This study aims to understand the impact of value added tax (VAT) in India at the
state level in 2005. The introduction of VAT by 21 Indian states is an important
challenge for business enterprises, as it would lead to reallocation of resources and
changes in business processes and performance. To achieve this, five sub objectives
have been set forth: critical analysis of the existing system of sales tax, study the
implementation of VAT in India, analyze the impact of VAT on the business processes,
impact of change in the processes on the performance of business enterprises upon
introduction of VAT and analyze the attitude of business enterprises towards VAT as an
input in their business decisions. A consistent research design has been adopted to
determine the difference between the enterprises from VAT and non-VAT states on the
basis of their profile