Abstract

http://ssrn.com/abstract=945952
 


 



Implementing VAT in India: Implications for Federal Polity


Chanchal Kumar Sharma


Central University of Haryana; Centre for Multilevel Federalism, Institute of Social Sciences


Indian Journal of Political Science, Vol. LXVI, No. 4, pp. 915-934, 2004

Abstract:     
Over the last few years, many attempts have been made to implement VAT in India. Initially, all states were to move to VAT system by 2000, but administrative problems and concern over the revenue implications of the change delayed the scheduled implementation. It has been postponed for five times in past five years. In fact, introduction of a full fledged VAT in India seem to present numerous administrative and constitutional difficulties, including the vexed question of union-state relations. In addition to this, implementing VAT in India in context of economic reforms has paradoxical dimensions. On one hand economic reforms have led to more decentralization of expenditure responsibilities which in turn demands more decentralization of revenue raising powers if fiscal accountability is to be maintained. But on the other hand the process of implementation of VAT can lead not only to revenue loss for the states but can also steal away the states' autonomy indicating more centralization. Thus the need is to develop such a 'federal friendly model' of VAT (along with a suitable compensation package) that can be implemented in India without compromising federal principles.

Number of Pages in PDF File: 21

Keywords: VAT, India, Federal Polity, subnational vat, national vat, dual vat

JEL Classification: H, H0, H29

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Date posted: November 20, 2006  

Suggested Citation

Sharma, Chanchal Kumar, Implementing VAT in India: Implications for Federal Polity. Indian Journal of Political Science, Vol. LXVI, No. 4, pp. 915-934, 2004. Available at SSRN: http://ssrn.com/abstract=945952

Contact Information

Chanchal Kumar Sharma (Contact Author)
Central University of Haryana ( email )
Department of Political Science
Central University of Haryana
Mahendergarh, Haryana
India
91+98222888272 (Phone)
Centre for Multilevel Federalism, Institute of Social Sciences ( email )
New Delhi
India
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