My client is selling articles online. He is putting X item for sale @ Rs. 100. The online company is providing 5% Discount on the said item & customer is getting same item @ Rs. 95. Now on what amount shall the VAT be charged as company is paying me after deducting charges on Rs. 100.
If I make a bill for Rs. 100 then VAT comes to Rs. 5. In that case customers says why should I pay extra VAT as I have purchase for Rs.95.(VAT @ 5% on 95 = Rs. 4.75)??
If I charge VAT on Rs. 95 then I am underpaying the VAT Tax??
Please suggest on what amount VAT shall be charged.
Thank You.
CAclubindia
