Question

how would VAT reduce the evasion of taxes on goods?

Answer 1

The policy design of the proposed VAT enables a dealer to claim credit of the tax paid or payable on the purchase of any goods made from a dealer registered in the State. ... Use as raw material or processing material in manufacture of goods for export out of India. Use in the State as capital goods.

Answer 2

${\huge{\boxed{\mathbf{\purple{♡ANSWER♡}}}}}$.

$\green\longmapsto\:$ All producers and traders will have to keep genuine record of their Sale and purchase.

$\green\longmapsto\:$ Everyone has to keep proper records and ask for bills for purchase.

$\green\longmapsto\:$ It is only on this basis they can show the tax already paid on cost of inputs.

$\green\longmapsto\:$ The tax inspector will be able to match records of the seller and purchaser for verification.

$\green\longmapsto\:$ These records and verifications in VAT reduce the evasion of taxes on goods.