Computation of Sales Tax Incidence

The application of incidence theory to the taxation on sales has been complicated by a wide variety of institutional circumstances, surrounding this kind of tax.The burden of sales tax should not be assessed in isolation. The regressivity of sales tax is lessened if it is considered simultaneously with the benefit accrued from public expenditure. The incidence of benefits will depend on the pattern of investment. If priority is assigned to increasing the supply of wage-goods, the poorer sections can improve their economic position over time and the volume of employment can expand steadily.In this study, estimating of sales tax incidence in (Rajasthan, Madhya Pradesh, Uttar Pradesh, Punjab and Haryana) (2000-2010) have been discussed.The per capita incidence of sales tax in 2009-10 increased by 1.9 time in Rajasthan, by 3.1 time in Uttar Pradesh, by 2.5 time in Haryana, by 1.8 time in Punjab, by 1.4 time in Madhya Pradesh over 2000-01. Uttar Pradesh and Madhya Pradesh is in a poor position so far as per capita incidence of sales tax is concerned.