Ad valorem tax is a tax that is imposed on the value of a good or service. Most of the taxes are ad valorem that is taxes imposed on value. Another type of tax is specific tax; where tax is imposed on quantity. The meaning of ad valorem is at value. An example for ad valorem tax is imposition of 28% GST on luxury cars. Here, if the price of a car is Rs 10 lakh, the GST amount will be Rs 2.8.
