DVAT is a tax on sale of goods in Delhi. The tax levied under this mechanism is simpler, fairer and more transparent than the current sales tax.

It replaces four existing tax statutes: Delhi Sales Tax Act, 1975, Delhi Sales Tax on Works Contract Act, 1999, Delhi Tax on Entry of Motor Vehicles into Local Areas Act, 1994 and Right to Use Goods Act, 2002. The new Act is called the Delhi Value Added Tax Act, 2004.

It is a multi-stage tax chargeable at each stage of economic activity, e.g., manufacturing, and wholesale and retail distribution.