Vat and cst clarification needed

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Jagadish

Director

23 Points Posted on 14 October 2011

I am looking at some clarification on VAT and CST on how they are calculated. Somehow it has seen confusing calculations and never something that clarifies the same. Here is an example that I need help on:

I am a registered dealer in State of Karnataka. I purchase a Laptop bag (VAT applicable 14%) from a vendor.

Purchase price inclusive of VAT: 1121

I want to Sell the bag to outside state company located in Hyderabad and they want to use the product for gifting it to their employees. I expect a profit of Rs 50.

What should be my final selling price (inclusive of Sales Tax) so that I make Rs 50 as profit? Detailed Calculations would really help.

Regards,

Jagadish

Replies (4)

ACMA Obulirajan R

M.Com ACMA

1021 Points Posted on 14 October 2011

Purchase Price	1,121
Add - Profit	50
	1,171
Add - VAT 14%	164
Gross Value	1,335

Swaminathan

Chartered Accountant

66 Points Posted on 15 October 2011

Purchase price 1121

Less: Input VAT 138

Add: Profit Margin 50

Total 1033

Add: Output VAT / CST @ 14% 145

Sale price 1178

In case the purchaser is ready to give C form, then the sale price can be Rs. 1,054

ACMA Obulirajan R

M.Com ACMA

1021 Points Posted on 15 October 2011

Dear Mr.Swami,

You should not deduct input vat in the purchase price to calculate the selling price to the end consumer.

However, You can take the credit of input vat while paying output VAT.

Swaminathan

Chartered Accountant

66 Points Posted on 15 October 2011

Input vat is not an expenditure in the hands of the purchaser as the came is classified as Current Assets. If he is not deducting he will be getting a profit of Rs. 188/. Even though total value of the invoice is 1121, the cost of purchase is only Rs. 988/-