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Vat on free gift and packing exp

Others 211 views 1 replies

540565

Accounts Manager

24 Points Joined February 2016

Hi Dear,

We are selling one item selling price is 10,000/- per pcs. we give gift Rs. 2000/- item which we buy from out side and the packing material is costing 500/- for per item we get only 7500/- net amout after paying gift and packing amt. On which amt we pay the vat ? On 7500/- or 8000/- or 9500/- or 10000/- as the gift and packing material is coming tax paid from local market.

Replies (1)

ROSHAN

TAX PRACTITIONER

74 Points Joined November 2012

Hi,

As such one has to charge VAT on invoice amount, and in your case, you have to charge VAT on 10000/- as it is the Invoice Value and the rest of Rs. 2500/- is to be considered as gift to customers and should be debited to Profit & Loss A/c as promotion expenses.