†Emeritus, National Institute of Public Finance and Policy, and former Member, Eleventh Finance Commission
Introduction of VAT at the state level discarding the sales tax systems that had been in operation for more than half a century has been rightly acclaimed as the boldest tax reform undertaken in independent India.
Introduction of VAT at the state level with the majority of the states discarding their archaic and distortionary sales taxes is the boldest measure of tax reform in independent India. However, the scheme of VAT that is being put in place falls short of what is regarded as a desirable design of VAT in some important respects. This note seeks to provide a brief appraisal of the state VATs that are coming into operation, identify the deficiencies and suggest remedies.
