Single point of taxation introduced in Punjab VAT
VAT is a multi-point taxing system with a system of Input tax credit on the purchases.
However, the recent amendment made by Punjab government has changed the VAT into single point levy.
VAT shall be payable only by first importer and manufacturer only. At subsequent stages of the cycle, when the goods will be sold by say either a wholeseller or distributor or retailler, the same will be not leveiable to VAT
No Vat shall be paid on any value addition to goods at subsequent stages of trade cycle. VAT is a multiple point taxation system . Single point of taxation is completely impossible and inconsistent within the VAT system.
The special rates of tax @14.5% and 22.5% have been notified for goods on which tax will be payable at first stage. Surcharge @ 10% u/s 8-B will be seperately leviable for such goods, thus effective rate comes to 15.95% & 24.75% respectively
Kindly find attached the Notification.pdf issued by Govt of Punjab in this regard
This is the best step ever taken i would say. This will reduce the cost of dealers and corruption. The handling of vat at single point will insure the reduction in administration cost of state vat departments.
Thinking from another angle,
While i agree it may reduce administrative costs, we have came a long way from the erstwhile sales tax system which was a single point taxing system and had lot of loopholes in the system. Evasion of taxes is not so easy under Multi-point VAT. The very meaning of VAT( Value Added taxation) has been changed. Government may loose substantial revenue due to single point system.