Question:
wt is the basic difference between MODVAT , VAT...n CENVAT...
detailed ones preferred.
Answers:
MODVAT= modififed value added tax...(no more used dont waste time)
Cenvat=Central Value added tax...(currently being used to tax manufacture of goods as % of value of goods)
VAT= value added tax..This is the proposed indirect taxation system wherein tax is to be paid whereever value (cost increased value) is added to the goods...this tax is supposed to replace all forms of taxation eg:sales tax.CST,,Octroi, Cenvat...
The problems with VAT is control as every seller/dealer will have to maintain books on VAT and get himself registered...which dealers offcourse want to avoid so that black money cannot be traced...read suggested modules of ICAI for better understandibility..
NOTE:
CENVAT= Tax on manufacture
VAT= Tax on every increase in value..dats manufacturer=>dealer=>
Distributor=>retailer=>custome...
Therefore VAT will tax every stage in sale whereever value is added to goods
Both are same. MODVAT is now known as CENVAT.
It is a tax on the manufacture of goods that is levied when goods leave the place of manufacturer. The name of tax which was known as 'Central Excise Duty' was renamed as CENtral Value Added Tax(CENVAT). Manufacturers can set off the duty paid on input materials against their output duty a procedure known as CENtral Value Added Tax Credit (CENVAT Credit). In India it was previously known as MODVAT or MODdified Value Added Tax
Cenvat is applicable in Central Government's excise duty. It is on manufacturers of goods/products.
Vat is State Government Tax on sale of goods and services. It is brought after repealing the Sales Tax. Most of the states have implemented it. Some have not yet implemented but are in process of implementing it. (Tamilnadu, U.P. Gujarat I guess.) It is applicable to everybody in the chain from manufacturer to retailer. Certain reliefs are provided in the relative acts.
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