Value Added Tax and Informality: Determinants of Registration of Enterprises under State VAT in India. (February 2019)

• Record Type: Journal Article
• Authors: Mukherjee, Sacchidananda; Rao, R. Kavita
• Is Part Of: Margin. Volume 13:Number 1(2019:Feb.)
• Page Start: 21
• Page End: 48
• Publication Date: 2019-02
• Subjects: Tax Registration -- Unincorporated Enterprises -- Informality -- Value Added Tax (VAT) -- Probit Model -- India; Economics -- Periodicals; Economics -- India -- Periodicals; Economics -- Asia -- Periodicals; Economic policy -- Periodicals; Economic development -- Periodicals; Economic development -- India -- Periodicals; Economic development -- Asia -- Periodicals; India -- Economic policy -- Periodicals; Asia -- Economic policy -- Periodicals; 338.9
• DOI: 10.1177/0973801018800086
• Languages: English
• ISSNs: 0973-8010

Abstract

Unincorporated enterprises often bypass formal regulations in general and taxation in particular. Bringing unincorporated enterprises under the taxation system is a challenge often faced by tax administrators, and it is in this regard that the present study explores the factors which influence the decision of unincorporated enterprises to register with the state value added tax (VAT)/sales tax authority across states in India. This analysis is limited to the decision regarding registration. It is not necessary that enterprises that are registered pay taxes and/or file returns—however, the process of registration does provide some information to the tax department for follow ups. The study throws up some interesting results for policymakers and tax administrators. JEL Classification: H25, H32, H26, L53