Vat on discount in invoice
This query is : Resolved
24 July 2013
IN UP VAT does we have to pay VAT on marginal discounts given in invoice.Supposing a discount of 250 on invoice of 45000.
24 July 2013
VAT is computed after deducting trade discount but before cash discount.Example:-
Sale price............................100000
(-)Trade discount 10%..................10000
Net....................................90000
(+)Vat @ 5%.............................4500
(-)Cash discount @5% on Rs.90000........4500
net amount receivable..................90000
Sale price............................100000
(-)Trade discount 10%..................10000
Net....................................90000
(+)Vat @ 5%.............................4500
(-)Cash discount @5% on Rs.90000........4500
net amount receivable..................90000
14 August 2013
The net amount receivable or received is the taxable amount. Cash discount is not mentioned in the invoice.It may be mentioned in the invoice for encouraging prompt and early payment.Hence the value arrived after reducing trade discount only is to be taken for VAT calculation.Cash discount arises only at a later stage as an incentive for early payment.....mjk
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