540565 (Accounts Manager) (24 Points)
08 February 2016Hi Dear,
We are selling one item selling price is 10,000/- per pcs. we give gift Rs. 2000/- item which we buy from out side and the packing material is costing 500/- for per item we get only 7500/- net amout after paying gift and packing amt. On which amt we pay the vat ? On 7500/- or 8000/- or 9500/- or 10000/- as the gift and packing material is coming tax paid from local market.
ROSHAN
(TAX PRACTITIONER)
(74 Points)
Replied 08 February 2016
Hi,
As such one has to charge VAT on invoice amount, and in your case, you have to charge VAT on 10000/- as it is the Invoice Value and the rest of Rs. 2500/- is to be considered as gift to customers and should be debited to Profit & Loss A/c as promotion expenses.
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