Vat calculation from invoices

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2012 My sales channel is as follows

COMPANY(in State A) -----> DISTRIBUTOR(IN STATE B) ---> RETAILER(IN STATE B)

The company to distributor invoice has the following details

Invoice Price Tax Final amount
7.56 2% 7.72

The distributor earns a margin of 5% on cost price.

The distributor to retailer invoice has the following details

Basic Price Tax FinalAmount

8.16 13.5% 9.26

My question is, what is the VAT that the distributor has to pay? and how did we arrive at this figure. Also, the basic price in retailer invoice and the final amount in distributor invoice are related as follows

8.16 (basic price) = 7.72 (which is the final amount) + 5% * 7.72 (which is the distributor margin) + 13.5% * 5% * 7.72 (which is the VAT on the margin)

Why is this so ?

I am a little confused on the VAT concept when inter state sale occurs for the distributor. How is the distributor paying the VAT on the value added?

Request you to please help.

Querist : Anonymous

Querist : Anonymous (Querist)

05 August 2012 Just to clarify the table

Invoice price|Tax|Final Amount
7.56|2%|7.72

table 2

Basic Price|tax|Final Amount
8.16|13.5%|9.26

Naresh Dharia F.C.A.

Naresh Dharia F.C.A. (Expert)
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05 August 2012 The VAT shall be payable wot is collected from the customer....

No need to confuse & read the margin of profit....

Simply pay the tax as collected & reduce the Input credit as paid to the Vendor

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