About vat

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bapugouda

bapugouda (Querist)
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14 November 2011 Can any one help to me about VAT.What is the benefit from VAT,How to calculate this?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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15 November 2011 VAT is a multi-point tax on value addition which is collected at different stages of sale
with a provision for set-off for tax paid at the previous stage/tax paid on inputs.

How do I calculate my tax liability?
A. Calculating tax liability under VAT is very simple. If a dealer is selling any item of 4% tax and he sells goods worth Rs. 1,000/-. Amount of tax payable will be Rs. 40/- But same goods he had purchased for Rs. 900/- and at that time he had already paid Rs. 36/- so the net tax payable by him will be 40-36= 4 and he will pay to the Government only Rs. 4 on the sale of Rs. 1000/- (@ 4% tax rate). The tax payable by him is tax rate multiplied by value addition, in the instant case (1000-900) X 0.04.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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15 November 2011 How to calculate VAT?

VAT is calculated by deducting tax credit from tax collected during the payment period.

Example:
(Rate of tax assumed at 10%).
Purchase Price Rs.100.
Tax paid on purchase Rs. 10(input tax).
Sale Price Rs. 150.
Tax payable on sale price Rs. 15(output tax).
Input tax credit Rs. 10.
VAT payable Rs. 5.
Total tax collection by govt. --------
On the sale price of Rs. 100 paid on the purchase by the dealer Rs. 10.
Net VAT paid by the dealer on value addition after resale Rs. 5.
Total tax at 10% on the last sale price of RS. 150 Rs. 15.

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