The sales tax could be charged by a seller from a buyer if he was an end user. However there was a lot of ambiguity related to it as most buyers refused to being consumers of that product which however could not be verified.
The businesses pay the difference in taxes paid during the purchase and those collected from the end consumer
The end buyer cannot get tax deductions on his buying since he cannot sell the product further .
The government is also benefitted since it has in effect transferred the responsibility of collecting taxes from the state to the businesses. VAT is charged for both goods and services unlike sales tax.
Calculate the taxes payable for a dealer for a who had purchases worth 1,50,000 and value added worth Rs 20,000 .The total profit calculated on the transaction is 15000 .The VAT rate is 12.5 %