Which one of the following is not a feature of “Value Added Tax”?

Value Added Tax (VAT) is a multi-point, destination-based consumption tax levied on the value addition at each stage of the production-distribution chain [2]. It is designed as a tax on final consumption, where businesses receive input tax credits for taxes paid on intermediate goods, ensuring the ultimate tax burden is borne by the final consumer [2]. In the Indian federal context, while the Central Government levied CENVAT (Central VAT) on manufacturing, the State VAT was a subject of the State governments, not the Central government [3]. States had the power to legislate, set rates, and collect VAT on the intra-state sale of goods. Therefore, the statement claiming VAT is primarily a Central government subject with States acting only as facilitators is incorrect, as States exercised sovereign legislative power over State VAT prior to the implementation of GST.

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Global Minimum Corporate Tax (GMCT): > p. 172
2. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Box 5.3: GST: One Nation, One Tax, One Market > p. 83
3. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > OTHER INDIRECT TAXES NOT REPLACED BY GST > p. 96