Q. Which one of the following is not a feature of "Value Added Tax"? (UPSC Prelims 2011)
Answer:
It is basically a subject of the Central Government and the State Governments are only a facilitator for its successful implementation
Notes: Option [D] is Incorrect
- State Authority: Under the Seventh Schedule of the Indian Constitution, the power to levy tax on the sale or purchase of goods (other than newspapers) was in the State List (List II). It is "destination-based" because the tax revenue eventually belongs to the state where the goods are consumed.
- [B] Levied on value addition: This is the core principle. At each stage, a dealer pays tax on their sales but gets a credit for the tax already paid on their purchases (Input Tax Credit).
- [C] Borne by the consumer: Although the tax is collected from businesses at various stages, it is an indirect tax.