India’s Experience with VAT

Most Indian states have had at least five years of experience with state VAT. Based on official announcements, the country is about to change over to national GST in 2011, which means that the time is ripe to take stock of India’s experience with VAT. In this article, the author traces India’s road to VAT and analyses the impact of VAT on state tax revenue, tax administration and compliance. It also seeks to draw lessons from India’s VAT experience and to analyse its implications for the switchover to national GST.