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.