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Effect of transport charges in vat

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Aditya Narkhede

Article

29 Points Posted on 19 January 2013

In a bill regarding purchase of any items, the supplier sometimes charges transportation charges and shows it in the bill itself. Bu tin the given manner,

( Basic amt + Transport charges ) + VAT = Final amt.

So, is this procedue correct? Coz i think Transport charges is not included in the basic amt for calculating VAT??

Replies (3)

Vikash Kumar

Manager Accounts (CA. Final)

517 Points Posted on 19 January 2013

No, this method is not correct. Best method of invoicing is-[BASIC+VAT]+TRANSPORT CHARGES=TOTAL INVOICE VALUE.

MJ Krishnamurthy

ACCT(Retd)

5757 Points Posted on 03 February 2013

Mr Aditya,

After introducing VAT law in all states transportation charges arre not given exemption from taxable turnover. So, what your seller has done is correct.....MJK

Mr Subrata Dasgupta

Finance Professional

170 Points Posted on 04 February 2013

I agree with Mr MJK, the definition of "Sale Price" has been amended to include the value of Packing Forwarding, Transportation, Insurance etc. Therefore there is no exemption for transportation charges in the Sate VAT Laws.

The definition of "Sale Price" under the Central Sales Tax Act does not include Freight / Transportation and Insurance charges. Therefore Freight and Insurance need not be included in the value of goods on which CST is to be charged.