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On Thursday, the Union Finance Minister Arun Jaitely said that the present indirect taxation system is in a “complete mess”.
“It is in a complete mess because somebody cultivates and produces a raw material, he sends to another state …he pays VAT.. when it enters the particular city, he pays Octroi..they now add value. The value added product will again have tax.
“And this chain will go on there, four times when it is sold to the consumer… For every tax paid at next junction again tax is paid. So tax is also paid on the tax. So a product which would have cost X, now becomes X plus Y,” the Minister said.
“In the process some people think it is safest to avoid normal natural chain and deal illegally in these products – so you evade,” he said.
“You have to converge the taxation powers of the state and the Centre into a common system,” he further said.
