I don't thing that it's a correct practice.
If you read the invoicing rule in relevant VAT Act and Rule,you will find the correct picture.
I don't thing that it's a correct practice.
If you read the invoicing rule in relevant VAT Act and Rule,you will find the correct picture.
I would like to reopen this issue and want the clarification also.
We are talking for VAT in Haryana.
As one of my client is charging VAT on freight and freight is showing as "Reimbursement of freight charges"
Calculation as follows:-
{(Basic
But in my opinion VAT should not be charged on freight on basis of following points :-
1. Here freight is charged as Reimbursement on freight, i.e. he is paying the freight on behalf of us and i.e. it is not part of sale.
2. As per definition of sale price u/s 2(1)(zg) of The Haryana Value Added Tax 2003, “sale price” means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof.
3. Since freight is charged as reimbursement i.e. it is not like that dealer has done anything as per the above definition and charging for that. He is only paying in our behalf.
Kindly guide me on this issue.
Regards
Priyank Agarwal
9992021501
Dear all,
I would like to reopen this issue and want the clarification also.
We are talking for VAT in Haryana.
As one of my client is charging VAT on freight and freight is showing as "Reimbursement of freight charges"
Calculation as follows:-
{(Basic
But in my opinion VAT should not be charged on freight on basis of following points :-
1. Here freight is charged as Reimbursement on freight, i.e. he is paying the freight on behalf of us and i.e. it is not part of sale.
2. As per definition of sale price u/s 2(1)(zg) of The Haryana Value Added Tax 2003, “sale price” means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed at the time of sale as cash or trade discount according to the practice, normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof.
3. Since freight is charged as reimbursement i.e. it is not like that dealer has done anything as per the above definition and charging for that. He is only paying in our behalf.
Kindly help me on this issue.
Regards
Priyank Agarwal
9992021501
If there is a FOB Destination Sale Contract with standardized additional freight charge provision , then obviously the sale does't happen untill and uless the goods reaches the destination and all expenses incurred up to the point of sale should be a part of Sale Price and accordingly VAT should be charged on the total amount including freight charges. If there is contract on FOB Sales point Contract, in that case VAT should not be charged on bill value including freight.
Becides this , an assessee should maintain separate ledger for freight transporting which should show whatever spent for sending out the goods to the buyers point, is collected from buyer. Nothing extra belongs to the collection as freight charges. Then it will help to plead in favour of non charging of VAT on freight charges.
Thus, whether it is a case of FOB Desitnation OR FOB Sales Point contract, the seller should have sufficient evidence of not charging any margin on actual freight charges. Other wise VAT may come in to the picture sofar the freight charges concerned.
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