fter much discussion and debate, the Government of India has decided to say goodbye to sales tax and impose value added tax (VAT) from April 1, 2005. A print campaign broke earlier this year to educate the lay consumer about the new tax and its advantages over the old system of taxation. The Government will reportedly spend about Rs 4 crore in the five-month, multi-media burst.


But first things first. What is VAT? VAT is a consumption tax that is calculated on the basis of the value added to goods and services. It is charged as a percentage of the price of the product or service, enabling the tax payer to see the tax burden at each stage in the production and distribution chain. Over 130 countries around the world have imposed VAT with the US and India (till now) among the only few exceptions.

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