The Value Added Tax (VAT) has become the predominant form of indirect taxation across the globe besides being a major source of fiscal revenue. According to recent estimates by Caragher (2023), around 175 countries have adopted VAT1 . In this article, we will review the economics of VAT and explain the advantages of VAT design in curbing evasion. We will also explore how the Indian VAT system has been designed to reduce evasion under the Goods and Services Tax (GST). Finally, we will discuss the shortcomings that exist in the current Indian tax structure and the remedial steps taken by the government to check tax evasion.