A sales tax is a tax paid to a governing body for the sales of certain goods. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase. When a tax on goods or services is paid to a governing body directly by a consumer, it is usually called a use tax. Often laws provide for the exemption of certain goods or services from sales and use tax.
Most countries in the world have sales taxes or value-added taxes at all or several of the national, state, county or city government levels.
Value-Added Tax – VAT
Value-added tax (VAT) is most often used in the European Union. The amount of value-added tax that the user pays is the cost of the product, less any of the costs of materials used in the product that have already been taxed. The purpose of VAT is to generate tax revenues to the government similar to the corporate income tax or the personal income tax. Value-added tax avoids the cascade effect of sales tax by taxing only the value added at each stage of production. For this reason, throughout the world, VAT has been gaining favor over traditional sales taxes. In principle, VAT applies to all provisions of goods and services. VAT is assessed and collected on the value of goods or services that have been provided every time there is a transaction (sale/purchase).
Solubilis Corporate Services provides TN VAT registration services in Chennai and TN VAT registration services in Coimbatore. We are the India’s fastest sales tax registration consultants providing registration services at affordable cost.