VAT will not lead to price raise: Minister

CHENNAI : There is a misconception that VAT increases the price of goods, Commercial Taxes Minister S.N.M. Ubayadullah said here on Wednesday. The experience of several countries that have adopted VAT showed that it improved tax collection and freed the consumer from the burden of surcharge and extra local taxes, Mr. Ubayadullah said at a seminar on VAT at The New College. He said Tamil Nadu expected to raise Rs. 20,000 crore from VAT this year.
G. Shanmugam, Joint Commissioner of VAT Cell, said that the initial hurdles in the implementation of VAT would be overcome as traders and the public understood how VAT functioned. VAT is added whenever the value of a product increases as a result of application of a company's labour and equipment. This facilitates a cross audit because tax charged by the supplier firm can be reported as a deduction by the buying firm.