Q. 85.0( 2 Votes )

How would VAT reduce the evasion of taxes on goods?

Answer :


A VAT is the Value Added Tax in which the tax is levied on every production process of a commodity. Any increase in the value in each stage of production it will be imposed by VAT. When the tax is levied in every stage of production, it becomes very difficult to evade the tax. Tax evasion is the illegal evasion of the tax by the individuals. When the tax is included in all the stages of the production, it will reduce the evasion of the tax by the individuals. But tax avoidance can be done in VAT by transferring the tax burden to another individual by increasing the price of the product which the consumer buys.


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