States back to pre-VAT chaos: Tax jungle of 30-plus different VATs

While continuing to block the introduction of GST, the states are making changes to the Value Added Tax (VAT) laws which are a blow to the economy. The most recent change is an amendment by Tamil Nadu, which severely restricts the tax credits in respect of inputs used in inter-state sales. It denies credit for the first 3% of the tax on any inputs for use in inter-state sales—which attract the 2% Central Sales Tax (CST)—and the first 5% on tax on inputs for inter-state branch transfers.

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