VAT may be classified in three ways: (i) on the basis of coverage of stages - throughout the production and distribution stages, or confined to limited stages - manufacturing plus wholesale, or wholesale plus retail. (ii) on the basis of the method of calculation - tax credit method, subtraction method, and addition method. and (iii) on the basis of tax treatment of final-product capital goods such as machinery, equipment, and supplies - the consumption form, the income form, and the product variety.
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