One of the objectives of taxation is to avoid double taxation for the commodities and services.
Previously old sales tax structure was developed in such a way that have attracted double tax
resulting in a cascading tax burden. Globally there were three sales tax systems were operated
in the past, Such as (a) Single Point Tax System (b) Multi Point Tax System and (c) Retail
Sales Tax System. All these tax systems has many loopholes and have cascading effect on tax
Cascading effect of old sales tax system can be understood with the following example