Question

Difference between gst input credit and vat input tax

Answer 1

Goods and Service Tax is an indirect tax which the Government of India is planning to levy on all goods and services apart from those exempted by the GST law. The GST taxation laws will put an end to multiple taxes which are levied on different products, starting from the source of manufacturing to reaching the end consumer.The GST is a dual taxation regime, where the only two components will be Central GST (CGST) and State GST (SGST). Under such nomenclature the total amount of GST for any goods or service will be distributed in both State and Central exchequers.
VAT is applicable for goods sold and not service. Service tax takes care of services rendered. However, GST will be applicable for both goods and services, and will have a uniform pricing.Very simply put, VAT is the tax a manufacturer has to pay for the additional value created. So, if the raw material costs INR 50 and finished product costs INR 100, the value added to raw material is INR 50.However, the VAT applicable on INR 100 and INR 50 will be based on the VAT guidelines and the difference of those tax amounts needs to be paid by the manufacturer.I hope this will help!!!