18 July 2008
We are a trader of hardware & networking equipments. My vendor called ingram micro is a Software Seller (microsoft partner), We buy the software to sell to our enduser customer, now the suppliers started charging service tax as well as vat both on same items? like:
cost Price = 100 Service tax @12.36% on 100 = 12.36 Vat on 100 @4% = 4 Bill Amount(100+12.36+4)= 116.36
What are the accounting treatment? How should we charge our customers? How and in which return ( service tax ot vat) we can show Rs. 100(basic amount)?
Please reply with example of accounting treatment.
21 July 2008
VAT is a state levy and service tax is a central levy. service tax is levied on development and upgradation of software under IT service. VAT has to be levied on sale of software. So VAT and service tax has to be levied on basic price of Rupees 100/-. As you are trader, VAT has to be levied. Service tax can be your cost and you can add to Basic price and then calculate VAT as explained by mohinder kansal.
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