We have received one invoice from vendor for supply of material. that invoice bifurcating Material cost, transport charges and Packing charges separately moreover, they are not charged VAT on cost of material not for transport and Packing charges. Is this invoice is correct, can you explain why they are not charge vat on transport and packing charges. Please clarify my doubt.
VAT is charged on total of invoice value i.e.(cost of material + Packing Charge + Transportation Charge). This is because VAT means it is a tax on value addition. The term "Value Addition " means whatever dealers do with respect to the goods before it is sold to the customer including margin.
In the light of above explanation the invoice in question is not correct.
CAclubindia
