Vat

A brief note on VAT,in general, can be put as follows:

1)The goods are classified into taxable and non taxable types.. 2) There will be schedules of taxable goods at special rates(for liquor,ganja etc)and reduced rates i.e.4%,5% etc on nearly sixty items.3) The rest of goods are charged at 12.5%,13.5%,14% or 14..5% varying from state to state..4) Every registered dealer has to collect tax on sale of taxable goods,at prescribed rates and pay to the govt through a return after the end each month/quarter/half year.(This is output tax).While paying such collected /uncolleted tax the tax paid on local purchases(input tax) is to be deducted and the balance only is to be paid. This results in paying tax by every dealer only on the value added in his hands and hence the name Value Added Tax.For small dealers,contractors,hoteliers etc there is variant scheme of paying on the entire receipts.,without any collections and deductions. This is called composition scheme.There are restrictions in claaiming of input tax credit in each state........mjk