If Cash discount is allowed to our customers,whether it is calculated on total bill amount or excluding VAT?
Antony Jacob
(FINANCIAL ACCOUNTANT)
(30 Points)
Replied 17 January 2013
cash discount is calculated on the total amount .for example if sale value is 1000 and vat is 50 and you are giving cash discount at 1% .you should calculate the amount from 1050 ie 10.50 .cash discount will be 10.50.Vat should be same Ie Rs 50
Ganesh Nagori
(Owner)
(29 Points)
Replied 17 January 2013
| Originally posted by : Jimi KR | ||
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If Cash discount is allowed to our customers,whether it is calculated on total bill amount or excluding VAT? |
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Well,
You are free to offer Discounts on either including or excluding VAT, its solely on your decision. But yes, that would be stupidity 
to offer discount after VAT unless you have strong reasons to do that. There are 2 reasons for not applying VAT before discounts.-
1. If you offer discount after applying VAT you give away more discounted amount (because it also includes a percentage on VAT amount.). Though, it makes no difference if you are opffering a fix amount of discount.
2. Your VAT amount is redusced if it is applied after discount. You know the calculations part. :).
Ands there are no legal clause for this.
CA DIGANT CHADHA
(Academician & Consultant)
(195 Points)
Replied 18 January 2013
Sonu Kumar
(Account Manager)
(665 Points)
Replied 20 January 2013
Agree With Mr. Digant Chadha........
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