Question

What are “Value Added Tax” and “Special Consumption Tax”. What are the similarities and differences?

Answer 1

Value Added Tax is a consumption tax that is levied on a product when the value is added at every stage of the chain of supply. VAT is levied at each point in the process of manufacturing and sales.

Special Consumotion Tax is a tax levied on the items manufactured within the country or if it is imported. It is also including the goods like petroleum products, Alchoholic drinks and tabacco products etc.

The main difference between VAT and Special Consumotion Tax, Special Consumption Tax is like excise tax which is levied on the goods that is imported or produced. Whereas, VAT is collected from producers from the value they add during the production chain at each stage.