Differentiate between VAT and Sales Tax
                     Differentiate between VAT and Sales Tax
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VAT stands for Value Added Taxes. Both VAT and sales tax are forms of indirect charge  
on services and goods. They are paid by the end customer and not the business selling it.  
Corporates often get confused between the two, making it necessary for their employees to  
have the skills and knowledge related to handling such tax charges. MindCypress assists  
organizations in hosting physical or virtual training sessions for VAT.
This blog will assist you by explaining what are the charges and the main differences  
between VAT and Sales Tax. So, let’s begin with VAT first.
What is Value Added Tax (VAT)?
VAT is a specific consumption tax that is inflicted upon every stage of the supply chain  
process. This means money is charged right from the manufacturer selling its raw material  
to a factory. Further, the factory sells the finished product to the wholesaler, which then  
goes to the retailers before finally reaching the consumer. The buyers at earlier stages of  
the production get reimbursed by the ensuing buyer, and the retail consumer pays VAT.
What is Sales Tax?
Sales tax is the final charge in the supply chain process and is indirect in nature. It means,  
the consumption tax is imposed on the consumers at the point of sales, by the retailer and  
then passed on to the government. Sales tax is a certain percentage of the product’s  
original value. According to the jurisdiction, a business is accountable for sales taxes that  
can be a physical location, an employee, or an affiliate, depending on the laws in that  
jurisdiction.
Differentiate between VAT and Sales Tax
Although VAT and Sales tax are both parts of the taxation system in India. Several features  
differentiate the two categories of taxes. Here is a list of how these taxes are distinct from  
each other.
 Paid By:
VAT is to be paid by both producer as well as a consumer while sales tax is levied entirely  
on consumers
 Calculation:
Calculation of VAT is complex because of the various layers of buying and selling  
transactions involved while that of sales tax is straightforward
 Admissible:
VAT is levied on various stages of production while sales tax is applicable on the final value  
of the purchase
 Evasion:
VAT is able to avoid evasion successfully while sales tax is easy to fiddle with
 Production Value:
The VAT model increases the cost of production to businesses which in turn can lead to a  
higher burden on purchasers whereas sales tax is easily handled
 Government Profit :
VAT tends to profit the government more rather than sales tax. This is because tax from  
each and every wholesale transaction also reaches the government unlike sales tax where  
just the end amount of tax is levied
Conclusion:
The chances that taxation can be charged for taxes and increases commodity price. Sales  
tax is less harmful to economic growth, VAT can create chaos on low-income taxpayers.
Further, the two taxes do not depend on a person’s wealth or income, and most probably  
rates are unchanged. Now you have a basic understanding of the difference between sales  
tax and VAT, it is time for you to enroll in a training session for VAT. Contact MindCypress  
for more information on training and certification.
Resource: https://blog.mindcypress.com/p/differentiate-between-vat-and-sales-tax