Value Added Tax (VAT) is a consumption tax levied on the value added at each stage of production and distribution of a good or service. Each business in the supply chain collects VAT on its sales and receives a credit for the VAT paid on its inputs, effectively taxing only the value it has added. The final burden of the tax falls on the consumer.
VAT is imposed:
Asked in UPPSC Upper Mains 2006 · UPPSC Upper Mains 2012 · Topic: Fiscal Policy & Revenue (Taxation System in India: Direct, Indirect taxes, and Tax Reforms (including GST))
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Answer: D. on all stages between production and final sale
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