied on other goods used as raw materials for manufacture. | The manufacturer will pay VAT on the goods purchased as raw materials but the VAT paid on raw materials will be deducted on the sale of goods manufactured. Thus duplication of tax burden on raw materials will be avoided. |
| Computation of tax liability is complex. | It is transparent and easier. |
| Sales Tax is not levied at the time of purchases against statutory forms but there is misuse of such forms resulting in tax evasion. | VAT dispenses with such forms and sets off all tax paid at the time of purchase from the amount of tax payable on sale. |
| Returns and chalans are filed separately and in returns the dealers have to give numerous details. Scrutiny of returns is also difficult. | The return and the chalan will be filed together in a simple format after self-assessment done by the dealer himself which will be subject to scrutiny. |
Huge number of forms required in procedure.
Six taxation rates. | At the most a few forms required
Only two rates. |
| Tax only on goods. | Tax on goods and services both. |
| Assessment done by the department. | Self-assessments by dealers. |
| Penal provisions for defaulters and evaders of tax not very strict. | Penalties will be stricter |
