Journal Press India^®

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This paper is intended to give an account of the emergence of Value Added Tax (VAT) in the world economy and then its subsequent adoption in various countries. It also documents the emergence of the concept of the VAT (including the theory of Input Tax Credit)and the history of the indirect tax system in India. The study also explores the impact of VAT on the economy in terms of economic growth, revenue generation, consumption, and income distribution. Through a thorough literature review, this essay provides a theoretical basis for the grounds on which VAT was implemented and then eventually replaced by Goods and Services Tax (GST) in India. The objective of the study is to contribute to the  literature on VAT in India, while laying a basis for rationalizing the entire indirect tax structure.

Keywords

VAT; Input Tax Credit; Goods and Services Tax (GST); Consumption tax.

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