Value-added taxation in India
India transitioned to a Value-added tax system on 1 April 2005. The previous general sales tax laws were replaced with the Value Added Tax Act and associated VAT rules.
A few states opted out of VAT during the initial introduction of VAT but adopted it later. As of 2 June 2014, VAT had been implemented in all the states and union territories of India except Pondicherry, Andaman and Nicobar Islands and Lakshadweep Island.
India replaced VAT with the Goods and Services Tax on 1 July 2017.
Legacy of India's VAT
In an audit of the policy, the Comptroller and Auditor of India found multiple deficiencies in the implementation of VAT.States where VAT was applicable
Gujarat
The Government of Gujarat had pass the "Gujarat Value Added Tax Act, 2003"in 2003 and specified the date of implementation would be notified later. Accordingly, the Government of Gujarat has vide notification no. GHN – 14/VAT-2006/S.1.-TH dated 29 March 2006 notified that the appointed date for implementation of VAT regulations in the State of Gujarat shall be effected from 1 April 2006.
However, "The Central Sales Tax Act, 1956" which levies sales tax on inter-state sales was still effective and all inter state sale and purchase transactions effected after 1 April 2006 in the State of Gujarat continued to be subject to levy central sales tax as applicable earlier.
In Gujarat, "DVAT" Act 2003, will merged three existing state taxes:
Gujarat Sales Tax Act, 1956
Bombay Sales of Motor Spirit Taxation Act, 1958
Gujarat Purchase Tax on Sugarcane Act, 1989
Rates under VAT:
The Gujarat Value Added Tax Act, 2003 - Schedule