Question

1.     In respect of VAT, what is the paradox of exemption?

Answer 1

VAT exemption means the process of some goods and services are evitable from the VAT tax that process called VAT exemption. The greater number of good and services are consist of VAT or value added tax or GST which is including the selling price of the product or service. Some countries like India called VAT as GSTor Goods and Service Tax.

Some group of products and services are excluded from the list that is VAT exemption goods and services .For example.Education,some type of charity means sponsorship or sponsorship programme, fund raising events as part of doing charity is exempt ed from VAT,and funeral related services like burial in the sea, hurried. And some insurance services related death. Health services of registered practitioners, houseboat mooring,lottary tickets and online and some online games these are some examples of VAT exemptions.

Paradox of VAT exemption means one who creates an exempted supplies then who think that he is exempted from VAT but he/she actually taxed by non deductible input tax is cost to him/her product or services. On the other hand one who creates taxed supplies then he/she think they are already taxed but in this situation he / she absolutely exempted from VAT, due to deducted input cost from her/his product or services. This paradox called paradox of VAT exemption.