Service tax & vat

@ Suvro 

The Service Tax is levied under the Central Government under residuary entry 97 as section 92C has not yet been made effective.The calculations for service tax are very simple! The rate generally is 12%+2% Education Cess+1% SHEC. So the effective tax rate is 12.36%, now lets say you provide services worth rupees 100 and they are not covered under the negative list or mega exemption notification 25/2012 then your bill would appear as under.

Services Provided       Rs.100

Add:S.T @ 12.36%      Rs.12.36

Total Bill Amt.----->            Rs.112.36

As for VAT there is no uniform rate countrywide as each state has it's own VAT laws and applicable rates.So you need to check your particaular State Vat Law for it.

@ varun Garg

VAT has basically eliminated the cascading effect of tax as under the erstwhilse "Local Sales Tax" which was considered quite draconian and had an inflationary effect on the economy.

The general rates of VAT are 4% (On notified commoditties) and 12.5% on other goods generally as per the White Paper Law put down by the group of Finance Ministers.

VAT enables you to take input of tax paid on sale of your goods (both VAT and CST), known as Input Tax Credit.

Suppose you are a trader and you sell goods liable to vat @ 12.5%, then your bill shall look as under:

Goods                Rs.100

VAT @ 12.55%     Rs.12.5

Total Bill             Rs112.5

Now lets say you bough certain goods like packing material for pcking your goods and paid VAT on such material then you are eligible for Input Tax Credit and the payment to Government will be as under:(Let's say you paid VAT on material for Rs.4)

Output VAT             Rs.12.5

Less: Input VAT       Rs.4

Payment to Government will be Rs.8.5 (Rs.12.5-Rs.4).

For further procedural compliances please contact your CA in your city.

@ Varun

VAT input can be utilised for payment of CST when you sell in other state however the reverse is not possible that is CST input is not available for selling items to other states.Hope the above helps.