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Factors Influencing Unincorporated Enterprises to Register under Value Added Tax (VAT): An Analysis with Enterprises Survey Data

Author

Listed:
  • Mukherjee, Sacchidananda

    (National Institute of Public Finance and Policy)

  • Rao, R. Kavita

    (National Institute of Public Finance and Policy)

Abstract

Unincorporated enterprises often bypass formal regulations in general and taxation in particular. However, escaping formal regulations does not always favour business of unincorporated enterprises and attracts multiple sources of exploitation (e.g., paying bribe to local administration, police and politicians). In other words, the benefits of that enterprises could reap by becoming part of the formal regulatory system often exceeds the costs of becoming a formal entity. Bringing unincorporated enterprises under taxation system is a challenge often faces by tax administrators and it is in this regard the present study explores the factors which influence decision of unincorporated enterprises to get registered with State tax authority. However, registration with State tax authority does not imply that the enterprises have to pay taxes and/or file return if they are not active or annual turnover does not exceed the threshold level. The study throws up interesting results for policy makers and tax administrators.

Suggested Citation

  • Mukherjee, Sacchidananda & Rao, R. Kavita, 2015. "Factors Influencing Unincorporated Enterprises to Register under Value Added Tax (VAT): An Analysis with Enterprises Survey Data," Working Papers 15/145, National Institute of Public Finance and Policy.
  • Handle: RePEc:npf:wpaper:15/145
    Note: Working Paper 145, 2015
    as

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    File URL: http://www.nipfp.org.in/media/medialibrary/2015/04/WP_2015_145.pdf
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    References listed on IDEAS

    as
    1. Joshi, Anuradha & Prichard, Wilson & Heady, Christopher, 2014. "Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research," Working Papers 13663, Institute of Development Studies, International Centre for Tax and Development.
    2. Anuradha Joshi & Wilson Prichard & Christopher Heady, 2014. "Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research," Journal of Development Studies, Taylor & Francis Journals, vol. 50(10), pages 1325-1347, November.
    3. Luca Barbone & Richard Bird & Jaime Vázquez Caro, 2012. "The Costs of VAT: A Review of the Literature," CASE Network Reports 0106, CASE-Center for Social and Economic Research.
    Full references (including those not matched with items on IDEAS)

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    1. Mukherjee, Sacchidananda & Rao, R. Kavita, 2017. "Determinants of Registration of Unincorporated Enterprises under State Value Added Tax Act in India," MPRA Paper 81236, University Library of Munich, Germany.
    2. 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.
    3. Sacchidananda Mukherjee, 2015. "Present State of Goods and Services Tax (GST) Reform in India," Working Papers id:7532, eSocialSciences.
    4. Rao, R. Kavita & Tandon, Suranjali & Mukherjee, Sacchidananda, 2016. "Corporate Tax: A brief assessment of some exemptions," Working Papers 16/165, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Tax Registration ; Indirect Tax ; Unincorporated Enterprises ; State Sales Tax/VAT Registration ; Partnership Firms ; Proprietary Enterprises ; Probit Model ; India;
    All these keywords.

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