Which one of the following is not a feature of “Value Added Tax”?
- AIt is a multi-point destination-based system of taxation
- BIt is a tax levied on value addition at each stage of transaction in the production-distribution chain
- CIt is a tax on the final consumption of goods or services and must ultimately be borne by the consumer
- DIt is basically a subject of the Central Government and the State Governments are only a facilitator for its successful implementationCorrect
Explanation
The correct option is D because Value Added Tax or VAT was primarily a state level subject in India before the introduction of GST. Under the Indian Constitution, the power to levy taxes on the sale or purchase of goods within a state belonged to the State Governments, not the Central Government. The States were responsible for its legislation, collection, and administration, while the Center only played a role in coordinating the transition through bodies like the Empowered Committee of State Finance Ministers.
Options A, B, and C are incorrect because they accurately describe the core features of VAT. It is indeed a multi point tax collected at each stage of value addition and is ultimately passed on to the final consumer.
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