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Value Added Tax and Informality: Determinants of Registration of Enterprises under State VAT in India

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  • Sacchidananda Mukherjee
  • R. Kavita Rao

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

Suggested Citation

  • Sacchidananda Mukherjee & R. Kavita Rao, 2019. "Value Added Tax and Informality: Determinants of Registration of Enterprises under State VAT in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 13(1), pages 21-48, February.
    • Handle: RePEc:sae:mareco:v:13:y:2019:i:1:p:21-48
    DOI: 10.1177/0973801018800086
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    References listed on IDEAS

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    Cited by:

    1. Sacchidananda Mukherjee & Shivani Badola, 2022. "Estimation of VAT compliance costs of unincorporated enterprises in India: unit-level analysis," Indian Economic Review, Springer, vol. 57(2), pages 421-441, December.
    2. Shivani Badola & Sacchidananda Mukherjee, 2021. "ICT Adoption and VAT Registration among Unincorporated Enterprises in India: Analysis of Unit-Level Data," Review of Development and Change, , vol. 26(2), pages 153-178, December.
    3. Badola, Shivani & Mukherjee, Sacchidananda, 2020. "Factors Influencing Access to Formal Credit of Unincorporated Enterprises in India: Analysis of NSSO's Unit-level Data," Working Papers 20/326, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Tax Registration; Unincorporated Enterprises; Informality; Value Added Tax (VAT); Probit Model; India;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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